Looking face that put the see the shark, LOL!
For
intraday trading of stocks, CFDs offer clear advantages forex over traditional
stocks, not least margin trading. Leverage investments to magnify small price
swings and multiply the benefits.
Leveraging
investment forex
The great
advantage of margin trading is the ability to leverage relatively small
investments for a greater effect of trading. This is particularly attractive in
the short term, investing on a daily basis when trading prices are lower than
in the long run. The amount forex you can leverage your investment will depend
on your provider operations; Click Trade currently allows a maximum leverage:
10
times for stock CFDs - on the 21 stock exchanges trading we currently support.
For example, forex a small investment of USD 2,000 can be used for a position forex
in the amount of up to USD 20,000 in shares in the forex.
20
times for stock index CFDs - for the 11 major indices we have, forex For example, an investment of USD 10,000
can be used to manage a position in a stock index up to USD 200,000 in the
forex.
How they
work operating margins
When you
are trading CFDs, you deposit a sum of money in the bank that allows you to
open and close positions for many times greater value to the amount you deposit
in trading. The amount you deposit is known as the "margin
collateral" for trading.
When you
open a position, this warranty is untouched until you close the position,
either for profit or loss and the same are either credited or debited from your
account. In other words, this collateral is there to cover potential losses
arising from its trading margin.
When you
open a position, a percentage of trading and your collateral is required to
cover that position, and that amount is reserved in your account. The amount of
collateral required to cover a position will change as the price of forex that
position changes. So if you already have open positions, the margin available trading
for new positions is continually changing in forex.
Margin
Calls
Operating
margins can work against you as well in your favor, and under normal
circumstances your account will not be in debt of forex. If the price of a
particular instrument turns against him and guarantees become insufficient to
cover the resulting loss trading, you will be prompted to close or reduce
positions in forex, or to make a new deposit to cover margin requirements. If
you do not perform any of these actions in forex, their positions will be
closed automatically in trading.
Margin
Calculation Example
In this
example we will use a stock CFD with a margin requirement of 10% and you have
margin collateral of EUR 100,000 in trading giving you up to EUR 1 million
available to invest in the forex.
Say you buy
CFDs Eur 400,000 using 40% (10% * EUR 400,000 / 100,000) warranty available for
margin in forex. At this point you have up to EUR 600,000 available to invest
in other CFD positions in forex.
If the
market moves in favor of investment in forex or trading.
If things
go well and the value of the shares of your CFD position go up by 2% and you
close the operation, you win £ 8000, in forex.
If the
market moves against your investment in trading.
If the
value of your CFD position drops to EUR 320,000, your available margin
collateral for EUR 20,000 (- loss (EUR 400,000 - EUR 100,000 320,000)) falls
and now only covers trading 6.25% of your investment (EUR 20,000 * 100 / EUR
320,000) - you have exceeded your margin and must take action in the case to
remedy this situation in forex:
1. Transfer
additional funds of at least EUR 12,000 to cover the new margin requirements of
EUR 32,000. Pay attention that transferring EUR 12,000 of trading will bring
your usable margin trading to 10% of your position (10% of EUR 320,000) but if
the CFD position falls further you will immediately have exceeded your margin
again in forex.
2. Reduce
the CFD position by selling the appropriate number of shares equivalent to at
least EUR 120,000 to bring your position trading down to EUR 200,000. Again,
this will take available trading to 10% (on Margin) of your position (10% of
EUR 200,000) range, but if the CFD position falls further you will immediately have
exceeded your margin again in forex or trading.
To better
understand the full picture of forex, you must know who are those who operate
in it and how they influence trading the situation in the forex larger
participants trading or even in trading.
In addition
to private investors, FOREX also earn the following trading professional
bodies:
State
central banks
banks
market makers trading
export / import
companies in forex
Company
security trading
corporate
investors in forex
hedge
funds and investment in trading
intermediary
companies that provide services tradings market access for natural and legal
persons in forex
Just the
big banks can have a serious influence because they can make forex trading currency
in large volumes of forex. They are what create the principal liquidity and
capital flows forex. That is why the events that have a direct relationship
with the policy of the central banks of various forex countries and the world's
largest forex banks are considered the most important news on the market.
Central
banks are the largest forex participants in the forex, which does not establish
any formal limit the movement of prices forex. However, they play a regulatory
role in determining forex the level of the leading interest rates. Trading Banks
operating in the forex trading buying and giving their assessments of the
current situation forex. Also in special cases the right to make direct
interventions currencies trading (purchase or sale of the national currency forex
in order to avoid devaluation or rise) are reserved.
The Market
Maker banks are individually listed a currency other market trading participants.
The right to define what contributions received under the agreement forex to
comply with a number of international standards.
The
stability of the services provided to the market by the market makers and the
code of laws and rules desarrollodados by regulatory organizations (eg the FSA
in Britain, which in turn is regulated by the Bank of England) more "code
of honor" created by the same conventional forex market makers, supplying
a continuous trading work of the FOREX
market.
Exporting / importing,
performing currency exchange operations trading are not placed forex Companies
aim to profit from trading, but use international mechanisms to implement
monetary exchange operations concerning their main area of activity.
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