What An Investor in Forex Needs to Know

For a retail investor in the forex market, things are very different with the banks and financial organizations who deal with each other twenty-four hours a day, seven days a week and in millions of dollars with actual businesses happening everyday. Investment organizations will conduct a credit study with each other like when a person passes an application for a loan. While currency trading are fixed and finished in real time by a centralized system or telephone. The transfer of money happens later on.

Although the merchandise investor means dealing with financial organization at almost the same time and with similar style nowadays. So who is the forex dealer and what is their importance to the forex market?

The merchandise investors put down their trades through the area of the margin dealer. Deals are usually put down in real time and with the help of broker who gets the order from a forex market investors either buying, selling or in a close position.

The dealer not only allows investor to deal in forex with the use of bank but also gives leverage. It means that the forex dealer only requires a cash deposit to represent the amount of cash that a person wants to invest, as long as the initial deposit is enough to cover any cash losses in the trade.

For example a leverage of one hundred is to one is granted to you by the forex broker. It means to hold $100,000 dollars of real cash (or one lot), you need to have $100,000 dollars of real money or one lot, and you need to give a cash security to your forex broker of only $1000 dollars.

The pip improvement in expenses will cause your own equity to improve or weaken by $10 dollars. So if you currently have 100,000 units of money, each time the cost change by a single pip-if 2.8484 increase to 2.8485-you will either receive or lose ten dollars. But a good thing though is that you as a retail dealer have utilized a security procedure of $1,000 dollars with the broker in your dealing account and the only expenses for putting the trade is a minimal spread (which requires no commission in a lot of instances) of two-three pips which the forex broker makes their earnings regardless of whether the trade is good or not.

The probability that you will lose your entire $1,000 dollars in the market is minimal especially if you remember to take the necessary precautions like utilizing a risk management and securing your capital from unnecessary loses.

Aside from that, a mini-forex dealing account is also like the normal forex dealing. Rather than dealing one whole lot every time, you can utilize a mini account instead to trade only a part of the lot.

So, Mini forex dealing is understanding what a "lot" means. Once you fully understand that forex is deal in with the use of lots and what is the meaning of a single lot for a forex dealer and to the investor utilizing a marginal leverage given by the broker, you will be able to understand what really mini-forex is.