Understanding Margin in Forex Trading

Comparing to other investment, the Foreign Exchange margin trading is one of the fairest and the most attractive investment method. Forex Trading on margin is nothing but taking a short-term loan from your forex broker.

What Is Forex Margin Trading?

In Forex, the margin trading means that the traders borrow loan from bank, finance organization or broker house to carry on the foreign currency trading. Generally, the financing proportion is above 1000 times, which means the Forex traders fund may enlarge to 1000 times to carry on the trading.

The bigger the financing proportion means the Forex traders just need to pay very less fund. For example, the financing proportion provided by the IMMFX is 1000 times, namely the lowest margin request is 0.10%, the traders just need to pay 10 US dollars, then he or she could trade as high as 10,000 US dollars, fully using the contract method to make big profit by only paying a very less price.

Basically, you are providing just 0.10% of your trading capital, the remaining 99.9% is provided by IMMFX.

Making Profit in Forex with Margin Trading:

The currency fluctuates continuously due to reasons such as political, economical reasons, sometimes the changes could be extremely great, therefore, the Forex traders also can have the opportunity in among which makes a profit.

For example, the Japanese Yen daily fluctuation is probably between 0.7% to 1.5%, Forex traders may make the profit through buying and selling. All trading could be completed in a short time, the trading strategy could carry up according to the market conditions, it is extremely flexible, even if the direction looks wrong, the loss could be stopped immediately, the loss could reduce but profit potential is still great. Therefore, the Foreign Exchange margin trading is the most flexible and the most reliable investment method.

Besides the fund enlargement, another attraction of the Forex margin trading method is that it can be traded in both ways, you can make profit by buying the currency when the currency rises (long-buying), or to sell a currency when the currency is dropping to make profit (short-selling), thus does not need to be restricted by the restriction so-called bear market is unable to make money.

Margin Calculation:

You must calculate the margin required as a percentage of the lot value. If your account is denominated in USD, the margin required per transaction is calculated in USD. For example, retail forex brokers always quote currency pair such as EUR/USD (i.e. EUR in terms of USD). If the EUR/USD is trading at 1.2500, that is one Euro is worth 1.2500 US Dollars, and you want to buy 10,000 Euros or 10K, you would sell 12,500 USD to get those 10,000 Euros. Basically, with a leverage of 1:5000, your margin required will be 0.2% of $12,500 which equals $25 only.

What does trading on margin provide me?

Forex Trading on margin lets you to significantly leverage your funds and potentially create strong profits compared to your capital.

However, Forex margin trading also involves a high rate of risk. A minor price movement can outcome in a considerable loss of funds. Although high leverage involves high risk, there are features added in the IMMFX trading platform that can benefit decreasing the amount you might lose in trading.

The IMMFX Trading Platform automatically calculates margin requirements and confirms available funds before executing a new trade position. If the account equity, the total floating value to the market, as defined below ever falls below the minimum margin requirement a Margin Call will be issued and all positions will be automatically closed.

What are the margin requirements for IMMFX?

You are allowed to select the margin level qualified to your account, down to a minimum margin requirement of 0.1% or 0.2% (or a maximum leverage of 1000:1 or 500:1) following your trading conditions or capital. This equates to the least margin of $100 or $200 for each lot, which represents 100,000 units of the first or “base” currency being traded.

How do I change my margin level?

Please note that you can change leverage on Currency Pairs + Metals at any time from your BackOffice (www.my.IMMFX.com) page and by clicking on ‘Change Margin’ within the forms section.