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Commodities trading, like any other commodity trading, utilize a principle called “leverage” to expand the reach of the investor. Much like mechanical leverage in your old physics class, financial leverage is about multiplying the amount of motion you get from the energy you put into a transaction.

How it works is like this: Instead of ponying up $10,000 of your own money to make a commodities trade, you put up about $500 (1/20th of the amount purchased), and borrow the remaining $9,500. Let’s say that your trade shifts by 10 basis points between the price you purchased the commodity at and the price you sold it at; you’ve made a $10,000 purchase and sold it for $10,100, making a $100 profit on the transaction.

Now, you will have to pay back the $9,500 you made, plus some interest on the loan. Let’s assume that the interest is 9% per year, and that you made the margin purchase and sale in a 24-hour period. If you held on to the $9,500 for an entire year, you would have to pay $855 in interest. Since you only held on to it for one day, you pay $855/365=$2.35 in interest on it.

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spreadexvideos asked:

Spreadex is a specialist in small cap shares. We offer one of the largest selections of AIM listed stocks in the industry. Small cap stocks often have a lower price, which makes them accessible to more traders. However, please note there is often a larger minimum stake size for shares with a price lower than 50p. Another thing to consider is that if you’re making a trade on a less liquid stock, you might pay a wider market spread — and guaranteed stops are not available. Read the market information sheet before you carry out your trade. We have some of the most competitive margin rates around for trading small caps with Notional Trading Requirements starting from 20% of nominal stock value. Our margin rates are a flat rate per particular stock and don’t incorporate tiered rates of margin. Most of our spreads are listed on our website, but if you don’t see the particular stock you want to trade, please call our financial room and we’ll do our best to accommodate your request. We’re happy to list shares with a market capitalization of as low as £1 million unlike many other spread betting providers. To give an example of a Non 350 Daily Share bet; if you placed a £200 buy of Physiomics with Spreadex at 0.30 and the market closed at 0.50 that day you would make £40 — the 0.2 point difference from your winning bet, multiplied by your £200 stake. However, if the market had closed down at 0.2 you would have lost £20 — the 0.1 point difference from your losing bet, multiplied …

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The commodity futures exchange allow people to take positions in their contracts with a much smaller amount of money than stock buyers are allowed. This trading without putting up 100% of the money is called going on margin.

The most a stock buyer can go on margin is 50%, in the wake of laws enacted following the 1929 stock market crash. Prior to that crash, it was normal for people to put up only 10% of the value of the stocks they were buying. Most stock buyers these days pay 100% up front.

But in the world of futures you’re not really buying anything — you’re contracting to supply or take delivery of a product.

The amount you put up to begin with is your initial margin. Then your account must continue to have about 70 to 80% of that. You are allowed to go a little below initial margin, because everybody understands the volatility of futures markets.

Your brokerage firm or individual broker decides whether you have enough money in your account to satisfy their margin requirements. At the end of the day your account balance is evaluated to see if you meet exchange set standards.

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ukspreadbetting asked:

Forex trading www.financial-spread-betting.com Different currency pairs have different bid-offer spreads and margin rates. The narrower spreads are usually for the most liquid forex pairs, also known as the forex mayors. These include the USA dollar, the EURO and the Japanese Yen and of course the british pound. Trends tend to persist longer in forex. Most spread traders take spread bet positions over days or weeks but there is no reason why you can’t use them to speculate on a currency’s direction over several months. Simply bet on the longer-dated future bets expiring in three months’ time.

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ehowfinance asked:

A margin rate is the rate of interest that is paid on money borrowed to buy stocks, bonds or mutual funds. Compare margin rates from different brokerage firms and banks with advice from a financial adviser in this free video on margin accounts. Expert: Roger Groh Bio: Roger Groh is the founder of Groh Asset Management. Filmmaker: Bing Hu

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Zulutrade is really a company that’s been around for a while now, but is one which is still largely unknown amongst the forex community. On the other hand, it’s surely only a matter of time before ZuluTrade genuinely starts to take off.

So what in fact is ZuluTrade very first of all?

Well ZuluTrade is basically a platform that brings together some of the finest forex signal providers from around the world.

They monitor each signal provider’s performance in good detail and permit ordinary traders to trade the signals generated from any provider(s) they select instantly in their account.

So let me show you exactly how it works:

Basically you sign up to zulutrade and either open a demo account and practice with a fictional balance of $50,000, or join 1 of their recommended brokers and open a live account with real cash.

Then you merely pick out which signal vendors you wish to trade, based on the vast array of overall performance data offered. Zulutrade will then immediately trade the signals provided in your account. All you require to complete is pick out the size of your stake and then sit back and watch the results.



