Saturday, July 17, 2010

Currency Trading Vehicles

There are a variety of ways to trade currencies and this report will give an introduction to the main ones used by speculators.
Leverage The Key To Large Prot Potential
Currency trading can yield large prot potential due to the use of leverage, which is the ability to trade with a small deposit leveraging a larger investment; prots and losses are therefore magnied. A simple example will illustrate this: A trader deposits $10,000 to trade and is granted a leverage of 20:1. He buys $10,000 worth of his nominated currency. We then need to multiply by his leverage in this case 20:1, so 20 X $10,000 or $200,000. The currency trade moves by 5%, so the prot or loss on the deal is $10,000. Because the trader has only put down a deposit of $10,000 on his investment, he either makes a prot of 100% or he losses his entire deposit. It is the use of leverage that gives the trader the opportunity to make large capital gains. The amount of leverage granted to a customer will depend on the bank or broker and the creditworthiness of the customer, and it is common today for customers to, in many instances, get leverage of up to 100:1.Download links :

Currency Trading Vehicles or Currency Trading Vehicles

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