Forex Trading Risk
2009
Forex trading risk for investing?
Ok I want to start trading on forex (small ammounts to start) and I started researching (for some time now) about how it works and I have tried various practice accounts (with great success).
But I have one question in particular. Ok lets say for example Im trading with a mini account and lets say i I invest, we will say $300 USD. Ok so if for example I Trade EUR/USD at x100 I am theoretically trading borrowed money at a factor of up to 100 times the 300 i initially invested. So my question is lets say the market drops drastically for some unexplained reason and i loose big time to where I loose all of the 300 I orriginally invested. Is it possible for me to loose more than the 300 I invested (to where I have to pay for the difference)
I know that most companies (if not all) have some sort of limit to where they automattically close the account. I just want get this cleared up in my head. I realy want to start trading but I want to know all I possibly can before I even start.
It depends on the platform and software you use.
I use Trade Fare, and on mine if I invest £100 and the market goes the other way it will use up my £100 original stake and whatever is in my balance, in accordance to the amount originally bet. But if you don’t have anything in your account balance or you lose it all, they won’t debit your account for money not there and you won’t get into the minus.
But let’s say you have £10.000 in your account your probably not going to run into trouble if you bet small amounts or keep to the suggested amount of 5% of your total.
The reason they do this is so they can make money from people and so it falls into the betting category. The upside for us is that if you buy and then the market falls you can (if you have enough in your balance) ride it out until it goes your way.
So basically, if you bet £100 and it falls below that, you will of lost your money, but no more, unless you have some in your balance.
I would beyond all reasonable doubt suggest you use demo accounts for a long time. Even if you seem to be on a lucky streak, ride it out until you can without any doubt prove to yourself that you are making the right decisions based on plausible information.
Apparently the average amount transfered into a Forex account is $40.000 and 60% of people lose all their money in the first month.
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