Leverage and Margin in Forex Trading

Exporters hedge against depreciation

Retail traders use expert advisors (EAs)

Put option gives right to sell currency

Borrow low-yield currency, buy high-yield

Popular futures: CME Group offerings

Positive rollover earns interest income

The most common retail Forex transaction

Forward rates reflect interest differentials

Spot trades settle in two business days

Algorithms execute trades automatically

Options hedge with limited downside

Negative rollover costs interest expense

Agree on exchange rate for future date

Speed advantage in HFT strategies

Currency swap exchanges both principal and coupons

Currency Quotes