Leveraged financing is a common practice in Forex trading, and allows traders o use credit, such as a trade purchased on margin, to maximize returns. ollateral for the loan/leverage in the margined account is provided by the nitial deposit. This can create the opportunity to control USD 100,000 for as ittle as USD 1,000. There are five ways private investors can trade in Forex, directly or directly: The spot market •Forwards and futures •Options •Contracts for difference •Spread betting •Please note that this book focuses on the most common way of trading in the Forex market, "Day-Trading" (related to "Spot"). Please refer to the glossary for explanations of each of the five ways investors can trade in Forex. A spot transaction is a straightforward exchange of one currency for another. he spot rate is the current market price, which is also called the "benchmark rice". Spot transactions do not require immediate settlement, or payment on the spot". The settlement date, or "value date" is the second business ay after the "deal date" (or "trade date") on which the transaction is agreed y the trader and market maker. The two-day period provides time to confirm he agreement and to arrange the clearing and necessary debiting and rediting of bank accounts in various international locations. Although Forex trading can lead to very profitable results, there are ubstantial risks involved: exchange rate risks, interest rate risks, credit risks nd event risks. pproximately 80% of all currency transactions last a period of seven days or ess, with more than 40% lasting fewer than two days. Given the extremelyhort lifespan of the typical trade, technical indicators heavily influence enry, exit and order placement decisionsA spot transaction
Risks
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