Leverage
There are not a lot of banks or people who would lend you money so that you
can use it to trade shares. And if there are, it would be very hard for you to
convince them to invest in you and in your idea that a certain share is going to
go up or down. Therefore, most of the time, if you have a $10,000 account, you
can only really afford to buy $10,000 worth of stocks.
In currency trading however, because you use 'borrowed money', you can trade
$10,000 of a currency and you only need anywhere between fifty (For a margin
lending ratio of 200:1) to two hundred dollars ( For a margin lending ratio of
50:1) in your trading account. This makes it possible for an average trader with
a small trading account, under $10,000 to be able to profit sufficiently from
the movements of the currency exchange rates. This concept is explained further
in The Part-Time Currency Trader.
