Wed 21 Jun 2006
Recently we have explained what is leverage.
Margin trading is a stock, commodity or currency purchase using borrowed money.
Usually in stock trading there is no margin or it is very low. Leverage in stock orders less than 1:10. Such level of margin could be explained by relatively big day average movements of share prices on stock exchange.
In above mentioned article we have explained why in the case of FOREX currency trading level of leverage could go as high as 1:400.
About the same level of margin is usual for commodity futures and option contracts.
Summarizing all said above it is clear that margin trading is viable for commodity and currency markets.