forex leverage under the microscope!?

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.

Ive been told that the Forex (retail) market has a success rate of about 5%.

Being a super careful soul I used a practice account for nearly a year and learned why. It was a 50k account and I didn't worry too much about margins.

After a while I started to work under the assumption that I only had 2k of capital. I got a lot more careful.

Then opened a live account with 2k. Three months on and I'm breaking even. Never expected to learn this stuff quickly but I believe I am still learning. Never leveraged more than 10x by the way because my aim was to gain experience, not make money.....that comes later.

I'm not sure that limiting leverage will achieve much. There are those that will jump in and expect to make money fast and get blown out fast. Some will use money they need for other things. That's their choice.

My worry is the nature of some of the advertising that suggests you can make it in Forex with a starting fund of 250 dollars. You can of course but you can also win the lottery and the chances are about even.

If the various government bodies are truly concerned about people throwing their money away then Id rather see a requirement that says you have to be certified as competant to play the market.

A few months accounts from a practice account perhaps?