I have a few questions about forex brokers. I've tried a couple of demo accoutns but still am not set on one. Are there forex brokers out there that will not allow you to lose more money that you originally invested? I'm just afraid that I'll end up losing more than I originally invested, its a big concern for me. Also I am not planning to invest much money (<$1000) as well as being in Canada, any suggestions for brokers that are good for someone in my situation? (I have looked into Oanda, although I like almost everything about them, their charting system lacks quite a bit)
You won't be able to lose more than you invested. If you drop below your Margin requirement the broker will automatically close your position. I've only used FXCM, but am not very happy with them, so I can't really comment on other brokers. Hope this helps.
Try a demo with FXCM.com .....Your position will be closed out when you run out of UNUSED MARGIN or your STOP is hit. A Forex account is different than an equity account when it comes to maximum loss on open positions. Account with $1000 on deposit: * Max loss on a $100.00 (20k lot @ 200:1 leverage) forex position is $900.00 without a STOP. * Max loss on a $900.00 (180k lot @ 200:1 leverage) forex position is $100.00 without a STOP. * Max loss on a $100.00 equity/option position is $100.00 without STOPS * Max loss on a $900.00 equity/option position is $900.00 without STOPS.
right... There would be no way you could lose more than you invest since how would they get the money from you? You would have to send them a check or the broker would have to directly debit it out of your checking or savings account, and I've never given out any bank account info to any broker. I would start out with a demo account and practice with that first, then once you feel comfortable, open up a 10k account and trade with small lots until you are profitable. Another thing, place your stops at a reasonable area. In Forex, it seems as though you have to place a stop at least 50 pips or greater.
Where is the client agreement does it say that??? Though I agree it was be hard for FXCM to squeeze the money out of you, unless you have another account with them. But didn't FXCM get fine for make such things as guaranteed stop losses. Isn't the 2% below equity the ultimate stop loss? What happens if the market gaps like it sometime does? Will FXCM take the loss? Doubt it, especially if it is rather large. But for the most of us, FXCM may take the loss on an location just so they appear that you can't loose more than your principle. BTW, I don't mean to be ragging on FXCM. I trade with them myself But in the FOREX market, the only thing the dealer seems to be really able to guarantee is that you could loose your shirt. If someone is really afraid of the market flux, and what to have some insurance from loosing more than your principle, form a LLC. They are pretty easy to do, but it my state, it will cost you $120 a year to maintain at the very least.
50 pips or greater? Are you serious? I'm an FX newb, and I get away with much less than that, but I'm paying attention to time&sales and market depth to see how much of a "noise band" there is. I generally like to enter trades with momentum on my side in the FX market to minimize noise triggering stops.
What if you fund your account with a credit card? I wonder what would happen? I think the only way your account would go negative if you held a position open over the weekend and there was a 80 pip gap opening against you (like on the EUR/USD a few months ago). If your total account balance can't cover that 80 pips then you would have a negative balance, and any stops would be missed.