Important Values of a Margin Calls

Considerations
The important values that trigger a margin call, the margin equity, can change quickly. Assets in the amount of $10,000 purchased with a 50 percent margin loan have a margin equity of $5,000. A maintenance requirement of 25 percent represents a cash value of $2,500.

If the value of the assets declines to $8,000, the outstanding loan is still $5,000, so the margin equity becomes $3,000, and the maintenance level of 25 percent represents $2,000. At a total asset value of $6,000, the equity is only $1,000 but the maintenance level (25 percent of $6,000) is $1,500.

A margin call would be issued to generate the difference. A precipitous decline could cause investors to lose more than their initial investment.

Upon issuing a margin call, a broker usually expects account holders to bring their equity in line with the maintenance level immediately or at least by the end of the trading day.

Though a margin call alerts the account holder to the situation, it doesn't necessarily provide much opportunity to be proactive and prioritize stocks for liquidation. Concurrent with the issuance of a margin call and without warning, the broker can begin to sell assets in the account.


Margin Deals, in finance, transactions in which a purchaser buys securities by paying a percentage of the price and pledging the securities to guarantee payment of the balance of the price.

For example, an investor pays a broker a specified sum (margin) toward the purchase of shares of stock. The broker advances as a loan the remainder of the money needed to purchase the shares.

If the price of the stock remains constant or rises, the broker's loan is protected. If the price begins to fall, the broker notifies the investor that the stock will be sold unless an additional margin is advanced.

One of the worst pieces of news an investor can receive. Not only does it mean the value of his assets has declined, it could mean he has to deposit more money in his trading account. Margin calls are issued by brokers according to the terms of a margin agreement, which specifies the terms by which the broker lends funds to an account holder. The Federal Reserve regulates margin accounts and the terms of a specific margin agreement.

The purpose of a margin call is to inform an account holder that the equity in her stock positions has dropped below the minimum required maintenance level, and to activate certain provisions of the margin agreement. The federal reserve mandates a maintenance level of at least 25 percent, though some brokers set a much higher bar. In response to a margin call, investors must liquidate assets in their account to raise cash or deposit additional funds in their account.

Advantage of Forex Trading

Presently, the FX market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions.
The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements.
Since then, the market has continued to grow. According to Euromoney's annual FX Poll, volumes grew a further 41% between 2007 and 2008.

The purpose of FX market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as US Dollar, Pound Sterling, etc., and the need for trading in such currencies.

Although the Forex market is by far the largest and most liquid in the world, day traders have up to now focused on seeking profits in mainly stock and futures markets. This is mainly due to the restrictive nature of bank-offered Forex trading services.

Huge market
Approximately three trillion dollars are being traded everyday in Forex, making it bigger than world stocks, future markets and bonds
Low startup: For trading in Forex, one can begin with as low as 50 dollars

Volatile
It is the most unstable market of the world, which means one gets great opportunities every moment while trading

Low cost
While trading in stock, options and futures, you give commission and spread, with foreign exchange your just cost of trade is spread

No cornering
Unlike the other markets, cornering the foreign exchange market is improbable. Regardless of the total number of people trade with same robot, the profitability and efficiency will remain unharmed, which is a huge plus point

Up and down
Earnings from falling and rising prices, you do not concern the way the market goes and unlike the stock market you need not wait for up tick for shorting.

No size limit
Trade small or big, as per your choice, as Forex trading allows you to trade the way you want.

The forex Trading Method

Forex Annihilation Method

Review I don't know whether you have looked recently, but it has been so obvious over the past year or so that some of the most popular digital information products on the net have been focused on how to make money trading foreign currencies, what is commonly known as Forex trading.

All though, this should not be surprising as many more people everyday are looking for a way of making money online and while some ideas such as setting up an online marketing business might seem difficult and a bit overwhelming, the idea of trading foreign currencies seems simple and easy.

However, the only thing that is easy about Forex trading is making a bad trade because it is possible to lose literally hundreds of dollars within a few minutes if you don't know what you're doing. So, is 'Forex Annihilation Method' just another 'get rich quick and ignore the risks' e-book product like so many of the others seem to be? The answer is categorically no, because 'Forex Annihilation Method' is distinguishable from the majority of other products on the market today.

