Are you mad borrowing money to trade Forex?

If you think I’m going to talk about borrowing money form a friend or taking a loan from a bank to trade Forex, you guessed wrong :)

Although, I’m glad you did think about the foolishness of borrowing money to trade Forex - no one should risk the money he can’t afford to lose!

In this topic, I’d like to talk about the other hidden way every trader borrows money from Forex brokers. It is done via leverage.

Just abstract yourself from the trading for a moment and think well about the next: Forex brokers lend you money to trade by leveraging your account, and they are so happy to do so… they must be looking like hungry monsters, waiting to eat you up on lunch… They know the lunch time will come soon :)

Forex brokers can leverage your initial investment as much as 400 times! This is mad. Even a 200 times leveraged account is serious! Well, may be there are 1 or 2 true genius out there who can take it as a beginner and instantly trade like a pro, but it’s not you and me.

Just think about it, you are accepting from a broker the money you don’t own, and you are putting them at risk, not a calculated risk, but, to some extent, an unknown risk,  such as the Forex currency market is. Is it wise?

Will you be broke soon or will you become a millionaire by risking it with the leveraged account? It depends: if you act silly and don’t learn about the leverage in Forex, you’re broke from the moment you accepted the leverage from your broker. Leverage not ONLY gives you the chance to profit MORE it gives you the same chance to lose MORE. If you don’t know how the leverage works, son’t squeal later that no one warned you.

If, however, you sort it out What and Why and Where the leverage helps you and hurts you, you can pull it out with ease, be it 40:1 or 400:1 leverage you start trading with.

** Forex Dark Lord **

Useful reading:
Forex leverage
Leverage and margin in Forex

5 Comments to this post

  1. Thank you for advice ;).

  2. hi mentor,i want to commend you for the great job you doing.As regards the above subject,i am a trader and am always conscious of risk involve before entering any trade despite that i trade with high leverage. i want to believe theres nothing wrong in doing that.i think all one need to understand is how leverage works and implement it rightly.thanks

  3. Absolutely.

    there is nothing wrong about trading with high leverage. One should simply understand how it works. Only lazy traders don’t learn essentials about managing OWN MONEY and then blame it on leverage….

    I saw a good practical explanation of leverage here at:
    Brokers with highest leverage

  4. Well you have a nice point of view. I see Forex diffrently, i am not a pro trader, but my motive is the hole idea of the Forex it’s crasy that is sooo right it’s not the propriate place for most of people but for me i think i belong to that crasy word where you are lost in a word of numbers and moving charts beside all that it may be a good experience to see what people are dowing while you are watching Tv or playing with friends, simply they are controling us, i don’t want to be controled i want to controle others………

  5. me personally trade x 100 and in fundamental breakout and when (FEELING… even i am not actually) shure about a particular time frame i dare x 200.

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