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  #1  
Old 01-20-2009, 05:25 AM
frati frati is offline
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Default Debt

Can we get a debt by trading in FOREX? What is actually the worse case scenario in trading with FOREX?
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  #2  
Old 01-20-2009, 05:41 AM
AllenFX AllenFX is offline
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The worse case scenario in trading FOREX is to lose all your deposited money
at your broker!
For example if you deposit $1.000 you cannot lose more than a $1.000

Hope this help you!
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  #3  
Old 01-20-2009, 05:41 AM
Anton Anton is offline
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Quote:
Originally Posted by frati View Post
Can we get a debt by trading in FOREX? What is actually the worse case scenario in trading with FOREX?
No, you cannot.
The worst scenario is when you lose all your capital. When your equity is too close to zero, your broker automatically closes all your open positions, and you cannot trade any more. You cannot get into debt with the broker.
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Old 01-20-2009, 07:10 AM
Almandine Almandine is offline
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Question

I found this on the NFA website:
'You could lose more money than you initially invest. You will be required to deposit an amount of money (often referred to as "margin") with your forex dealer in order to buy or sell an off-exchange forex contract. Only a relatively small amount of money can enable you to hold a forex position for much more than the account value. This is referred to leverage or gearing. The smaller the deposit in relation to the underlying value of the contract, the greater the leverage.

If the price moves in an unfavorable direction, high leverage can produce large losses in relation to your initial deposit. In fact, even a small move against your position may result in a large loss, including the loss of your entire initial deposit and the liability for additional losses.'

http://www.nfa.futures.org/complianc...estorAlert.asp
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Old 01-20-2009, 03:29 PM
frati frati is offline
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Quote:
Originally Posted by Almandine View Post
I found this on the NFA website:
'You could lose more money than you initially invest. You will be required to deposit an amount of money (often referred to as "margin") with your forex dealer in order to buy or sell an off-exchange forex contract. Only a relatively small amount of money can enable you to hold a forex position for much more than the account value. This is referred to leverage or gearing. The smaller the deposit in relation to the underlying value of the contract, the greater the leverage.

If the price moves in an unfavorable direction, high leverage can produce large losses in relation to your initial deposit. In fact, even a small move against your position may result in a large loss, including the loss of your entire initial deposit and the liability for additional losses.'

http://www.nfa.futures.org/complianc...estorAlert.asp
Does that mean we can be in debt, i mean in serious trouble...how bad could it get?
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Old 01-22-2009, 01:57 PM
JasonSTX JasonSTX is offline
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I wonder how that works when working with a MM or dealing desk. If you trade in smaller lot sizes, the broker is taking the opposite position.

I think the only real issue comes when the price drastically swings and your stop loss gets blown away. You could be out more money than you started with.
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Old 01-22-2009, 02:43 PM
Craig BC Craig BC is offline
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Quote:
Originally Posted by frati View Post
Does that mean we can be in debt, i mean in serious trouble...how bad could it get?
I asked FXDD this same question, and they said yes, you can be in debt.
It can happen when you have the price spike against you and they don't have time for a margin call. Usually they will call in the trades before it hits that point, but if it happens too quickly they can't. And you could end up in debt
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Old 01-22-2009, 03:24 PM
donnaforex donnaforex is offline
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I've personally had this happen to me on a couple of very small accounts i was running at very high risk (not fapturbo).

It shouldn't be a concern if you are using reasonable levels of risk, especially not if you are not holding trades over the weekend (i.e. just using FAPT scalper). Any LRR of 40 or under shouldn't cause you any problems, even in extreme situations.

Some brokers GUARANTEE that you will not lose more than you deposit- you should check with your broker. The majority you can get into debt with though.
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Old 01-25-2009, 05:09 AM
Johno Johno is offline
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Quote:
Originally Posted by donnaforex View Post
I've personally had this happen to me on a couple of very small accounts i was running at very high risk (not fapturbo).

It shouldn't be a concern if you are using reasonable levels of risk, especially not if you are not holding trades over the weekend (i.e. just using FAPT scalper). Any LRR of 40 or under shouldn't cause you any problems, even in extreme situations.

Some brokers GUARANTEE that you will not lose more than you deposit- you should check with your broker. The majority you can get into debt with though.
An LRR of 40 on eurgbp will lose you 50% of your balance if it hits stop loss thats way to risky.
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Old 01-25-2009, 07:24 AM
donnaforex donnaforex is offline
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Of course it is too risky, but you will not end up in debt to your broker trading at this level- that was my point. Didn't mean it to be my endorsement of using such a LRR level, i was just trying to show the kind of extreme risk you would have to take to end up in debt to your broker. (try LRR 150!). Sorry for any misunderstanding.
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