Forex High Leverage Eliminates the Foolish Investors
When looking at forex trading brokers, it’s important to consider their leverage. Leverage is, essentially, a free loan provided by the broker to the investor. A common forex high leverage of 1:200 means that for every dollar you deposit into your trading account, you will have 200 dollars with which to trade. Some Forex brokers go as high as 1:500, or even higher in a bid to attract those investors looking for a high gain on investment.
For most investors, the attraction of a high leverage is very simple: they could earn significant profits in a short period of time, based on only a small deposit. Forex brokers are essentially appealing to investors’ innate greediness. However, it’s essential to understand that a high leverage will multiply your losses just as effectively as it will multiply your gains. This means that a highly leveraged investor who bets the wrong way on a currency movement could be wiped out in an instant. Although forex brokers may rely on the relatively low movements of currencies, the recent unexpected currency crisis triggered by the Swiss National Bank illustrates just how risky this assumption can be.
However, not all forex trading has to rely on risky high leverages. Here at Engineering Investments we take a different approach, using algorithmic-trading to achieve low risk investment, delivering significant gains via large numbers of small trades. We have combined our expertise in statistics, algorithm design and forex trading to design the best investment tools for forex markets.
Importantly, this kind of low risk approach does not mean that you can’t get high returns. During the final quarter of 2014, for example, our Real-Time Algorithmic-Trading managed account achieved gains of 16.48%.