Important Term Forex Trading 2

Important Term Forex Trading 2 : This is a picture of currency before this article is for articles Term Forex Trading 1 is important here to talk about the most important concepts in Forex trading continues as follows:

Margin Trading
Margin trading means providing players to the commercial capital of Forex trading as a property. This can happen because investors to borrow money from a bank or broker that investors just to give a sum of money as security (collateral).

For investors, the use of margin trading and increasing purchasing power index funds that exceed the amount of property owned. For companies or bank loans, the use of margin trading, you will be able to increase competitive advantage. Type of margin that will be available to investors:

  • Percentage Margin (Margin basic level)
         Margin forex traders take a certain percentage based on a percentage of the transaction value. Margin in the form of currency in the base currency in the bidding. For example, 1%, then the collateral for the transaction of USD / JPY up to $ 100,000 (1 item), enough investors to fund up to $ 1,000 (1% x $ 100,000).
  • Margin With a Certain Amount (flat rate margin)
       In margin trading, there are so-called leverage long. In the leverage ratio is the ratio or the amount of funds that can be traded (such as security or collateral) time with equity. Leverage ratio for each agent or bank that different from one another, 50:1, 100:1, 200:1, or 400:1. With 100:1 leverage, then the investor only funds $ 1 for the purchase of $ 100. For example, if for $ 2,000, then you have funds in your account to 100:1 leverage to buy up to $ 200,000.

However, margin trading, the risk that investors may be dangerous. Risks associated with the trading range is: first, to reserve (collateral). Margin Call is a notice by the margin lender issued to investors to raise capital in margin accounts, because the situation on the border maintenance received (GWM who is always at the expense of investors). Second, the liquidation of positions. This risk arises because the investor does not cause an increase in equity to margin maintenance margin position.

When using a credit system, there are some things that are considered by investors to account, namely: first, to understand how margin trading and its impact on the number of accounts. Second, always follow the position of the stone and stop doing procurement in any open position to minimize the risk of E. Third, if the account balance is not maintained enough to cover the minimum threshold, the position is automatically closed.

Nutrition and Futures Markets
Spot transactions, purchase and sale of foreign currency to the requirement that buyers and sellers with the maximum mutual currency within two working days of order. The date on which each point with two currencies (ie two business days after your order) named value. Although the normal period is two days to transfer points can be completed on the day of the contract or the day after the date of the contract. While the futures market is the buying and selling of foreign currency to the requirement that each buyer and seller in currency of more than two working days after the date of the contract. The word "more than two working days" could mean future performance transfer period ends day one week one month three months of the year after a point value.

Interest Rate Positions
Which money market operations, cash flows can be affected by changes in interest rates on money market instruments. If the surgery is done while watching the flow of funds to these changes, it is said that the position of the number of flowers (flower position). Long positions when the interest on the contract, the term of the loan in one currency for more than the period of the funds in this currency. Conversely, if shorter, the same contract term of loans in foreign currency is shorter than the term of the investment, and in that currency.

In other words, take a long or short position for the signs in the two currencies in a day and age differences in debts and investments. Language differences era banking, credit and investment through the air. Business loans from banks and investment if a different perspective on the part of companies, non-bank (eg, manufacturing) was observed. For banks, lenders may accept deposits from customers and other banks because the location can invest through loans and advances made or lend funds to other banks. Non-bank loan companies can benefit from the funds of the bank loan and investment can occur due to bank deposits.

Stock Position
Who functioning foreign exchange market, or Forex market is a cash flow can be affected by changes in foreign exchange rates against other currencies. If the surgery is performed while suspended cash flows (t-exposed) to changes in the exchange rate, it is said that money from the position in foreign currency (exchange rate positions) flows. Changes in the long position, if the purchase amount is less than the amount of currency sales. On the other hand, if the amount of short payment currency is less than the number of sales. In other words, take a long or short position if there is a difference in the size of the buy and sell currencies. In the language of the bank, the difference is in the amount of the purchase and sale of currency exposure.

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