http://www.finra.org/Industry/Regula...s/2009/P117744
Any comments, just picked this up in a broker discussion.
"For example, if an investor wishes to purchase $1million worth of a
foreign currency offered with a 100 to 1 leverage, the investor would only need a good
faith deposit of $10,000. If the investor deposits only theminimumfunds required, and
if the value of the foreign currency contract dropped by 1 percent (to $990,000), the
account equity would be depleted entirely and the investor’s position would be closed
out. The investor would lose the entire $10,000 deposit. In the retail forexmarket, there
is neither anymargin call nor any notice for an investor to deposit additional funds to
maintain his or her position. As a result, even small intra-day swings in currency rates
have the potential to close out investors on either side of themarket."
LOL.. I wonder who's fault that is! blame the broker and its leverage!
"Moreover, limiting the leverage ratios is intended
to reduce the risks of excessive speculation."
and making any money.
Any comments, just picked this up in a broker discussion.
"For example, if an investor wishes to purchase $1million worth of a
foreign currency offered with a 100 to 1 leverage, the investor would only need a good
faith deposit of $10,000. If the investor deposits only theminimumfunds required, and
if the value of the foreign currency contract dropped by 1 percent (to $990,000), the
account equity would be depleted entirely and the investor’s position would be closed
out. The investor would lose the entire $10,000 deposit. In the retail forexmarket, there
is neither anymargin call nor any notice for an investor to deposit additional funds to
maintain his or her position. As a result, even small intra-day swings in currency rates
have the potential to close out investors on either side of themarket."
LOL.. I wonder who's fault that is! blame the broker and its leverage!
"Moreover, limiting the leverage ratios is intended
to reduce the risks of excessive speculation."
and making any money.
lowest draw down possible please.