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By offering high leverage, the market maker encourages traders to trade extremely large positions. This increases the trading volume cleared by the market maker and increases his profits, but increases the risk that the trader will receive a margin call. While professional currency dealers (banks, hedge funds) never use more than 10:1 leverage, retail clients are generally offered leverage between 50:1 and 200:1[2].
A self-regulating body for the foreign exchange market, the National Futures Association warns traders in a forex training presentation of the risk in trading currency. “As stated at the beginning of this program, off-exchange foreign currency trading carries a high level of risk and may not be suitable for all customers. The only funds that should ever be used to speculate in foreign currency trading, or any type of highly speculative investment, are funds that represent risk capital; in other words, funds you can afford to lose without affecting your financial situation.“ [17]
Dan,Today is my biggest one-day gain
almost 6 figures gain. Thanks for your wisdom. When some people in the chat room today felt the market might sell off after the Fed announcement, but you said judging by the way BIDU was breaking out today, you did not feel the market would sell off. I had a lot of calls of GS, BSC, MA & some stocks such as BIDU, etc. What you said stopped me from selling any before the Fed announcement. What you said came from your many years of experience. Can't find it in any books or from "financial experts". You are the best. By the way, I’ve been to your seminar 3 times & been a subscriber for many years, Still learning.Tony
