Marginal trading is both what makes trading on the foreign exchange market so possibly profitable – and its biggest risk. In a nutshell, trading on the margin is simply trading with borrowed capital. Depending on your dealer, you can purchase $100,000 worth of currency for as little as $500. If your trades are on target, you make a profit on the entire $100,000 lot – minus dealer commission, of course. If, on the other hand, your trade ends up losing you money, you could end up being liable for far more than the $500 you originally invested.
That’s why one of the strongest bits of advice you’ll hear from most experienced forex traders is ‘Keep your eye on the margin’ – or even more strongly, ‘Don’t ever trade on the margin’.
Here are some other important tips to keep in mind from forex traders on how to make quick money on the forex.
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