A particular advantage of forex trading compared to trading in stocks is that the relatively low stakes. A minimum stake, so-called margins, is required of these involved, which is typically between 0.5 and two percent. for instance , to maneuver a million euros on the exchange market , with a 1 percent minimum stake, you simply need 10,000 eurosof margin necessary. This creates a leverage effect, in order that with relatively small fluctuations in exchange rates, extreme profits or to not forget losses may result during a short period of your time . there's no obligation to form additional payments, in order that the currency account cannot fall under the red, as losses are limited to deposits. additionally , a capital investment in foreign currencies can generate profits when the rate of exchange rises or falls.
The large number of market participants and therefore the short response times that are possible because of modern technologies now cause strong price fluctuations in at some point . it's precisely during this circumstance that the actual attractiveness of exchange trading lies, but also its extraordinarily high risk. There also are numerous economic, social and political factors that require to be kept in mind. for instance , a rise or decrease within the country-specific key rate of interest can cause large fluctuations. Therefore, information about the respective countries, their economic forecasts and therefore the inflation there are of great importance.
Foreign exchange transactions should generally only be administered by those that , thanks to their financial situation, can tolerate the entire loss of the capital invested.