Dec 11
10
Understanding Futures Margin
Understanding Futures Margin
Article by Sheim Quah
In futures trading, one cannot run from what is known as margin requirements, even more so because trading futures contracts are considered to be a high leverage financial investment.
The beautiful challenge of trading futures is that the high financial risk goes hand in hand with speedy returns and speed is what attracts a handful few thrill-seeking traders. The high leverage ratio offered by trading futures also means that this type of investment is not for the average Joes.
Unlike dabbling with the stocks market, futures traders need to retain additional fund as a margin to control risk of loss in any given trading activities. Bear in mind that the risk of loss in futures trading goes in tandem with the opportunity to gain profit.
In layman term, the leverage of a :0 ratio on a 0 wager could mean two things: either you stand to gain 0 or risk losing 00 actual money.
There are two kinds of margins that you should be aware about in futures trading. The term