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TheOptionsCourse asked:

How to Place a Stop Loss Order blog.theoptionstradingcourse.com for more option trading training. If you have questions, either leave them in the comments below (I will answer, promise!) or go to my blog (See above) or my youtube channel http The thinkorswim platform is a great platform in general and for options traders in particular. It is a very easy to use platform. However one of the difficulties with the thinkorswim platform is that placing stop loss orders are not so intuitive. The following steps are required in order to place a stop loss order. 1) Initially you need to open a position (eg buy stock) 2) Create a separate stop loss order. This means putting in an order to sell the equivalent number of shares using a stop order. Stop loss orders can either be regular stop loss orders OR stop limit orders. Stop loss orders are activated below the stop price. Once activated they initiate a market order. They are pretty much guaranteed to fill but the price is not guaranteed. Stop limit orders involve setting both a stop price – below which the order will be activated – and a limit order price. The limit order price sets the order think or swim will send out once the stop is triggered.

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Shorting or Selling short is a way some investors make money on stocks they believe are going to decline in price in the near future. So how to short a stock? first you need to borrow the shares from your broker, and then sell the shares in the open market at the bid price and collect the profits or premium from the sale. But wait don’t spend it! You need to hold the money and wait hopefully the stock to will fall. If your prediction is right and it does fall, you then buy back the shares at the lower ask price and give them back to your broker, who gets a commission and interest.So for example, you borrow 100 shares of ABC at $100/share from your broker, then sell them for $10000. If ABC continues to fall, example drops by 10% to $90/share; then you just need to buy back the shares back for $9,000. You then pocket the different of $1000 and return the shares back to your broker. Of course, minus your broker’s commission, depending on your brokers, different rates apply.But wait! What happen if your prediction is wrong?! If you happen to make a wrong bet and short a stock whose price rises later, then you are in trouble. Either you can choose to wait to see if the stock will decline, or cut loss and buy the stock back at a higher price than you sold them and give them back to your broker, along with the commissions. Also when you return the shares to the broker, you have to pay any dividends the company hands out.There are some requirements to remember for shorting stocks:1.You need to open a margin account.2.You can’t short-sell stocks that are trading below $5.3.The price at which you short a stock must be at the market price or higher.4.Most short sales must be executed in round lots of 100 shares. In order to short stock, your broker will require you to take up a margin account. A margin account serves as a credit that has to be repaid at some time, depending on the decision of your stock broker firm. An initial investment of $2,000 is mandatory to set up a margin account. While margin requirements may vary at different brokerage firms, according to the rule, you must deposit at least 50% of the stock price in the margin account.If the stock you have shorted rises later, the account will be subjected to a maintenance margin. You will need to put more money into the margin account. Currently the regulations governing margin accounts are very stringent. For every 20% gain in the stock price, you have to add another 30% into the margin account.Now when you decided to take profit and close out your position, or when you sense the stock is having a bull run; this is the time to close out or cover your shorts. You repurchase the shares at the ask price and give return to your broker. Covering your short position at a loss can be a hair raising experience. During a bull run, not only short-sellers like you out there trying to buying back the shares, many more investors also jump onto the ship and start buying! This is where you experience “A squeeze”. This will greatly putting greater upward pressure on the stock price! During a bull run, the upside potential may be “unlimited”; just look a GOOG and BIDU. It is very important to remember is that shorting, while offering a smart way to make bearish bets, carries very great risks when prediction goes wrong!Despite in depth analysis of a company fundamentals, prediction can sometime be wrong. You should protect their short bets should consider two simple measures. First, set a stop-loss limit on how much you are willing to lose on a short bet, and stick to it. Second, you should seriously consider hedging their bets by buying call options, which increase in value when a stock goes up.



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chartmytrade asked:

How to place a stop-loss-order and how to trail it, lock in your profits, before price goes in the opposite direction. www.chart-my-trade.com

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A good rule of thumb for either a mini-account or standard forex account, is to limit your margin usage for each trade to 5% – 10% of your usable margin.

As an example, if your usable margin is $5000, to trade safely, limit your margin usage for each trade to a maximum of $250. This means trading only 1 full lot for each trade. This is assuming that you are trading in a CMS Universal account with 400:1 margin. Your use of margin is increased with a smaller ratio, as most other brokerages only offer a smaller ratio, normally 200:1 or even 100:1.

As your account grows and your usable margin grows, you can increase your margin usage and trade bigger mini or full lot sizes. If you lose money and your account shrinks, drop your margin usage back down to smaller sizes. You need to learn to keep your eye on your usable margin, especially if you’ve suffered some losses.

Protect your usable Margin by not having more than 2 open hedged or unhedged position at any one time. Your usable margin & equity will get eaten up by un-hedged open positions that go bad in the wrong direction…this is a really good reason why you want to use stops, and if you hedge, hedge tightly.



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