In the Forex market currencies are traded around the world.
In the past, currency trading was limited to certain individuals and institutions. This is because the means required for the play were much higher than for any other investment tool. However, with the development of electronic trading networks and margin accounts, the requirements have changed. Although about 75% of Forex trading are large banks and financial institutions, private individuals can invest in Forex with as little as $1,000 – largely due to the use of leverage.
When using a margin account, investors essentially borrow money from their brokers. Of course, margin accounts can also be used by investors to trade equity securities. The main difference between stock trading and Forex on margin is the leverage that is provided.
For equity securities, brokers typically offer 2:1 leverage for investors. On the other hand, Forex traders are conducted between 50:1 and 200:1 leverage. This means that traders must Deposit between $250 and $2,000 for a trading position from 50 000 $to 100 000$. (See. also: Margin trading.)
Forex traders are usually given several options when deciding how they will Deposit funds into your trading account. The credit card deposits to date the easy way out. With the development of online payments, digital payments, credit cards are becoming more effective and safe. Investors can simply log into their accounts, enter in their credit card and these funds will be placed in one working day.
Investors may also transfer funds to their trading accounts from an existing Bank account or send money via Bank transfer or online check. Traders are also able to write a check directly to their Forex brokers. The only problem with these methods is the amount of time required to process payments. For example, paper checks can be held for up to 10 business days before adding to the trading account. (See. also: wading into the currency market.)