CFD's : increased leverage?

Discussion in 'Forex Brokers' started by mephistos, May 13, 2011.

  1. mephistos


    Hello everyone,

    I've started trading forex and commodities with a CFD broker.
    I've noticed the disavantages that everyone mentions everywhere (slow, delayed, not 100% reliable connections, price information manipulated by spreads, and so on).

    But there is an important advantage that I noticed as well wich brings some advantages specially for swing trading. The fact is that if a trade is generating profits these can be used as collateral (margin) for new positions, even before the trade is closed and the profits "locked in" , therefore incresing overall leverage.
    Now, I would like to ask if a regular FOREX or futures broker accept this kind of "collateral" for opening new positions as well or if you need always actual cash.

    If this question is non-sense (for any reason) don't take me wrong.
    I just started now trading these kind of leveraged products.:confused:
  2. Hi Pal,

    What will happens is that as your positions make income you will release more of your available margin (the collateral that you mention) for new trades.

    Still, as you open other positions with the AM, you get the risk of receiveing a margin call if your positions get bad.

    I hope this helps.