Forex margin trading is a way of applying leverage to the purchasing power of your money to increase profits. Leverage simply means using a small amount of money to control a much larger sum. This is possible because it is unlikely that the value of a currency will change by more than a certain percentage over a short time FX마진거래. So you can place a few hundred dollars in your brokerage account to trade on margin – the amount you think the price will fall. Your broker will effectively lend you the balance.
Trading on margin is also known in the stock and futures markets, but because of the special nature of currencies, you can apply much more leverage in the forex market. Depending on the broker’s terms, you may be able to control 50, 100 or even 200 times your account balance. Imagine that the current rate on the British pound to US dollar Forex market is shown as GBP/USD 1. 7100. So to buy one British pound you would need $1. 71. If you expected the value of the dollar to rise against the pound you might decide to sell enough pounds to buy $100, 000. If your broker used lots of $10, 000 each, this would be 10 lots. Then you would sit back and wait for the price to go up.
A few days later you might find that the price had moved to GBP/USD 1. 6600. Sure enough, the dollar has risen and the pound is now worth only $1. 66. If you sell your dollars now and buy back into pounds, you will have made a profit of 2. 9% less the spread. 2. 9% of $100, 000 is $2, 900, so that would be an excellent trade. Because you are buying and selling currencies at the same time, your money just has to cover any losses that may occur if the dollar falls instead of rising. And you would put a stop loss in place to minimize losses, so $1, 000 can be all you need to have in your account to make this $100, 000 purchase. Your broker guarantees the other $99, 000.
In fact, many brokers now operate limited risk amounts, and the account will automatically close the deal if whatever funds you have on your account are lost. This prevents the margin calls that could be disastrous for a trader, because they mean that you can lose more than you have. But with a limited risk Forex account that is not a possibility. Broker software that you use to manage your account will not let you lose more than your account balance.
Using leverage in this way is so common in currency trading that you will do it without even thinking about it. Still, it is important to consider the risks. Lower leverage is always safer, and you may never want to go to the maximum Forex margin your broker will allow.
Binance Futures is one of the leading futures crypto platforms with 20x leverage (previously it was 100x). Trade is an art, and every crypto trader starts their crypto dealing journey with spot trading. However, when they grow their skills as a trader, they can maximize gains and minimize risks using some innovative strategies. Although for long-term, spot market is good, but you can go with futures trading when you want to short sell an asset or use increased leverage in a trade.
Futures are the type of derivative trading and these are the regulated contracts between two parties involving an agreement to buy or sell any underlying asset. Futures Trading allows traders to hedge against volatile markets and make sure that they buy or sell an asset at a set price in the future. And, if the price moves in the opposite direction, they may end up paying more than the market price or selling it at a loss.
But when we talk about futures trading, this kind of dealing allows traders to diversify their portfolios and increase their exposure to a variety of cryptocurrencies without even having to hold the underlying asset. Making use of leverage on the crypto derivative dealing allows them for better capital efficiency. Moreover, short-selling gives them a better chance to earn profits even if the price of an asset drops.
Binance Futures is the most liquid derivates exchange in the crypto market that provides the user with the best offers to help them avoid unnecessary risks. Leverage trade at Binance Futures platform allows the traders to open positions which are bigger than their crypto assets capital. If you can open a position which is 50 times bigger than their capital, then you have 50x available for you to make trades.
Binance Futures trading allows its traders to access a wide range of features including advanced order types, Binance trading bots, grid trading, etc. that further ensure a seamless trade experience. When we talk about advanced orders, it’s quite beneficial. Like, if a trader places a limit order, then take profit and stop-loss can be placed simultaneously. This enables traders to set a primary order and secondary order at the same time, with the former being a limit order and the latter being a stop loss and take profit order.