Last update 2020.10.19
Margin trading is a form of leveraged trading that takes place from a margin brokerage account. With a margin account, the cash you deposit has the greater nominal buying power, as the brokerage will loan you the difference automatically or require that you post a smaller amount of collateral when placing a trade.
What you will learn here
- Understanding leverage and margin in forex
- How to use leverage to take advantage of forex trading
- Cautions regarding the use of leverage and margin in trading
- How to use AI to trade forex without leverage
- What are the best forex brokers to trade
Let’s see more about how to trade using margin and why you need to understand what it means.
To operate a margin account in forex trading, for example, you need to have specific knowledge of what the margin percentage will be. Forex Brokers may require a minimum deposit of money or assets to be used as collateral when placing a trade from a margin account.
However, from a margin account with a 50% margin requirement, you can buy the same quantity of currency that you did before with only $5,000 from your $10,000 balance. This is because the broker is putting up the other $5,000 behind the scenes.
Lastly, any leverage obtained from a margin account is not free, as it has the interest to be paid to the broker when any positions are maintained for more than one day (usually past a specific time each day), generating rollover costs.
All the features of margin accounts are designed to be useful for short-periods and trading with a high level of certainty. Most stockbrokers don’t allow margin operations with high-risk assets, like Over the Counter (OTC) products or penny stocks. However, with commodity and derivative trading, as well as forex trading, it is almost always done from a margin account.
That’s why it is important to know what your margin requirement is, and any levels that can trigger a margin call, also known as a liquidation call (i.e. when trades are closed automatically due to insufficient available balance). In some cases, a margin account can also cause a negative balance.
Generally, a low margin requirement will mean higher leverage, while a higher margin requirement will mean lower leverage. Here are examples of various margin requirements and their associated leverage amounts:
- 100% margin = zero leverage
- 50% margin = 2:1 leverage
- 25% margin = 4:1 leverage
- 20% margin = 5:1 leverage
- 10% margin = 10:1 leverage
- 5% margin = 20:1 leverage
- 1% margin = 100:1 leverage
The best way to trade forex
There are two ways to invest with our AI in forex without concern about leverage in trading.
1. Automated with AI-Trading. Check out the 3 steps to trade automated with our AI.
By trading forex automated with AI, you will save time and improve your performance without monitoring the market and managing trading platforms.
With Automated AI trading you do not need MT4 / MT5 and other trading platforms to invest in forex. All forex trades are automatically placed into your broker account every time that our AI system identifies a new worthy trading opportunity. You can monitor the AI trading performance in real-time directly on our dashboard.
Automated AI trading benefits
- Setup in 3 minutes.
- Totally hands-off, from anywhere.
- Invest from just $1.
- APY of 40% over the past 13 years*.
- Lightning-fast execution & no slippage.
- No commissions, no management fees.
- Portfolio with 40 different automatic strategies.
- No MT4/MT5 or other platforms required.
- Test with a risk-free practice account.
- Trading results directly on our dashboard.
Don’t you have a broker account yet? Our AI is integrated to trade automated with the broker Oanda. Click here to open an account.
2. Manually with AI forex signals.
Wiseinvest also provides AI forex signals that perfectly fit into MT4, MT5, and any trading platform. To trade with our AI forex signals, you must simply copy the data you receive from each real-time signal into any forex brokerage account of your choice.
There are five unique variables for each AI signal, and each must be copied exactly, to match the performance of the signal as close as possible.
Each AI forex signal alert consists of the following five data points:
- Symbol (forex pair)
- Direction (long or short)
- Position size (number of units or lots)
- Take profit (price level to exit with maximum gain)
- Stop loss (price level to exit with maximum loss)
Check out how to trade with our AI forex signals.
- Subscribe to a Wise-Plan.
- Open a Brokerage account. Check this article about the best forex Brokers.
- Set an amount and a position size on our Wiseinvest dashboard.
- Our AI will send you real-time trading alerts by email and Telegram.
