Time to revise this article – after I change my broker
1000: 1 forex leverage spotted!
Who wants to do the math for this question “Can I become millionaire in 1 month with $10k forex trading capital?” because the story obviously needs a new revision. A forex broker is now offering 1000:1 forex leverage. I kid you not. See below. Screen grab made 30 minutes ago.
High forex leverage magnifies risk
Before I jump, you jump everybody jump, I hope ‘Alpari UK’, ‘FXCM’ rings a bell.
No? How about ‘SNB’? Add them together and this is the biggest story of January 2015.
Drew Niv was looking for action. Then action came looking for him.
While in his 30s, Niv built his young brokerage, FXCM Inc., into a money machine by turning the global foreign-exchange market into a playground for day-traders.
But by early 2014, his hot hand had gone cold. Niv’s customers — small-timers who usually lost money while FXCM was busy making it — were looking for thrills elsewhere. Currencies seemed boring.
So from his 50th-floor office just south of Wall Street, Niv, now 41, held out a solution. FXCM could help customers capitalize on minuscule currency moves with a powerful financial tool: leverage.
Well, the big move just arrived, via Zurich. The Swiss central bank’s decision to let its national currency float freely against the euro has blown a $225-million hole in FXCM and left Niv, its chief executive, struggling to contain the damage. Turns out, the leverage he’d warned of just eight months ago magnified his customers’ bets by as much as 200-to-1.
Kaboom! Can make it or not is one thing, if you succeed, can you collect if your broker don’t make it.
I strongly discourage this kind of leverage and I have written about it here. So before we forget about the SNB-lesson and the likes of Alpari UK and FXCM, let me refresh your memory. Oh one other thing, Saxo was not the only forex broker in Singapore that asked for client to make good negative equities.
Articles for your reading
- Super traders meet forex leverage: become millionaire or a wipe out
- SNB surprises, CHF blasts away, freezes then gaps
- Can I have a bad fill for my stop loss after SNB announcement?
- Requotes, negative balances and trading risk
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.