Hi all,
First off, I apologise if this has been asked before.
I am completely new to forex trading. I have been using the practice account at FXTrade (Oanda) and was wondering if you end up being negative, how do Oanda (or other brokers to be fair) deal with it? Are they quite aggressive in their manner in recovering their money or can they be quite negotiable?
Thanks in advance.
No experience I have. If you need to make sure about their reviews please go in FPA. Hopefully will get the result you want.
How do you end up being negative ?
Yes, I am also interested to know more about this issue!
Hi @mowareking and @LauChoKun,
FOREX.com’s 100% margin requirement and real-time margin system are designed to limit your trading losses and help ensure that total losses never exceed your total account balance, but you do risk incurring losses greater than your account balance, especially during periods of extreme market volatility. While it is not our policy to hold clients responsible for modest negative balances, we do reserve the right to hold clients responsible for large debit balances and when special circumstances apply.
We can’t speak for other brokers.
Hi @A1lenTrader
The leveraged nature of forex trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you.
For example, US regulations allow forex traders to use up to 50:1 leverage. If you use the full 50:1 leverage available to you, then it would only take a 2% move against you in the market price to deplete all the money you have in your account for margin. In normal market conditions, margin trading systems are designed to close out your trades if you can no longer meet the margin requirements. However, during periods of extreme market volatility or a weekend gap, there is a risk the market could gap in price more than 2% before the system can close your trade which could result in a loss greater than your account balance.
It’s important to note that even you have 50:1 leverage (or more outside the US) available to you, that does not mean you have to use it all. Using the maximum leverage available to you is like driving your car at its top speed on a public street. Using less leverage, gives you more margin for error. For example, if you use 10:1 leverage, it would take a 10% market move against your trade to deplete your account. If you use 5:1 leverage, it would take a 20% market move against your trade to deplete your account.
If you use 5:1 leverage, that would mean trading 5K in the market for every 1K in your account balance.
I KNOW THAT
ThOUGHT the poster “mowareking” had negative somehow, was asking how that was ?