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Category: Beginners Guide

Leverage is seen as a significant advantage of foreign currency trading, because it permits you to make giant good points with a small investment. Nevertheless, leverage can also be an excessive unfavorable if a commerce moves in opposition to you as a result of your losses also are amplified by the leverage. With this kind of leverage, there's the actual risk which you could lose more than you invested - though most firms have protective stops preventing an account from going negative. For that reason, it's important that you keep in mind this when opening an account and that whenever you determine your desired leverage you perceive the dangers involved.

Commissions and Charges

One other main good thing about foreign exchange accounts is that trading within them is done on a commission-free basis. That is not like equity accounts, wherein you pay the broker a price for every trade. The rationale for that is that you are dealing instantly with market makers and should not have to undergo different parties like brokers.

This may sound too good to be true, but rest assured that market makers are still making a living every time you trade. Keep in mind the bid and ask from the earlier section? Each time a commerce is made, it's the market makers that capture the unfold between these two. Due to this fact, if the bid/ask for a foreign foreign money is 1.5200/50, the market maker captures the difference (50 foundation factors.
U.S. Government Required Disclaimer - Commodity Futures Trading Commission

Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. This is neither a solicitation nor an offer to Buy/Sell futures or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this web site. The past performance of any trading system or methodology is not necessarily indicative of future results. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. All trades, patterns, charts, systems, etc., discussed in this advertisement and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author and do not necessarily reflect those of the publisher or Tradewins.