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Leverage is not a bad word
By Mandy Ong  •  April 9, 2009
[caption id="attachment_2221" align="alignright" width="192" caption="Photo by Robert Couse-Baker"]Photo by Robert Couse-Baker[/caption] The scientific defination of leverage is the use of a smaller energy force to move an object of a greater energy force. Since the age of cavemen, the use of leverage in the form of simple tools has made the lives of mankind much easier. Yet, in the financial markets, leverage is associated with high risk and investors often shunned leveraged products. The recent volatility in the markets also had many investors pointing their fingers at leveraged traders cutting losses to meet margin calls. Indeed it is true that leverage trading carries a certain level of risk. With the investor only putting up a percentage of the total contract value, he runs the risk of losing his entire investment and more. For example, to trade 1 lot of Emini S&P at price 800, the contract value is Usd40,000 (usd50 x800pts), but the investor only has to have Usd 5000 to initiate a position. If the contracts falls by 100pts, the contract value drops by 12.5%, but the investors loses 100% of the amount he invested. Read more...
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By Mandy Ong
Mandy Ong started out as Futures Broker with a SGX clearing member firm in year 2000, handling institutional and retail clients. In year 2003, she became a commission-based Broker, servicing her own clients. During this time, Mandy found that many retail investors are not familiar with trading futures due to the lack of education and proper information, and the futures trading courses that are available are very over-priced and over-sold. Many investors often part with their hard earned money investing in something they do not fully understand. Therefore, she quit broking in Sept 2008 to devote more time to educating the public on Futures Trading. The main objective of The MidnightStar is to introduce investors to Futures Trading and help you understand what trading is all about before plunging into the markets. The website will give you market updates, information and news to help you in your trading. If you are new to Futures and need more help, we have courses to help equip you with the skills and knowledge required for successful trading. As an ex-broker, Mandy will also share with you the secrets of successful traders, what they do right where others have failed.
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