The day trading margin is a common method in the forex market where traders buy and sell currencies as dollars, pounds, euros, yen and so on.
The profit possibility in this peculiar market is based on the fluctuation of the different currencies. This fluctuation is the consequence of from daily forecasts of the gross domestic product of the world nations and other factors that influence the value of a currency as the political stability, the inflation rates, official economic reports and the general economic conditions.
If the financial news regarding Europe are negative, for example, the foreign exchange traders will want to sell off their Euros because they fear the Euro is going to less value. When the Euro recovers, the same marketers will sell it for another currency, in order to make a profit.
All these currencies transactions are not literal, however, they are performed on margin, i.e. the buyer has not to pay all the sum he's buying but only the 1%. This is what is called "buying on margin" or "buying on leverage".
In the forex market you have to invest only $1000 to actually get $100,000. It's possible because the fluctuations of the major world currencies are less than 1% a day, so your investment normally covers the gains and losses.
This fact alone marks an important difference between the forex market and the stock exchange where the typical fluctuation can be as much as 10% in one day.
The basic lot for trading the forex is normally 100.000 units (remember, the traders has to pay only 1000 for this lot) and many foreign exchange brokers don't handle any lower sum.
However some firm allows to establish a day trading margin account with as little as $100. This solution is ideal for beginners traders because it offers a safe possibility to practice the currency trading market avoiding the risk of the standard trading account.
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