Important DEBT RISK qs about LEVERAGE! (No one seems to explain this...)

Hai guys.

I just started reading into currency markets and trading in them (Haven’t started actually trading yet - because of these two questions below).

And I have a SERIOUSLY important question which I can’t seem to find the answer to ANYWHERE!

If you take a high leveraged um borrowing? Or you borrow on the high leverage offered - say 100:1 - BUT then - you lose ALL the money borrowed.

First off - is that possible? TO lose ALL the borrowed money? Because from what I’ve read, it sounds like the online broker stops you from losing your money up to the point of your capital? Or something similar?

My BIGGEST question though: [B]Can you, from entering a 100:1 position in the market, end up in say a $100,000 debt TO your online broker, from that $1000 initial capital? (Assume all of it was used? And the market took a MASSIVE dive in like 1 second). [/B]

Sorry for being a major noob. But … it sounds scary LOL I’m not sure why so many people would ever take high leverage if you can go into debt for the full loss amount? So that’s my question. :slight_smile:

… please don’t flame me for my ignorance. lol. :frowning:

first you will never lose more money that the one you have in your broker account, because your broker will close the trade for you when you hit the margin call.

second if you buy, for egsample, 100K eur usd the only way of losing 100K is the euro central bank complete colapse and the euro become cost 0$

third open a demo account and pctice for free… the same conditions that you have on the demo account is the same as in a live account. [B][U]DON´T OPEN A LIVE ACCOUNT UNTIL YOU HAVE A LOT OF PRACTICE ON DEMO[/U][/B]

is better lose virtual money than real money:D

good luck, and hope you´ll be succed

You need to check your broker’s specs on this. Some guarantee you will never lose more than what’s in your account. Some do not. That means you could lose more than your initial account balance. It is unlikely because you will get a margin call (and forced exit) in all but the most extreme of cases well before you go bust.

DON´T OPEN A LIVE ACCOUNT UNTIL YOU HAVE A LOT OF PRACTICE ON DEMO.
Correct, but.

Crashing a car whilst playing a video game doesn’t hurt. Crashing a car in real life does!!!

so you think he should open a live account before he understand the basics?:confused:

No and yes.
No because most people lose first time out.
Yes because there is no substitute for live trading, emotionally speaking.
Most people can’t trade a demo account with the same emotions as a live account. I couldn’t.
Yes he will lose money, well probably. Consider it tuition fees.