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Learn Forex Trading > Introduction to Forex Trade > Margin Trading

Margin Trading

Forex market has the lowest margin requirement among all other underlying financial instruments in the world.

• Usually only 1% is needed for Minimum Margin Requirement i.e $ 1000 for standard account and $100 for mini account.
• There are 2 types of accounts a novice trader may choose from: Standard account or Mini account
• In a Standard account, 1pip value is 10usd and lot size is 100,000USD
• In a Mini account, 1 pip value is 1usd and lot size is 10,000USD

What are Spreads ?

Spread is the difference between the Bid and Ask price quoted for a currency pair.

• Spreads may defer from broker to broker.
• Traders prefer a smaller spread to maximise profits.
• Most exotic currencies have very large spreads due to the illiquidity of the currencies.
• In EUR/USD , a price value of 3 pips spread will be quoted as : EUR/USD 1.3455 / 1.3458
• 3 pips is the spread when you buy or sell the EUR/USD currency pair which is your cost of trading

Trading Platforms

• Most brokers will provide a charting platform free of charge to traders who trades with them.
• You can choose any Forex brokers and check if they are CFTC and NFA members.
• Check your broker’s listing with the Securities Commission of the country.
• Examples of advance platforms are : Metatrader 4, Advance GET system
• For charting, you can get free charting systems from dailyfx.com
• Most brokers will allow you to have a demo account for the first 30 days on trial.
• Prices are quoted live for all trading accounts , be it a demo or live account.

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