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Your brokers love you most if you use leverages and margins for trading. Why? The rules are there to protect them but definitely not you. If you got it wrong, you are wiped out due to your own greediness. Your brokers WILL NEVER LOSE. Your BROKERS ARE NOT YOUR FATHER OR MOTHER!. They exist to make money for themselves, but they always seem to be there to HELP you to make money. They also appear to be your GOD OF FORTUNE. At least, some of them will behave like your friends or personal financial consultants.
When you use your own to make money, if you got it wrong, you only lose what you intentionally put in. For example, you earn and save up to $50K, and you have decided to go into trading and unfortunately, you got it all wrong. How much will you lose? You probably sitting on paper loss UP TO $50K and with the hope of some recovery if you decided to hang on or take back some money if you decided to cut losses. Maximum loss UP TO $50K. You lost what you intended to lose i.e. $50K at most.
What if you do margin or leverage? Now you put in $50K in margin account to trade. For leverage trading, you need to implement stop losses mechanism due to the leverage of 5 or 10 times. As you lose , the losses multiplied by 5 or 10. What if you keep losing? It is a matter of time, you will hit the stage of Negative Equity, then you will be asked by your broker to top up or liquidate? Read more...[caption id="attachment_1794" align="alignright" width="240" caption="Photo by beggs"][/caption]
Your brokers love you most if you use leverages and margins for trading. Why? The rules are there to protect them but definitely not you. If you got it wrong, you are wiped out due to your own greediness. Your brokers WILL NEVER LOSE. Your BROKERS ARE NOT YOUR FATHER OR MOTHER!. They exist to make money for themselves, but they always seem to be there to HELP you to make money. They also appear to be your GOD OF FORTUNE. At least, some of them will behave like your friends or personal financial consultants.
When you use your own to make money, if you got it wrong, you only lose what you intentionally put in. For example, you earn and save up to $50K, and you have decided to go into trading and unfortunately, you got it all wrong. How much will you lose? You probably sitting on paper loss UP TO $50K and with the hope of some recovery if you decided to hang on or take back some money if you decided to cut losses. Maximum loss UP TO $50K. You lost what you intended to lose i.e. $50K at most.
What if you do margin or leverage? Now you put in $50K in margin account to trade. For leverage trading, you need to implement stop losses mechanism due to the leverage of 5 or 10 times. As you lose , the losses multiplied by 5 or 10. What if you keep losing? It is a matter of time, you will hit the stage of Negative Equity, then you will be asked by your broker to top up or liquidate? Read more...
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Your brokers love you most if you use leverages and margins for trading. Why? The rules are there to protect them but definitely not you. If you got it wrong, you are wiped out due to your own greediness. Your brokers WILL NEVER LOSE. Your BROKERS ARE NOT YOUR FATHER OR MOTHER!. They exist to make money for themselves, but they always seem to be there to HELP you to make money. They also appear to be your GOD OF FORTUNE. At least, some of them will behave like your friends or personal financial consultants.
When you use your own to make money, if you got it wrong, you only lose what you intentionally put in. For example, you earn and save up to $50K, and you have decided to go into trading and unfortunately, you got it all wrong. How much will you lose? You probably sitting on paper loss UP TO $50K and with the hope of some recovery if you decided to hang on or take back some money if you decided to cut losses. Maximum loss UP TO $50K. You lost what you intended to lose i.e. $50K at most.
What if you do margin or leverage? Now you put in $50K in margin account to trade. For leverage trading, you need to implement stop losses mechanism due to the leverage of 5 or 10 times. As you lose , the losses multiplied by 5 or 10. What if you keep losing? It is a matter of time, you will hit the stage of Negative Equity, then you will be asked by your broker to top up or liquidate? Read more...