For a start off, many of the products currently doing the rounds are automated trading systems where the principle idea is that you buy into an automated system that is somehow 'guaranteed' to make thousands of dollars over night. The fact is however that developing a fully automated trading system has long been the 'holy grail' of Forex traders. With the modern computer technology undoubtedly makes it far easier to create such a system, it is a fact that not one of the most successful traders in the history of Forex has ever been able to come up with a perfect system.

Furthermore, using an automatic robot trading system that some programmer has designed means that you do not comprehend the basics of Forex, which is invaluable knowledge if you want to be a Forex success story for many years to come. Here you have the one of the main positive factors of 'Forex Annihilation Method'. It is not an automatic robot, but rather a blueprint to the best known and most effective forex strategies that you can adopt and apply for many years to come, long after the majority of the automated 'trading robot' systems have crashed and burned.

It is a blueprint that draws on over 100 years of expert knowledge and experience to layout and easy to follow, simple trading strategies that are extremely profitable and 100% replicable. Some people liken Forex trading to a way of gambling and whilst this is not a particularly accurate comparison, there is undoubtedly a significant element of risk attached to trading. If you are using an automated robot system, you are allowing someone else to use your money and you have no idea what level of risks they are taking.

But, if you apply your own wisdom to the markets, you control the risks and profits, which is a far more sensible and longer term view approach. Yes, there is good money to be made trading Forex and trading can be a business that supports you for the rest of your life. However, if that is to be the case, you need to learn everything you can and one of the best ways of learning is by research and reading and then applying what you have learned from 'Forex Annihilation Method'.

On the basis of cost versus value for money, 'Forex Annihilation Method' is one of the best investments you can make this year or indeed any year. If you want to become a serious Forex trader, one who makes thousands of dollars of profit from one of the world's most exciting businesses.

The Foreign Exchange Market

Many people are looking at getting into day trading, and start with studying the Stock Market, and the different stock exchanges. What many don't realize is that there are different markets and financial instruments that one can profit from. One market that has recently become available to the public to trade is the Foreign Currency Exchange, the FOREX.

The foreign exchange market is the largest financial market in the world. It trades upwards of 2.5 trillion dollars per day, which is approximately 1000 times the volume of the New York Stock Exchange. Quite easily, the foreign exchange market dwarfs the stock market of any country.

So, where is the foreign currency market? Well, unlike the stock exchanges of the world. The foreign currency market is a virtual market that is connected by the internet, phones, and fax.

The advantage of having a worldwide currency market is that it is open 24 hours a day, 5 days a week. Living in the USA, one could trade 24 hours per day Sunday 5pm to Friday 4pm EST. One can only trade stocks during normal market hours, so for those that have jobs during the day, the FOREX market is much more accessible as trading can be done at night or early in the morning before going to work.

Benefits of the foreign currency exchange

1. High Leverage
Currency brokers usually give their traders 100:1 leverage, meaning that if there is $1000.00 in ones account, they will let one control $100,000.00, which allows currency traders to reap large gains from relatively small price movements in the market.

2. High Liquidity
Because the currency market is the largest market in the world with huge daily volumes, one is always able to get in and out of trades as liquidity is never an issue.

3. Stops are always honored
Except in extremely volatile markets, which is rare, limits and stops are always honored. Because of the market's liquidity and 24 hour continuous trading periods, dangerous trading gaps are eliminated altogether. Orders are executed very quickly, without slippage. In the stock market, it is much more frequent that stops get skipped over as stock prices plummet, but in the FOREX, one can be much more confident that the stops are honored.

4. Entry orders are instant
There is no lag time in placing an order. Orders are processed instantly at the current market price, or the price at which you set the order to enter the market in the future.

5. No Commissions
There are no commissions in currency trading, the broker just takes a small difference between the bid price and the ask price as its fee for the transaction.

As currency markets are some of the most volatile markets, many fundamental variables such as weather, and war affect the price of the currency, however, since there is no one apparent reason much of the time for price movement, the fundamentals get discounted and one can use an almost purely technical approach to trading. This is why the FOREX is considered one of the most predictable trending markets that follows technical analysis methods more than any other market.

As one can see, there are many great benefits to using the FOREX as a highly profitable financial instrument. One can trade from home in their spare time, but first it is important to get a solid education in learning specific FX trading methods. Before trading in a live account, it is important to first get educated using books, or online courses.

There are many courses online selling for upwards of $3000.00, but it is not necessary to spend that kind of money to get a good education. Usually the expensive courses come with DVD's and other expensive items that raise the price. Much of the time one can find a course for under $500 that teaches the exact same content for much less money.