In the Forex market there are many terms that can be a hard for the new traders to understand, but to make money they must know about all the terms and how they work within a trade. You can’t make a profit until you learn about the market properly. Always remember, knowledge is power when it comes to the trading business. Unless you educate yourself and learn the details from scratch, it will be really hard to make a living from trading.
In this article, you will find a few important terms that are essential to make money and if you follow these terms, you will soon become a pro trader in Hong Kong. Without having precise knowledge of these terms, it will be really hard to protect your trading capital, let alone to secure the profit. Read this article very carefully since it will help you hone your skills.
Role of leverage
Leverage is known as borrowed money from the brokers. Leverage helps a trader to open a position with a high contract size with less capital. You can trade your favorite Forex pairs with the help of high leverage even with a limited or small amount of trading capital. For this reason, many retail traders prefer to trade the market with a high leverage trading account.
Pro traders use the leverage to double their money with the help of buying power. Leverage basically refers to take debt. Leverage is mostly used by investors to increase the investment that has been provided. For instance, if you trade with 1:10 leverage, you will get 10 times more balance than your deposited amount to trade the market.
Role of margin
The margin is known as one of the important terms in the Forex market. But not all the traders know about it. The margin is the minimum amount of deposit required to open new a position or trade. Margin trading has both positive and negative effects. Before you trade in the market, make sure you have an idea regarding margin.
You need to know how the margin trading works to reduce the risk exposure. Before an investor place a trade he must deposit money into the margin account. The margin percentage depends on the investor and brokers offered leverage. You need to read more about the term margin as it is not an easy term to understand.
Role of the lot size
The lot size is expressed to be equal to 100000 units of the base currency. Lot size can also be defined as a mini lot and a micro lot. In the Forex market, the lot size is used to measure an increment of a particular asset, you need to understand the lot size to trade profitably. For instance, if you open 1 standard lot trade, you can expect to make $10 profit or loss for each movement of that trading asset.
The retail traders can determine the units by the lot size. If you want to purchase or sell anything in the market then there you need to do that with lots. Keep practicing more to understand the lot size accurately. Learning to calculate the lot size at trading is very important because your profit greatly depends the calculation of the lot size. At the initial stage, trade with small volume so that you don’t have to lose a big portion of your trading capital.
There are many more terms in the Forex market that you should know about to trade. If you want to become a successful trader then there are no short cuts. So, you need to always read, learn and practice to enhance your skills. The more you practice the better you will become at trading.
If you see any unknown terms you are not aware of, don’t stop there. Ask professionals or research the term you don’t know about. Always keep working hard to make money like pro traders.