Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

Interest definition

In finance, interest can have more than one definition. Firstly it refers to the charge levied against a party for borrowing money, which can be either a cost or a means of making profit for a trader. Secondly, it can mean the portion of a company’s stocks held by a particular shareholder.

Interest is an important concept for a trader, because many trades involve either lending or borrowing money. The amount of interest charged is usually given as a percentage of the amount borrowed, and called the interest rate. This applies to both private lenders and central banks, who lend to private banks. The rate at which central banks lend is often called the base rate.

When discussing the amount of equities in a company owned by a single stockholder, interest is usually also presented as a percentage. In this instance, a figure above 10% can be referred to as ‘significant interest’.

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