Difference Between Forex Margin and Spot Trading

2023-06-05
Summary:

Understand the distinctions between forex margin trading and spot trading for smarter decisions in the forex market.

Forex margin trading and forex brokers service are currently the two most common forex investment and financial management methods in China. Many investors who are not familiar with the forex market are unaware of the difference between the two and do not know which trading method to choose. Below, we will introduce the difference between forex margin trading and forex brokers service, to help investors understand how to choose between forex margin trading and firm trading.

Average Daily Trading Volume

The difference between forex margin and real offer mainly lies in the account opening method and trading characteristics:

1、 Real Forex Trading

To open a forex trading account, you need to apply at the bank counter, then purchase and deposit the funds into the account, sign a forex trading  agreement with the bank, apply for online banking, and log inJust go to the bank website and use your personal computer at home to enter online banking for trading. Usually open an account for transactions at a bank, such as China Merchants Bank or Industrial and Commercial Bank of China. The biggest characteristic of forex firm trading is that the risk and return are relatively small. What are the forex margin trading platforms? The transaction fee (spread) is slightly higher, usually between 10 to 30 points. If operated well, the annual revenue is generally between 5% and 10%. Funds that are too small may have limited returns.


2、 Forex Margin Trading

Forexmargin trading is usually conducted through the internet, usually through domestic agents or directly applying for account opening on forex company websites, and then depositing the funds into the trading account for trading. The biggest characteristic of forex margin trading is high risk and high return. Forex margin trading is a leveraged model, with a maximum leverage of up to 400 times. If an investor does not have $100, under leverage, it is equivalent to trading at most $40000, greatly increasing the investor's return, but the corresponding risk will also increase exponentially. It is more suitable for investors with a certain understanding of the forex market to trade.


The Difference Between These Two:

1. The required principal is different, and the actual transaction requires a relatively large amount of principal, while forex margin trading generally only requires a small amount of funds.


2. The return to risk ratio is different, compared to margin trading, forex brokers has less risk and is suitable for most people to invest.


3. There are different policy tendencies, and currently policies support firm trading, while margin trading is strictly illegal.


4. The trading channels are different, and forex brokers is mainly completed through the banking system, while margin trading needs to be mediated by market traders, which carries certain system risks.


How to choose between forex margin and forex brokers? From the above introduction, it is not difficult to see that if investors have a large principal and pursue stable returns, they can choose forex brokers; If investors have a good understanding of the forex market, have relatively small initial funds, and bear certain risks, they can choose forex margin trading.


【 EBC Platform Risk Reminder and Disclaimer 】: There are risks in the market, and investment needs to be cautious. This article does not constitute investment advice.

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Business Address: The Leadenhall Building, 122 Leadenhall Street, London, United Kingdom, EC3V 4AB. Email Address : [email protected]. Telephone : +44 20 3376 9662
Disclaimer: EBC Financial Group explicitly does not participate in any cryptocurrency activities or offer Crypto Contracts for Difference (CFDs). Our financial services solely pertain to traditional instruments. Clients are advised that any references to crypto-related services using the EBC name are inaccurate and unauthorized. Any reference to past performance is not indicative of future performance. The information contained in this website is provided for reference only and does not constitute any investment advice.
Regional Restrictions: EBC does not offer any services to citizens and residents of certain jurisdictions including: Afghanistan, Belarus, Burma (Myanmar), Canada, Central African Republic, Congo, Cuba, Democratic Republic of the Congo, Eritrea, Haiti, Iran, Iraq, Lebanon, Libya, Malaysia, Mali, North Korea (Democratic People's Republic of Korea), Russia, Somalia, Sudan, South Sudan, Syria, Ukraine (including Crimea, Donetsk, and Luhansk Regions), the United States, Venezuela, and Yemen. For more information, please check out our FAQs.
Compliance Disclosure：The website can be accessed globally and is not specific to any entity. Your actual rights and obligations will be determined based on the entity and jurisdiction that you choose to be regulated.There may be local laws and regulations which prohibit or limit your rights to access, download, distribute, disseminate, share or otherwise use any or all of the documents and information published on this website.
Risk Warning: Trading Contracts for Difference (CFDs) are complex financial instruments and come with a high risk of losing money rapidly due to leverage. Trade on margin carries a high level of risk and may not be suitable for all investors. Before deciding to trade Forex and CFDs, you should carefully consider your trading objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial trading capital. We recommend that you seek independent advice and ensure you fully understand the risks involved before making any investment decision. Please read the relevant risk disclosure statements carefully before trading.
EBC Financial Group is a co-brand shared by a group of entities including:
EBC Financial Group (SVG) LLC is authorized by the St.Vincent and the Grenadines Financial Services Authority(SVGFSA),and the company registration number is 353 LLC 2020. with registered address at Euro House, Richmond Hill Road, Kingstown, VC0100, St. Vincent and the Grenadines.
Other Relevant Entities
EBC Financial Group (UK) Limited is authorised and regulated by the Financial Conduct Authority. Reference Number: 927552. Website: www.ebcfin.co.uk
EBC Financial Group (Australia) Pty Ltd (ACN: 619 073 237) is authorised and regulated by the Australian Securities and Investments Commission (Number: 500991). EBC Financial Group (Australia) Pty Ltd is a related entity of EBC Financial Group (SVG) LLC. The two entities are managed separately. The financial products and services offered on this website are NOT provided by the Australian entity and no recourse against the Australian entity is available.
EBC Financial Group (Cayman) Limited is licensed and regulated by the Cayman Islands Monetary Authority (Number: 2038223). Website: www.ebcgroup.ky
Business Address: The Leadenhall Building, 122 Leadenhall Street, London, United Kingdom, EC3V 4AB. Email Address : [email protected]. Telephone : +44 20 3376 9662
Disclaimer: EBC Financial Group explicitly does not participate in any cryptocurrency activities or offer Crypto Contracts for Difference (CFDs). Our financial services solely pertain to traditional instruments. Clients are advised that any references to crypto-related services using the EBC name are inaccurate and unauthorized. Any reference to past performance is not indicative of future performance. The information contained in this website is provided for reference only and does not constitute any investment advice.
Regional Restrictions: EBC does not offer any services to citizens and residents of certain jurisdictions including: Afghanistan, Belarus, Burma (Myanmar), Canada, Central African Republic, Congo, Cuba, Democratic Republic of the Congo, Eritrea, Haiti, Iran, Iraq, Lebanon, Libya, Malaysia, Mali, North Korea (Democratic People's Republic of Korea), Russia, Somalia, Sudan, South Sudan, Syria, Ukraine (including Crimea, Donetsk, and Luhansk Regions), the United States, Venezuela, and Yemen. For more information, please check out our FAQs.
Compliance Disclosure：The website can be accessed globally and is not specific to any entity. Your actual rights and obligations will be determined based on the entity and jurisdiction that you choose to be regulated.There may be local laws and regulations which prohibit or limit your rights to access, download, distribute, disseminate, share or otherwise use any or all of the documents and information published on this website.
Risk Warning: Trading Contracts for Difference (CFDs) are complex financial instruments and come with a high risk of losing money rapidly due to leverage. Trade on margin carries a high level of risk and may not be suitable for all investors. Before deciding to trade Forex and CFDs, you should carefully consider your trading objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial trading capital. We recommend that you seek independent advice and ensure you fully understand the risks involved before making any investment decision. Please read the relevant risk disclosure statements carefully before trading.
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