A forex margin account is used by a trader when he wishes to get into a position which takes a higher financial investment than that which is currently available in the account of the trader. That is one of the unique advantages of the forex trading market wherein the traders will be able to conduct transactions in currencies of worth which is much higher than the amount available in the forex account. Unlike the currency markets and the equity market that offer little or no leverage to the trader, the forex market offers a leverage of 100:1 to its trader, implying that if a trader who has $1000 in his forex account decides to trade with a forex margin of 1% then he would be in a position to trade up to $100,000.
Forex margin trading is normally completed through the broker and to be able to indulge in this type of trade one needs to entail the services of a forex broker who offers margin trading as part of a bigger package deal. This is owing to the point that the concept of trading on forex margin is based on acquiring a short term loan from the broker for the purpose of indulging in trade and in exchange paying him a particular percentage of profits. Therefore, one first needs to open a merchant account with the broker, deposit some finances in it and use forex margin trading to get leverage and create a foray into the actual forex market.
Although forex margin trading is known as to be an edge of forex currency trading, a word of caution here will be pertaining to the proverbial two sides of exactly the same coin. This implies that a forex trader might well be familiar with the fact that if he can use the leverage option effectively, he stands to create phenomenal profits but concurrently if his investments grow to be loss making then your extent of financial losses which would be incurred would also be manifold. This is evident from the fact that there are many people who complain of experiencing lost out heavily due to forex trading and this is usually the case when people are misinformed concerning the market and make an educated use