With an increasing number of traders recognising the opportunities that can be found in forex trading, knowing how you can do more with your available capital becomes even more important. After all, you might already have the knowledge and confidence in your trading ability, but still be limited by the capital you have to truly find success. That is why trading with a broker like PU Prime can break down some of these barriers.
There are several ways to bring your capital further, the first and most common way offered by CFD brokers is leverage.
What is Leverage?
Leverage is a feature offered by brokers that allows traders to amplify their potential returns, but it also increases the potential for both gains and losses. Leverage is often represented as a ratio, such as 10:1, 100:1, or 500:1. This ratio indicates how much larger your trading position can be compared to the amount of capital you have in your trading account. For example, with a 100:1 leverage ratio, you can control a position that is 100 times larger than your capital used.
When you open a leveraged CFD trade, you are required to deposit a fraction of the total position value as collateral. This is called the “margin requirement.” The amount of margin you need to deposit is a percentage of the total position size, which is effectively a “good faith” amount for using the leverage service.
Leverage is important because it allows you to take on the large positions needed to trade forex and commodities. A standard lot size of 100,000 in forex would just require 200 in account currency to open. However, it is important to note that leverage both amplifies potential gains and potential losses, making it a double-edged sword.
Trading with a deposit bonus
The other way that you can take your capital further is with a deposit bonus. A deposit bonus provided by Forex brokers is an incentive given by certain Forex brokerage firms to encourage new customers or to reward existing ones. Normally, this kind of promotion involves the broker matching a certain percentage of new deposits in trading credits.
Trading credits function similarly to capital, meaning that they can be used to trade with but not withdrawn. However, any profits made from trading using credits can usually be withdrawn.
What Are The Benefits Of Trading Credits?
For traders, the first obvious benefit is you effectively have more trading capital! This translates to the ability to initiate a greater number of trades or larger positions, and thereby, potentially achieving higher profits, all without incurring added expenses or leveraging. As an illustration, utilizing PU Prime’s 50% Deposit Bonus, a mere $1000 deposit can grant you a total tradable capital of $1500.
To provide context, this implies that your available margin increases by 50%, enabling you to open trades worth 1.5 times the total value (in notional terms) compared to what would have been possible without the deposit bonus. As a result, your profits also grow by 1.5 times, all without increasing your risk. Your risked amount remains at $1000 even though you are trading with a capital of $1500.
Promotions like these, coupled with the low trading costs, a highly-regulated environment, and fast and easy withdrawals are just some of the reasons why it’s great to trade with leading CFD broker PU Prime.
Trade with PU Prime to experience 24-hour support, cutting-edge execution technology, and most importantly, a broker that truly cares about its customers.
Idowu Dayo Oloyede, PU Prime’s country director for Nigeria, will be sharing about wealth creation and management through the global financial markets in two upcoming seminars at the following times and locations:
10:30am, September 2nd event is in Abuja.
Work and Connect event hall, 50 Ebitu Ukiwe street, Jabi, Abuja.
10:30am, 23rd September Lagos event:
Watercress Hotels, 48 Oritshe Street, Off Balogun St, Allen, Ikeja, Lagos
To register attendance, send “puprime” to 0806 173 9229