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August 14, 2008


Losing All Your Funds Very Quickly

This bit made me chuckle:

“OANDA offers a maximum leverage of 50:1. It also enables OANDA clients to cap their leverage at 40:1, 30:1, 20:1, or 10:1—we recommend 20:1 or lower. Other companies may offer 100:1 leverage, or even 200:1, but OANDA believes these levels are far too risky and could cause clients to lose all their funds very quickly.”

This run-up in the dollar (and corresponding collapse in EUR, GBP, etc.) is impressive and I’m sure it has wiped out many a small speculator caught on the wrong side, even those “conservatively” levered at 20:1. :-)

Related: Dollar Gain Signals Pain; Rally Prompts Exit

This entry was posted on Thursday, August 14th, 2008 at 2:44 pm (utc+8) and is filed under Currencies.

9 Responses to “Losing All Your Funds Very Quickly”

  1. MarkusP said:
    August 14th, 2008 at 4:49 pm

    Where you’re right, you’re right.

    ;-)

    That said, I can only recommend Oanda very highly, if such a thing exists, they are it, an honest broker.

    Don’t work for them or anything, I’m just a satsified client.

  2. Wanderer said:
    August 14th, 2008 at 4:56 pm

    Me too.

    I’m a very satisfied client.

  3. drummania said:
    August 14th, 2008 at 8:35 pm

    I guess even large, low-leveraged investors sustained a loss in the USD run. So many stop loss orders are tripped. On a different note, actually, it is when the market sideways that small, high-leveraged speculators get wiped out.

  4. darin said:
    August 15th, 2008 at 12:32 am

    Regardless of how much leverage was used, if you fight a trend like that you’ll be wiped out. The dumbass thing wouldn’t necessarily be the leverage, but lack of stop losses.

    I use 100:1 at thinkorswim at it works fine. Just a matter of setting the stops.

  5. KC Trader said:
    August 15th, 2008 at 3:30 am

    “Serious professionals seldom trade at those levels of risk.”

    Can you consider LTC and Bear Sterns professional?

  6. j said:
    August 15th, 2008 at 7:23 am

    If position size, your “R” (the amount you are willing to loose) - are adjusted accordingly; and the leverage fits the timeframe* you are trading - where’s the problem?

    *200:1, meaning you are out after a 0,5% move against you, wouldn’t work well with trading a daily chart, even in FX, I guess…

  7. Lawrence Chiu said:
    August 15th, 2008 at 10:27 am

    On 04/05/2008, Jim Sinclair made a bet that Gold would hit 1650 by Jan 2011. Is he starting to sweat yet?

    “My position on timing and price is that Gold will trade at USD $1650 before the second week of January 2011. I am offering a $1,000,000USD wager to a financially qualified party that this will occur within the stated timeframe.”

    Who ended up taking his bet?

  8. C. Maoxian said:
    August 15th, 2008 at 10:38 am

    Lawrence: I wrote a post about his “crazy bet” at the time.

  9. Jay said:
    August 15th, 2008 at 8:36 pm

    I have used Oanda for more than a year. Very satisfied.

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