Forex encyclopedia

Margin trading is a trading with borrowed funds. The idea of such a trading is to borrow money from a broker and trade with funds greatly exceeding trader’s own. This pledge is called margin. Margin funds are measured by the currency of deposit (for instance, US dollar). Margin depends on liquidity of a trading instrument (products). The essential part of the margin trading mechanism is to provide a leverage. To calculate margin-based leverage, divide the margin amount by the total value of a transaction. For example, the ratio 1:100 shows that in order you can trade, the balance of your trading account have to be 100 times less than the value of a transaction.
Popular article: Equidistant Channel
Equidistant Channel represents two parallel trend lines, which serve as support and resistance lines for the price. Basically it is inclined trading range with the lines connecting highest and lowest prices. Prevailing tendency is defined by a trader. If trend is upward, the line should be built along two lowest points (bottom – bottom). In case of downward trend, the line is built along two highest points (top - top) Parallel line is built as distant as possible from the trend line. The result will be equidistant channel within the borders of which fluctuation of currency rate takes place.
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