Trade FX with 1:3000 Leverage. Table of Contents
FBS offers 1:3000 High Leverage
FBS an online Forex and CFD broker, is proud to offer the highest Forex leverage in the world.
The available maximum leverage on FBS’s MT4 and MT5 trading platforms is 1:3000.
The average Forex leverage in the industry is around 1:500, and FBS’s 1:3000 leverage is 6 times higher than the average.
By utilizing 1:3000 high leverage, you can increase the trading volume in your trading account dynamically.
With FBS, you can start trading Forex and CFDs from only a few dollars of minimum deposit amount, and the 1:3000 maximum leverage can allow you to place orders with much larger scale.
FBS’s 1:3000 high leverage is only one of many advantages available for online traders.
FBS’s various bonus promotions and trading contests are popular reasons for FX traders to choose FBS.
Go to FBS Official Website and check out more about their service conditions.
What is Leverage?
By utilizing a leverage, it is possible to manage a position scale that is larger than the actual fund.
Let’s look at a concrete example.
If you try to hold 10,000 EUR when 1 EUR = 1 USD, you would normally need 10,000 USD.
However, if you make the most of the leverage mechanism, you will be able to manage 10,000 dollars with about 10 USD with 1:1000 leverage.
In other words, the advantage of leverage is that you can trade with a smaller amount of money that you really need.
By trading with leverage, you can trade larger in size than the funds you have, so if you can make superior trades such as riding the trend well, you can efficiently increase the amount of funds.
However, if you do not have skills, but have such as unskilled trading technology, poor management of funds, mental disorder etc. you may immediately lose money.
To experience the leveraged Forex trading with FBS without any risks, you can also open a Demo trading account with virtual money.
What is Margin and Margin Requirement?
Why can FX trade with leverage?
This is closely related to the margin trading mechanism.
When trading EURUSD, investors do not receive dollar bills or coins at hand.
In the trading screen, you decide to trade the EURUSD, and reflect the resulting profit or loss in your trading account.
This mechanism is called margin settlement, and the amount of money that increases or decreases as a result of a transaction is called margin.
What is Margin Level and Free Margin?
Since we do not exchange actual EUR or USD in the case of FX, we can hold a position with the necessary funds of up to 1/3000 with FBS, and it is possible to trade with leverage.
For FX trading, there are always two transactions, “hold new position and settle open position” as a set.
Also, settlement transactions are always the opposite of new transactions.
For example, if you buy a EURUSD, settle the position and the trade will be completed.
The state in which the settlement transaction has not been performed yet is expressed as “possessing a position”, and at that time, an undetermined profit (unrealized gain) or loss (unrealized loss) is held.
If you do not settle, neither unrealized gains nor unrealized losses will be reflected in the actual account, but there is a “bearing limit” on unrealized losses.
When the unrealized loss on the funds exceeds a certain level, all positions will be closed.
This mechanism is called forced stop out.
Basically, the more leverage you apply, the weaker your ability to withstand the net loss.
In other words, if you trade with a leverage as high as 3000 times, you are more likely to lose money.
How much do you need to start trading FX?
Currently, the minimum lot that can be traded in most FX accounts is “from 100,000 currency”.
This means 100,000 dollars for a EUR.
Since the limit of leverage is 3000 times in case of FBS, you can trade 100,000 currencies for about 33 USD.
However, this is just the minimum amount of money needed to hold a position.
As explained earlier, it is not capable of withstanding losses in the high leverage state.
It means that FX can be done without hundreds of thousands or millions of dollars.
People who do not know FX may have the image that they are trading with a huge amount of money, but FX is fully possible even with funds less than 1,000 USD.
Especially with FBS, you can start trading Forex and CFDs with only 5 USD of minimum deposit, but still you should consider the required margin for trading when making a deposit.
FBS is now giving away 100 USD for free to start trading Forex.
By receiving FBS’s $100 No Deposit Bonus, you can experience the real trading condition without risking your own funds.
Be Aware of Stop Out %
Compulsory stop out is a system where the FX company compulsorily places a settlement order when a certain loss occurs in the holding position in order to protect the trader from the loss of more than the deposit amount.
Since FX trades more than the amount deposited with leverage, there is a possibility that you will lose more than your margin.
To give an example, a margin of 1,000 USD makes a transaction of 10,000 EUR when 1 EUR = 1.10 USD (leverage 11 times).
If 1 EUR = 1 USD, the unrealized loss will be 1,000 USD and the margin will be completely gone.
If 1 EUR = 0.90 USD, the loss will be 2,000 USD, which is not enough with margin money.
