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In Forex the terms “margin” and “leverage” play a major part. Could you explain the coherences in contrast to the stock market?

April 26, 2017contrast explain forex leverage margin play Stock Market terms

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In Forex the terms “margin” and “leverage” play a major part. Could you explain the coherences in contrast to the stock market?

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The stock market generally does not allow leverage products, unless you are trading an exchange traded future. As FX is an OTC market, leverage can generally be greater, and margin requirements are more flexible depending on the product and entity. As an example of leverage, if a client is on margin of 5% he can trade to 20 times his initial deposit. Also, there are no commissions or exchange fees to pay in the FOREX market which is an advantage to the trader. And with narrow spreads in FX compared to equities this can be an additional saving to the trader. Slippage is another factor in the stock market. But here in the FX market, this is not something that the FX trader has to worry about under normal market conditions.