The amount of cash deposit required in a clients account in order to open a position or to maintain an open position. Margin is essentially collateral for a position. If the market moves against a customer’s position, the client will be requested to deposit additional funds through a “margin call.”
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WHO REGULATES THE FOREX MARKET IN THE U.S.?
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The Commodity Futures Trading Commission (CFTC) and National Futures Association (NFA) monitor FOREX trading in the U.S. and provide a high degree of requirements and regulation of U.S. brokers.
WHAT IS THE MARGIN REQUIREMENT TO MAKE A TRADE?
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The FOREX allows spot currency positions to be leveraged at various amounts depending on the broker – up to 50:1 leverage is common. This means that a 2% margin deposit ($200) allows you to control $10,000 of currency in a 1 Mini lot position in the FOREX market. FOREX trading is conducted on “margin” which…
WHAT IS A LOT?
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A standard unit of measurement for a FOREX trade. One lot in a standard account is approximately equal to $100,000 currency. Whereas, one lot in a Mini account is approximately equal to $10,000 of currency.
WHAT MAKES THE FOREX MARKET MOVE?
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World currencies are exchanged in large because of international trade. For instance, consumers of one country purchase goods of another country. Also, when large companies do business with other global companies. Global investments and monetary diversification are additional reasons that make the FOREX market move.
WHEN IS THE FOREX MARKET OPEN FOR TRADING?
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In a 24-hour market, Forex trading begins each day in Sydney, and moves around the globe as the business day begins in each financial center, first to Tokyo, then London, and New York. Unlike any other financial market, investors can respond to currency fluctuations caused by economic, social and political events at the time they…
WHERE IS THE CENTRAL LOCATION OF THE FOREX MARKET?
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FOREX trading is not centralized on an exchange, as with the stock and futures markets. The Forex market is considered an Over the Counter (OTC) or “Interbank” market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.