Once Bitten, Twice Shy: What Brokers Started Limiting Leverage Ahead of Pivotal ECB Move?

Nothing makes companies more alert to risks than a severe shock to the system. Following the SNB decision to stop the CHF peg, some brand names in the FX trading industry were left reeling.

Determined to avoid a similar fate as much as possible , brokers are now paying more attention to the risk of exposure to a particular currency ahead of expected Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term.

This Thursday, the European Central Bank is expected to announce what action it will take with regard to its quantitative easing program. Whatever the ECB announcement will be, high volatility might follow on all euro pairs. Making things worse, the Greek elections are on Sunday and traders around the world are waiting to see what type of government might come out of it. Will it be one likely to abandon the euro or not?

Under these circumstances some prudent brokers have started to limit Leverage Leverage In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders In financial trading, leverage is a loan supplied by a broker, which facilitates a trader in being able to control a relatively large amount of money with a significantly lesser initial investment. Leverage therefore allows traders to make a much greater return on investment compared to trading without any leverage. Traders seek to make a profit from movements in financial markets, such as stocks and currencies.Trading without any leverage would greatly diminish the potential rewards, so traders Read this Term:

We will be updating the list when new announcements are made.