For a long time I ignored FOREX trading – choosing to trade the futures contracts for currencies. I have changed my mine and now prefer FOREX. There are several reasons, but the most important just might be the scalability of the trade. When you trade a futures contract the amount of the trade is fixed – and so is the margin. With FOREX the margin is fixed – but as a ratio to the amount of the trade. A typical amount to trade is $100,000.00 and the margin required is about $2,000.00. But in FOREX you can trade a much smaller amount – say $25,000 and the margin is about $500.00. This is great for beginners – and is handy for experienced traders as well. We often will enter a trade and if it goes our way with a strong trend – add another tranche or two as the trade progresses. We have also been known to add a tranche when the market moved against our trade temporarily – thereby averaging down our entry price – but this must be done with extreme care and confidence in your analysis system.

 

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