IQ Option just announced the upcoming release of margin trading on the IQ Option platform. It is a major update. Traders will be able to trade through lot sizes and enhance their trading potential with margin.
According to the announcement the new trading instrument will soon be available on the desktop, web browser, and Android applications. This is an expected trading feature for any major trading platform.
What is margin trading?
If you’re unfamiliar with the term “margin,” it’s simply collateral for a financial instrument. The purpose of margin is to cover credit risk. Using collateral to cover the credit risk of trade helps the investor keep more of the profits. However, you should remember that this practice requires some knowledge of the financial market.
Essentially, margin trading means that you borrow money from the brokerage firm before purchasing stocks or other investments. This allows you to take on larger positions and earn larger profits. Unlike regular cash accounts, a margin account has strict requirements and may not be suitable for every investor. As a result, it’s crucial to learn more about it before you start.
The amount of leverage you can use is determined by your account size and the amount of your overall maintenance margin. This amount of money must be used to cover the risks of your trade. When you borrow from a brokerage firm, you risk incurring losses if you don’t manage your account properly. Moreover, your brokerage firm may liquidate your shares or contracts to cover your outstanding balance.
A margin account is a popular way of trading stocks. Using this method, you can earn massive gains even if you only have a small amount of capital. However, the risks associated with using a margin account are significant. For that reason, it’s important to keep an eye on your trading activities and use automatic stop orders.