Availability of high leverage in Forex trading is one of the reasons why more and more people trade it. Common margin level is 100:1, although 400:1 and higher is offered by some brokers. This brings promise of fast riches, but more often than not, leads to heavy losses. At the very least traders using maximum leverage experience massive equity swings in their accounts.
Just because high margin is available, it doesn't mean it has to be used. We at Spectrum Forex LLC, have always been advocating much lower levels. Number of regulators around the world are also looking at putting limits on Forex leverage. Most recently South Korea announced plans to regulate currency margin trading to deter speculators and reduce deep swings in the market. The move is expected to worry investors as the curbs could limit their trading activity, even though regulators said the upcoming regulations are designed to protect them.
Earlier in the year Japanese financial authorities also looked at ways to limit leverage in currency trading accounts. Should any of these proposals be implemented, we can expect other countries to also review their Forex trading margin regulation. At the very least, this will be a popular topic over next few months.
Our systems had lackluster week. This was largely to be expected after the blistering performance in June. Please see the results below and follow the link for details.
(Sunday, 07.12.2009).
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Here are the results for last week:
- Daily Pound lost 29 pips ;
- Daily Euro made 3 pips;
Follow the link on the right to view details.
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Last week's results.
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Week ago we concentrated on Euro-Canadian Dollar pair for possible trade. We wanted to sell it at 1.6158. Trade took place, but the price remained in a range, without making any progress. After some time we placed a stop loss which was triggered for a loss of 41 pips.
We have another sell order pending here. This time it is at 1.6128, with a target of 1.6020. We hope that price breaks the support it has been tasting for few weeks now.
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Both Dollar and Japanese Yen have experienced strength last week. It was most visible in case of the Yen. General press is quick to state "risk awareness" and "flight to safety" for this move. Well, after huge losses this year, the Yen is due for some bounce and that's what is happening.
This week we are looking at USD-CHF for potential trade. It appears that Dollar is trying to move higher, so we want to test it against the Franc. Buy is order is set at 1.0964, target is 1.1100.
It is difficult to say just how long current price contraction will last, but chances are it will stretch for some time. That's why we are willing to give this trade longer time for completion, maybe 2-3 weeks.
We wish everybody great trading week!
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Once again we must stress that the trades highlighted here are only a small sample of our trades. If you have any comments or would like to obtain more information please contact us at info@spectrumforex.com .
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Risk disclaimer:
Substantial risk is involved. Forex trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the Forex markets. Don't trade with money you can't afford to lose. Nothing in our website shall be deemed a solicitation or an offer to Buy/Sell futures and/or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on our site. Also, the past performance of any trading methodology is not necessarily indicative of futures results. Trading involves high risks and you can lose a lot of money.
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