Forex market are called margin trading because the traders borrow loan from bank, finance organization or broker house to carry on the foreign currency trading.
Generally, the financing leverage is up to 100 times, which means the Forex traders fund may enlarge to 100 times to carry on the trading. The bigger the financing proportion, means the Forex traders just need to pay very less fund, for example, the financing proportion provided by the financial organization is up to 400 times.
For example if the lowest margin request is 0.25%, then the traders just need to pay 25 US dollars, then he or she could trade as high as 10,000 US dollars, fully using the contra method to make big profit by only paying a very less price.
Besides the fund enlargement, another attraction of the Forex margin trading method is that it can be traded in both ways, you can make profit by buying the currency when the currency rise, or to sell a currency when the currency is dropping to make profit or short-selling, thus does not need to be restricted by the restriction so-called bear market is unable to make money.
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