In a series of announcements, Roboforex has communicated to its clients that it will be releasing updated margin requirements on some of its MT4 offerings until May. In contrast to the majority of the efforts by the industry on this aspect of an offering, Roboforex has decreased margin requirements, hiking available leverage to up to 1:1000.
The new leverage offerings are valid between the 30th of March and the 1st of May and include levels of up to 1:700, 1:888, and 1:1000, whilst advertising “bigger trading volume without making any additional investments to your trading account.”
In a post-Swiss National Bank (SNB) risk event world, this is a step in a different direction. With the well-known issues for traders who use higher leverage, Finance Magnates’ reporters have reached out to the company in order to ascertain why RoboForex decided to provide looser margin requirements to its clients.
The Tradeoff between More Risks and More Opportunities
Speaking to Finance Magnates, Anton Ivanov from RoboForex explained, “When offering brokerage services, any company is striving to provide its clients with the maximum possible choice of opportunities. It includes almost everything: the number of available trading instruments, wide and flexible line of accounts, variety of trading terminals and payment systems.”
While explaining that high leverage expands the client’s trading potential due to the lower margin requirements for opening orders due to the less the margin for open positions is, the bigger trading volume and the number of open transactions are available for the trader with the same amount of his deposit.
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no one denies the importance of capital and risk management even if you trade with a small deposit on the accounts with the increased leverage
“On one hand, it allows him to make more transactions, increase his trading volume, and receive more profit from trading operations. On the other hand, lower margin requirements make the trader’s trading account more resistant to drawdown,” Mr. Ivanov added.
Unfortunately, in the real world there are many uneducated traders who are using higher leverage only to increase their risk exposure and are not managing their funds appropriately.
Mr, Ivanov noted, “No one denies the importance of capital and risk management even if you trade with a small deposit on the accounts with the increased leverage. One should remember that following the rules of trading, balanced strategy of deposit management, and constant risk management is the area of responsibility of the trader himself.”
“Here we can make a comparison with the car manufacturer that produces a Lamborghini with a top speed of 360 km/h although the speed limit in cities and towns is just 60 km/h. Each person has the right to choose how to use the opportunities he has, because the wide choice is intended not to use the provided opportunities irresponsibly, but to help people to choose the best ones from the available,” Mr. Ivanov concluded.
The eternal debate about how much responsibility that traders can handle while taking risks on the financial markets will invariably remain intact. For the time being however, the downside of clients of RoboForex is limited to their account balance, since the company has honored its negative balance protection pledge in the aftermath of the SNB move on January 15th.