Monday, November 2, 2009

3.9 Forex Lexicon : Margin

When an investor opens a new margin account with a
FOREX broker, he or she must deposit a minimum 
amount of money with that broker. This minimum
varies from broker to broker and can be as low as
$100.00 to as high as $100,000.00.
Each time the trader executes a new trade, 
a certain percentage of the account balance in 
the margin account will be earmarked as the initial
margin requirement for the new trade based upon 
the underlying currency pair, its current price, and
the number of units traded (called a lot). The lot size
always refers to the base currency.
An even lot is usually
a quantity of 100,000 units, but most brokers permit investors
to trade in odd lots (fractions of 100,000 units).

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