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You should ensure that
you fully master how
your margin account
functions. You’ll want
to make sure that you
read the agreement
margin that exists
between you and your
clearing
firm.
You’ll
also want to contact
your account
representative with any
questions you might
have.
The
positions which are
present in your
account could be
moderately or
completely liquidated
on the basis that the
margin available in
your account falls
beneath an amount
which has been
predetermined.
Your
margin call might not
come in before your
positions are
liquidated. Due to
this, you should
supervise your margin
balance on regularly
and use stop-loss
orders on every open
position to limit the
possibility of a
downside.
2.
No Fees for
Commission or
Exchange
When
you decide to trade in
futures, you will have to
pay for exchange and
brokerage fees. The
advantage of trading with
FOREX is that it is
commission free. This will
prove to be far better for
you, because currency
trading is an inter-bank
market which is worldwide.
Therefore, it enables
buyers to get coordinated
with sellers
immediately.
Even
though there are no
commission fees for
broker matching
buyers up with the
seller, the spread is
usually larger than
it is when you are
trading
futures.
As
an example: If you
trade a Japanese
Yen/US Dollar pair,
FOREX trade will give
you about a 3 point
spread (worth $30).
However, if you trade
a JY futures trade
you would most likely
get a 1 point spread
(worth $10) but on
the other hand, you
would also
additionally have to
pay commission to the
broker. This price
could be as low as
$10 in-and-out for
online trading which
is self-directed, or
as high as $50 for
full-service trading.
Note that the price
is
all-inclusive.
You
will have to evaluate
the difference in
commission with your
online FOREX and your
specific futures in
order to find out
which commission is
the greater
one.
3.
Limited Risk and
Guaranteed
Stops
Your risk
can be unlimited when you
are trading futures. An
example would be if you
thought that the prices for
Live Cattle were going to
continue rising in December
2003, just before Mad Cow
Disease was found in
American
cattle.
The
price for Live Cattle
after that striking
fall moved the limit
down for several days
in a row. You
wouldn’t have been
able to leave your
position and as a
result, this could’ve
cleared out the
entire equity in your
account. As the price
quickly decreased,
you would have needed
more money in your
account in order to
make up for the
fall.
Click here for the net step
in your FOREX
guide
.
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