Using leverage, the investor has a loan provided by the broker.
To trade a standard lot of $100,000, with a margin of 1%, an investor will have to deposit $1,000 into his or her margin account. The leverage provided on a trade like this is 100:1.
When the investor has a winning trade, he/she is paying the loan.
But what happens when the investor makes a bad trade and get a margin call?
This investor now owes $99,000. How is the loan paid? How does the forex market or brokers deal with this?
To trade a standard lot of $100,000, with a margin of 1%, an investor will have to deposit $1,000 into his or her margin account. The leverage provided on a trade like this is 100:1.
When the investor has a winning trade, he/she is paying the loan.
But what happens when the investor makes a bad trade and get a margin call?
This investor now owes $99,000. How is the loan paid? How does the forex market or brokers deal with this?