In order to avoid such cases, compulsory stop out is a mechanism to forcibly settle when an unrealized loss occurs above a certain level.
You should put a stop order to close the position properly in case the rate goes beyond your expectations and to control the loss by yourself.
however, thanks to this stop out system, YOU can prevent the spread of losses.
In case of FBS MT4 and MT5, the stop out % is about 30% of the margin level.
Example of Stop Out
The point at which the stop out is implemented depends on the FX brijer, but if the margin rate falls below 30% in a common pattern (when a loss of 70% or more of the margin appears), the stop out will be activated.
In this case, if 1 EUR = 1.10 USD interrupts 1 EUR = 1.03 USD in the previous case, and if the loss exceeds 700 USD, which is 70% of the original margin of 1,000 USD, it will be a compulsory stop out.
This will reduce the possibility of losing more than your margin.
On FBS MT4 and MT5, you can monitor the margin level and the status of your live trading account real time.
Stop Out isn’t a perfect system
It is undeniable that even if the mandatory stop out is triggered, there may be more damage than the deposited margin depending on market conditions.
If the margin rate falls below 30% as in the example, it is unlikely that the EURUSD will exceed the margin rate, but it is necessary to be aware of the risks as the market is not absolute.
In the case of the 2015 Swiss franc shock, there were many cases in which positions such as EURCHF actually suffered losses that exceeded the margin.
In addition, since the conditions for triggering stop out vary greatly depending on the trader, it is possible that the trader who does not trigger stop out to the last minute will suffer a loss beyond the margin.
Luckily FBS supports NBP (Negative Balance Protection) which protects traders from exceeded losses.
With FBS, you will not lose more than the total account balance.
Earn More Swap Points with High Leverage
There are two ways to make a profit with FX.
One is the transaction that we have explained so far, aiming at fluctuations in exchange rates between currencies, and the method of obtaining the difference by “buying cheap and selling high” or “selling high and buying back cheaply”.
The other is swap point management, which aims to the policy interest rate differential.
If there is a difference in the policy interest rate (basic interest rate, which is the standard of the country) between the two types of currency pairs that you trade in FX, there is a mechanism that the investor receives or pays the adjusted amount as a swap point.
Swap points occur when you hold positions across days.
The amount of swap points is multiplied by the trading volume.
Meaning that higher the trading volume, higher the swap points you can receive, or pay.
Now you can imagine that you can earn greater amount of swap points by utilizing FBS’s 1:3000 leverage.
Which Forex currency pairs are recommended?
High interest rates include Turkish lira, Mexican peso and South African rand.
On the other hand, the representative of low interest rates is Japanese yen, and Swiss Franc, Euro, and British pound are also low interest rates.
With these combinations, you can receive swap points when you have the “buy” position of the Turkish lira, the Mexican peso, or the South African rand, and you can receive the swap points when you cross the day in the “sell” position.
There are many people who are aiming for swap points because profits are generated daily by holding a position that can receive swap points.
FBS MT4 and MT5 also cover all the major, minor and exotic currency pairs and you have got all the options to trade.
Risk of trading for Swap Points
When aiming to earn swap points, you also should be aware that there are a couple of risks involved in swap point operations.
The first is the risk of foreign exchange losses.
For example, if the value of the Turkish lira declines while you have a buy position of the Turkish lira pair, of course there will be an unrealized loss.
And if the unrealized loss exceeds a certain line, it will be forced stop out and the position will be settled.
Even if you stack up your swap points with the utmost effort, there is a possibility that the loss caused by foreign exchange will exceed the profit gained with the swap points.
If you apply a particularly high leverage such as FBS’s 1:3000 leverage, you will not be able to withstand a drop in the market, and you will be more likely to experience a stop out.
It is necessary to have sufficient funds so that a slight fluctuation will not result in a stop out.
The second is the risk of changes in the policy rate.
It is not uncommon for policy interest rates to fall over the course of a month, even if interest rates are high when you start investment.
The narrower the interest rate difference, the fewer swap points you can receive.
In some cases, the policy interest rate differential may reverse, and even if you have received swap points until now, if the interest rate differential reverses, you will be the “payment side”.
For swap operations, it is necessary to understand these risks and work on them.
Please check FBS official website or contact the customer support with regard to the latest information and more accurate details.
FBS official website is here.
Please click "Introduction of FBS", if you want to know the details and the company information of FBS.
IronFX
Comment by Diletta
March 26, 2024
Awesome bonuses, good leverage. A few hiccups, but support rocks!