The main point of work on Forex market is settlement of sale-purchase operations of foreign exchange contracts with the aim to get a profit due to change of currency exchange rates in time. Foreign exchange contract trading on Forex market is based on principles of margin trading and are carried put through Market-Makers, which sell and purchase (quote) foreign currencies for prices, reflecting market state for the current moment. Here is the essence ofmargin trading: market participant (trader, investor) by lodging his margin money resources to a broker’s deposit is permitted to manage broker’s directed credit (leverage), which is granted on this collateral and is 10-200 times more than the amount committed. However, conditions of work with a broker don’t allow suffering losses, which would exceed the committed sum.
During margin trading each operation necessarily has two stages: purchase (sale) of foreign currency at one price, and then necessary sale (purchase) of it at the other price (or at the same price). First action is called opening of a position, and the second closing of a position. During position opening there is no real delivery of foreign currency, and a participant, who opened a position, contributes insurance deposit, which becomes a guarantee of compensation of possible losses. After closing of a position the insurance deposit is returned, and a settlement of profit or losses is made, which are usually equivalent to the amount of insurance deposit. Besides the deposit is often one hundred times less than the sum, which is given to the participant to use for this trading operation.