Trading with leverage can be a profitable way to stretch your capital. As a trader, you can leverage the funds in your account and potentially generate larger profits relative to the amount you invest.

But with this advantage comes the potential risk, because losses can also be greater than the total margin held. Both the upside and the downside can be significant. At OANDA, we are dedicated to your success, and we want you to realize the potential of leveraged trading, without exposing yourself to the risk. This happens simply due to lack of focus.

It is worth considering a trade strategy that includes a narrowed focus to a few markets to monitor for suitable volatility.

Benefits of Trading Forex. Understanding Leverage — What You Don't Know Can Hurt You. Putting It All Together.

Trading High-Risk Events in Forex

The Commodity Futures Trading Commission CFTC limits leverage available to retail forex traders in the United States to OANDA Asia Pacific offers maximum leverage of Maximum leverage for OANDA Canada clients is determined by IIROC and is subject to change. For more information refer to our regulatory and financial compliance section.

This is for general information purposes only - Examples shown are for illustrative purposes and may not reflect current prices from OANDA. It is not investment advice or an inducement to trade.

Past history is not an indication of future performance. All other trademarks appearing on this Website are the property of their respective owners. Leveraged trading in foreign currency contracts or other off-exchange products on margin carries a high level of risk and may not be suitable for everyone. We advise you to carefully consider whether trading is appropriate for you in light of your personal circumstances.

You may lose more than you invest. Information on this website is general in nature. We recommend that you seek independent financial advice and ensure you fully understand the risks involved before trading.

Trading through an online platform carries additional risks. Refer to our legal section here. Financial spread betting is only available to OANDA Europe Ltd customers who reside in the UK or Republic of Ireland. CFDs, MT4 hedging capabilities and leverage ratios exceeding The information on this site is not directed at residents of countries where its distribution, or use by any person, would be contrary to local law or regulation.

OANDA Corporation is a registered Futures Commission Merchant and Retail Foreign Exchange Dealer with the Commodity Futures Trading Commission and is a member of the National Futures Association. Please refer to the NFA's FOREX INVESTOR ALERT where appropriate.

OANDA Canada Corporation ULC accounts are available to anyone with a Canadian bank account. OANDA Canada Corporation ULC is regulated by the Investment Industry Regulatory Organization of Canada IIROC , which includes IIROC's online advisor check database IIROC AdvisorReport , and customer accounts are protected by the Canadian Investor Protection Fund within specified limits.

A brochure describing the nature and limits of coverage is available upon request or at www. OANDA Europe Limited is a company registered in England number , and has its registered office at Floor 9a, Tower 42, 25 Old Broad St, London EC2N 1HQ. OANDA Asia Pacific Pte Ltd Co. No K holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore and is also licenced by the International Enterprise Singapore.

It's important for you to consider the current Financial Service Guide FSG , Product Disclosure Statement 'PDS' , Account Terms and any other relevant OANDA documents before making any financial investment decisions. These documents can be found here. First Type I Financial Instruments Business Director of the Kanto Local Financial Bureau Kin-sho No. OANDA uses cookies to make our websites easy to use and customized to our visitors. Cookies cannot be used to identify you personally.

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Restricting cookies will prevent you benefiting from some of the functionality of our website. Download our Mobile Apps Currency Converter App Forex Trade App. The Benefits of Trading Forex and Market Participants.

You can lose more than your initial deposit. Forex trading — like any form of trading — is not without risk. Some may even suggest that trading in the forex market actually carries above-average risk. The one rule you must hold above all else is to trade only using your risk capital.

In other words, never trade more than you can afford to lose. Leveraged trading carries a high degree of risk Trading with leverage can be a profitable way to stretch your capital. If the market moves significantly and a sound risk management plan such as stop losses has not been put in place, losses could exceed the total amount invested. Since traders can have multiple leveraged trades open concurrently, even seemingly small or low risk trades can add up when these positions are combined.

If the market were to spike, crash or gap, it could result in significant losses for a highly-leveraged trading account. This happens so we can protect you from losing more money than you have in your account. Start with a shorter watch list of markets. It's possible, even for experienced traders, to miss market moves and become exposed to risk when watching many markets at the same time.

Creating a shorter watch list today of the most liquid and volatile markets with tight spreads would be a great place to start.

Risks associated with a Margin Close Out When does a Margin Close Out happen? Margin Closeouts can help prevent the possibility of a loss exceeding your investment. But in fast moving markets, your losses can exceed your capital. Having multiple trades open concurrently can increase the risk of a margin closeout due to an inability to follow many open positions simultaneously.

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A sudden or significant movement in one of your instruments may adversely affect your margin levels for your entire account. By reducing your account leverage you impose a higher margin requirement on each trade, which ultimately keeps you further away from a margin closeout. Risk associated with Volatility and Liquidity Market Volatility Spreads fluctuate just like exchange rates.

As a market maker, OANDA faces increased market risk periods of price volatility, such as economic and political news announcements. When volatility increases, our pricing engine widens our spreads accordingly. When volatility decreases, we narrow our spreads accordingly. Liquidity As a market maker, OANDA provides you liquidity even when pricing is not available to us from banks or other trading partners.

Global market liquidity changes throughout the day and reacts to news events, end-of-day rollover periods, and trading session openings. At times of scarce liquidity our partner banks act to limit their own risk. Deal Only with Reputable Forex Brokers Unfortunately, in the early days of online forex trading, fraud was an all-too common problem.

Great inroads have been made to clear out unscrupulous brokers, but you must still exercise caution when selecting a new broker. Insist Upon Regulation When reviewing a forex broker, insist upon regulation. You should only trade with a broker that is a member in good standing with a recognized regulator such as those listed in the table below: Reputable Forex Regulators by Country Country Regulator Australia Australian Securities and Investment Commission United States Commodity Futures Trading Commission CFTC National Futures Association NFA Great Britain Financial Conduct Authority FCA Japan Financial Services Agency FSA Singapore Monetary Authority of Singapore MAS Hong Kong Hong Kong Securities Futures Commission SFC Canada Investment Industry Regulatory Association of Canada IIROC New Zealand Financial Markets Authority Putting It All Together.

Benefits of Trading Forex 3. Forex Market Participants 5. Risks Involved in Forex Trading 6. Losses can exceed investment.