- Copy the signals and paste into your Brokerage account.
All forex signals are sent every time that our AI trading system identifies a new trading opportunity. Our trading strategies are developed on a variety of time frames such as 4 and 8 hours.
Wiseinvest AI forex signals are Market Orders and you do not need the entry price. You can copy each signal while it is available on our dashboard. We do this way to assure that traders will just place signals while they are good to be traded.
You can trade forex with our free forex signals clicking here, or with our Premium subscription that provides you unlimited AI signals and automated AI trading in partner brokers. Whether you are a beginner or a professional forex trader, our AI trading system can help you save time and improve your trading performance. Get started with free AI.
When investing through Wiseinvest automated AI trading or AI forex signals, you do not need to calculate pips and change the leverage in your forex broker account. Learn more about leverage in forex trading by clicking here.
What is the AI performance in forex trading?
The Win Rate of our AI varies according to the period and can reach up to 95%. The performance is based on the efficient frontier measurement metric, which means that our model is profitable whenever the Win Rate is greater than 60%. All strategies of our AI trading system seek stable returns and sufficient results to achieve an average return of 40% per year (APY), without the use of high leverages.
We understand that what matters in forex trading is the final result. Thus, the investor needs to consider that Win Rate is not always the best metric to measure performance in forex, as other signal providers disclose. For instance, out of 100 trades, only 1 trade may be enough loss to make the 99 trades not profitable. In this case, the Win Rate would be 99%, but the final result would be unfeasible (negative).
We focus on the return of 40% of APY and not just on Win Rate.
It is essential to observe that forex brokers may charge spreads, commissions, and overnight fees in your trading account, and these factors can affect the AI performance. You can check our forex trading track record to understand more about AI trading performance by clicking here.
How much do I need to trade forex with AI?
You can start in forex trading with free AI signals or an AI trading account and deposit just $1 in the broker. It is also possible to test using a risk-free practice account with our AI trading system. However, to do efficient risk management in real accounts, we suggest you start from at least $100. Notice that some forex brokers require different initial deposits to trade forex.
What is the trading strategy of our AI?
Our AI strategy is the combination of different AI trading systems, with more than 100 features, that define 40 different strategies which simultaneously consider: Quotes of the 28 forex pairs, Supports & Resistances in different time frames, Trends and Counter-trends, Cross-indicators, Index of each pair, Economic Calendar, Investors Sentiment.
Our AI analyzes those fundamental, technical, and sentiment factors that affect forex trading, and all criteria are evaluated in real-time using different weights. After completing the analysis, the choice of the signal emission strategy is made considering the increased likelihood of short-term profit and the amount available for investment.
Using technical analysis, our algorithm considers not only the patterns of various trends, including support and resistance levels and cross-indicators, but our AI is also able to create its own real-time index for each currency pair, that is used to identify what is the best direction and target.
In relation to fundamental analysis in forex, the AI makes a correlation within the economic calendar to find news data that can affect specific currency pairs.
- Margin trading can be a useful tool to increase your buying power and profit potential, but it also substantially increases the risk of loss.
- Margin trading suits better to short-term operations, when the information about market movement is clear.
Good trades can often have larger margins requirements to operate; our Artificial Intelligence-powered strategies can help you to identify the best forex trading opportunities.
Disclaimer: Forex and Contracts for Difference (CFDs) are complex instruments and come with a high risk of losing money due to leverage. Forex trading is not suitable for everyone. You should consider whether you understand how forex and CFDs work and whether you can afford to take the high risk of losing your money.
The forex brokerages displayed shall disclaim the overall performance of traders in their platforms. Oanda warns that 76.8% of retail forex traders lose money trading CFDs. XTB warns that 80% of retail forex traders lose money trading CFDs. FXCM warns that 74.74% of retail forex traders lose money trading CFDs.
The performances aforementioned are not related to Wiseinvest AI forex trading and AI forex signals system. You can check the performance of our AI forex system on our dashboard.