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Forums > Main Street > Manual Trading Systems > Forex Trading: Strategies to Maximize Margin Gains
Messages (2 Replies)
31 Dec 2017 4:17 PM

    Forex Trading: Strategies to Maximize Margin Gains

    One of the factors that separates the foreign exchange market from most of the other available asset markets is the fact that it is possible to trade on margin. Trading on forex margin with the use of leverage can enable you to capture gains that are far larger than the traditional methods of trading.  

    For example, let’s assume that you have $1,000 to start a forex trading account.  You have done your due diligence by first trading with a forex demo account so that you can see how these markets operate under live conditions.  When using forex margin, you could then capitalize on position sizes with ratios of 200:1, 400:1 or 500:1 depending on the limitations that are put in place by the market broker that is being used for the transaction.  

    Once you believe that you have a solid strategy that will produce consistent and reliable gains over time, you can than enter into a live trading account that has a forex margin feature.

    Hedge Funds vs. Individual Traders

    Another factor that is heavily influence these advantages is the idea that forex margin has gone far to democratize the landscape for all traders and trading accounts of all sizes.  In other words, it is no longer necessary to be a member of the ‘boys club’ at the world’s largest institutional organizations in order to profit substantially from the forex markets.

    When using forex margin, the trader is liable for all activity within the total position size.  This means that you will accumulate all gains (of all losses) from the total position size.  When we compare this to our earlier example, this would mean that the trader with the $1,000 trading account is able to capture gains that are made with position sizes of $100,000 or more.  

    So even traders with smaller account sizes are able to influence the market and generate substantial gains for their forex accounts.

    Forex Trade Management

    Forex margin trading will also allow you to manage your trades in a more objective manner.  This is because you are not limited to the actual funds that are currently in your forex trading account and can instead bring your trading sizes back toward round numbers (i.e. a standard trading lot).  

    When you are better able to manage your account sizes and create more predictable trading outcomes, it becomes much easier to capture sustainable gains over time.

    Edited:31 Dec 2017 4:17 PM
    23 Jan 2018 7:36 AM
    Hello, A trader must create and adjust their trading strategies to fit their personality, trading schedule and risk.
    Thank you
    04 Jun 2018 1:46 AM
    i usually use 1:500 leverage and i comfort with that. I'm still can trade with small money and not too much danger with my fund if market againt my open trade.
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