Is it possible to lose the broker's money on Forex?

A feature of Forex trading is the use of borrowed money, the so-called leverage .

Which allows you to increase the available funds tens, and if necessary, hundreds of times. The loan is provided by a broker who organizes the dealing process, simply by transmitting your orders to buy or sell to the foreign exchange market.

Is it possible to lose the broker's money on Forex? And after this, won’t you have to pay for the loan with your hard-earned money?

In theory, it is not possible to lose the broker’s money; two mechanisms are used to protect borrowed funds - margin call and stop out , the first can work if there is less than 30-40% of the funds left on the deposit, the second will definitely work if the balance is less than 10-20% .

The size of these stops is set individually by each Forex brokerage company, a margin call is triggered at the request of the broker, a stop out is mandatory as a last defense.

It seemed in such a situation that the broker’s money was reliably protected, and you were only losing your hard-earned money, but as practice shows, you can lose the broker’s money on Forex!!!

The reason why stop outs don't work are gaps (price gaps) and high leverage.

In order to understand how this happens, you must first understand the mechanism for executing orders on the exchange.

Any order, including stop loss or stop out, is triggered at the first available quote. That is, you set a stop loss at 1.3500, but there is a price gap that starts at 1.3499 and ends at 1.3550.

As a result, you have 50 points of additional loss. A similar situation is smoothed out with stop orders from the broker, while it would seem that there is a reserve of 10%, but this does not always save.

The reason for this is a large leverage, and the result is a trader’s negative balance, which sometimes reaches several thousand. But all is not lost here, most Forex brokerage companies indicate in their trading conditions that they will pay off the negative balance.

That is, you will not have to return the money to the broker, but be careful, if such a clause is not in the contract, you may be subject to financial claims. But still, in order to avoid troubles, try to do two things - do not use excessive leverage and do not leave open trades for the weekend.