Well, this is the time to discuss something of concern for most of us... the "leverage"... while many brokers do offer to leverage your capital to ridiculous size (even 1000 times your capital), doing that  will one way or another bring one step closer to margin call...

Leveraging your capital 100 times means that with 10.000 euros you open a position of 1.000.000 euros... and it also means that if the market moves 100 pips against you, you will probably experience what is called a "margin call"... but that is not the bad thing since you are full aware of the risk you are taking while entering a ridiculous position such as the one mentioned above... what should scare you the most is that there have been many instances in the past 30 years (and it happens once or twice every year as well) where a central bank intervention,  a financial event  or a geopolitical event can cause a spike of even 1000 (!!!) pips against your position! 1000 pips is 10% of a move... currencies fairly move 5% / month, but there are cases (and there will be even more in the future) where a pair shall experience a rapid appreciation or depreciation of its value between 2 to 10% in a matter of minutes..! That is a huge move... an unexpected one as well..!

That means that the currency pair you bought with a 1/100 leverage actually dived 10% in a matter of seconds... where all orders which could support the price were dissappeared, and your stop loss order probably got filled not 50-100 pips below your entry price... but most probable 500 - 700 pips below your limit order! That means that you got a margin call! but it's not only that... your order got filled with a loss... a loss of 5 - 10 times your capital! So, now you owe to your broker money... probably some 5 times your initially invested capital... and be sure that he will ask for his money, and go against you for that reason! Because, besided yours, his money were also lost!

So, next time you enter a position with a high leverage think twice... and also nomatter how strong your believes are, DON'T... DON'T leave a high leveraged position open through the weekend..!

Two out of three times a that kind of a spike takes place through the weekends! Weekends are the dates where most political events take place...

Happy trading all!
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