Leverage does not only add risk to your trading account, it also adds risk to the entire financial system. Just take a look at what happened in 2008. Many well reputed banks went belly up in matter of days. How could it happen so quickly? Most of these banks have been taking highly leveraged positions in the markets. Once the markets turned, most of these banks suffered tremendous losses in matter of days and went bankrupt. Please visit:- fx사이트
As a result, there’s a tremendous amount of oversight that goes with leveraged strategies. The Securities and Exchange Commission, the US Treasury, the Commodity Futures Trading Commission and the different exchanges in the US regulate how much money a trader can borrow. Many brokerage firms have even stricter rules in place as part of their risk management. Most of these firms follow the rules set by the National Association of Securities Dealers and the National Futures Association.
This means you don’t have much flexibility when you borrow from your broker to trade securities or currencies. Margin loans are highly regulated and you must meet the terms of your broker. You brokerage firms make you sign a margin agreement that says that you understand the risks and limits of your activities. You can’t have a margin account unless you have a minimum amount in your account something like $10,000.
You need to read the fine print of the margin agreement before you start trading on margin. Whenever you will place a trade, you would be asked if you are trading with cash or margin. Clicking the margin box let’s you use margin. It’s that easy but beware and know everything about how to trade on margin before you actually do it.
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