Advantages of margin trading
- Higher potential returns: Margin trading allows you to amplify your profits by allowing you to trade with more funds than you actually have. This means that you can potentially make larger gains than if you were just trading with your own funds.
- Increased buying power: With margin trading, you can access a larger pool of funds to buy stocks, currencies, and other assets. This gives you more flexibility in your investment strategy and allows you to take advantage of market opportunities that you might not be able to with just your own funds.
- Ability to short-sell: Margin trading also enables you to short-sell assets. This means that you can profit from a decline in the price of an asset by borrowing shares and selling them at a higher price. If the price drops, you can buy back the shares at a lower price and return them to the lender, pocketing the difference as profit.
- Flexibility in trading: Margin trading allows for greater flexibility in terms of how much and when you invest. You can use margin financing for long-term investments or take advantage of short-term opportunities that might arise.
- Greater portfolio diversification: With margin trading, you have more buying power, which means that you can diversify your portfolio more easily. This can help reduce risk and increase returns over time.
- Hedge against market downturns: Finally, margin trading can be used as a hedge against market downturns. By borrowing funds to invest in assets that are not correlated with the broader market, investors can protect themselves from losses during a downturn while still having exposure to potential gains.
Check out MiralFX’s Broker trading accounts now as all accounts offer 100% call margin, allowing you to participate in trades for double the deposit amount, thus increasing your trading power.
