/10/07 · The negative balance may occur with any broker. This is due to Price Gaps and no matter it's the stock market or forex or CFD. What matters is that the negative balance will not protect you no stop loss or stop out. Smart trader should read the public offer with the broker. Usually it says that the trader can lose no more than the size of his However, there are forex brokers that hold you responsible for the negative balance and will require you to deposit more money to cover it. In case you agree to such contract, you can not only lose all of the money in your account, but also end up owning money much greater than your initial deposit He or she can, however, also make a large, leveraged loss, again far more than the payment on a margin which started the trade. This is why you can lose more money than you deposit when you enter a CFD trade and you must always bear in mind the potential risk and take whatever steps are possible to protect your position
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It only takes a minute to sign up. Connect and share knowledge within a single location that is structured and easy to search. My question would be simple: if I mess something up in online Forex really badly, can I lose more money than I deposited? lose my house, gain a debt. If you don't use leverage you can't lose more than you invested because you "play" with your own money.
But even with forex lose more than deposit when you reach a certain limit maintenance margin you will receive a margin call from your broker to add more funds to your account. At least, this is valid for assets like stocks and derivatives. Hope it helps! It's the same as with equities. If you're just buying foreign currencies to hold, you can't lose more than you invest.
But if you're buying derivatives e, forex lose more than deposit. forward contracts or spread betsor borrowing to buy on margin, you can certainly lose more than you invest. FX is often purchased with leverage by both retail and wholesale speculators on the assumption daily movements are typically more restrained than a number of other asset classes. When volatility picks up unexpectedly these leveraged accounts can absolutely be wiped out. While these events are relatively rare, one happened as recently as when the Swiss National Bank unleashed the Swiss Franc from its Euro mooring.
Contrary to what other people said I believe that even without leverage you can lose more that you invest when you short a FX.
because the amount it can go down is alwasy limited to zero but it can, potentially, go up without limit. See This question for a mored detailed information. Sign up to join this community. The best answers are voted up and rise to the top. Stack Overflow for Teams — Collaborate and share knowledge with a private group. Create a free Team What is Teams? Learn more. Can I lose more on Forex than I deposit?
Ask Question. Asked 3 years, 11 months ago. Active 3 years, 6 months ago. Viewed 12k times. Improve this question. asked May 16 '17 at Peter Peter 1 1 gold badge 1 1 silver badge 6 6 bronze badges. please see my edit — geo May 16 '17 at It is good of you to understand that Forex "investing" is all about losing money.
May 16 '17 at Indeed, Forex is much more difficult. But why do you believe that you can only lose money. Sure it's difficult, but there are other investing options that are complicated as well. Its speculation and timing. Could you get lucky and make money on a few trades?
Eventually, however, the whole "house of cards" will come crashing down. You are better off sticking money in an index fund and watching it grow. It isn't really complicated at all. Concentrate on earning through wages, and investing a portion of it, forex lose more than deposit.
geo Like gold and other non-revenue earning "investments", Forex forex lose more than deposit a zero-sum game, and that only if you ignore trading costs, forex lose more than deposit. Add a comment. Active Oldest Votes. Improve this answer.
edited May 17 '17 at answered May 16 '17 at geo geo 1 1 silver badge 6 6 bronze badges, forex lose more than deposit. The margin call and asset liquidation are not perfect protection.
If for whatever reason it is impossible to liquidate the asset to repay the margin loan, the broker definitely will attempt to collect the losses from the investor. If somebody living in the USA opens a bank account in GPB and deposits pounds worth USD, and the exchange rate then moves so they are only worth USD, that person has lost USD, however you look at the situation.
Of course most Forex investors or traders invest on margin, which is presumably what the OP is asking about. This forex lose more than deposit be "can't lose anything more than you invest" — not store bought dirt May 16 '17 at Yeap, I edited it to be more clear, forex lose more than deposit. Thanks for the detail. Mike Scott Mike Scott since it's the same as with equities, then shouldn't he receive a margin call to add funds or liquidate some of the assets?
I don't think that he can lose his home or something I'm not an expert though geo Sure, but margin calls are not guarantees. In a rapidly moving market, such as a stock market crash, you can build up a big debt before you or your broker can liquidate your position. When a price goes from 40 to 20, it doesn't always hit 30 on the way.
geo Generally margin calls are received and positions are liquidated if margin is not met. However quite often the rates move so fast that even after margin call and liquidating assets, there is still debt so one has to pump in additional funds. Dheer I think there might be something all these answers are overlooking. My reading of certain Forex literature suggests one isn't really trading in real currency at all, as there are no interest rates being charged or credited in the currency being held or borrowed.
As such, my read could be wrong! is that this is more like a CFD thing where you are contractually limited in how much you can make or lose. Am I off the mark here? Peacock Peacock 2 2 silver badges 5 5 bronze badges. answered May 17 '17 at borjab borjab 1 1 silver badge 6 6 bronze badges. A short is a derivative, which was included in my answer.
In ordinary Forex you can put SELL orders and you may not feel like working with a derivate at all. In fact a BUY in one currency is a SELL in other. It all depends on the currency that your account currency. The Overflow Blog. Featured on Meta. New onboarding for review queues. Related 7. Hot Network Questions. Question feed. Accept all forex lose more than deposit Customize settings.
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/01/22 · The same goes for forex: controlling leverage for sensitive currencies could prevent reaching negative balances. And circling back to the headline: forex traders should not lose more than they deposit. What’s in it for the broker? A potential client would prefer to open an account where he knows he cannot lose more than he deposited /10/07 · The negative balance may occur with any broker. This is due to Price Gaps and no matter it's the stock market or forex or CFD. What matters is that the negative balance will not protect you no stop loss or stop out. Smart trader should read the public offer with the broker. Usually it says that the trader can lose no more than the size of his /01/06 · Risk Warning: Trading CFDs is a high risk activity and you may lose more than your initial deposit. You should never invest money that you cannot afford to lose