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If the stocks business generates most of the revenue, the company can be very large but the forex division can still be small compared to others. Assets Under Management AUM In the case of forex brokers, the closest thing to AUM are the client funds. While they are not managed by the brokers, they represent the total value of the client accounts. This measure is much more relevant than the previous ones, but it still lacks the differentiation between the forex business and the other services offered by the company. If you mix stocks trading with forex, it is very likely that the largest part of the client funds will be used in trading stocks, not forex. Another thing that makes clients funds less relevant is the different leverage used by brokers. Lower leverage needs more funds in the broker's custody for the same operations. Also, it is possible to have large forex accounts with very little trading activity. Average Volume of Daily Transactions AVDT The daily transactions of a forex broker can vary a lot, but the more active clients the broker has, the less volatile the value of daily transactions will be. In order to get a better idea about the real volume of a broker, it is better to calculate the average volume for a larger period of time, as daily and seasonal fluctuations will be less relevant. We think the AVDT becomes relevant when at least the last three months are being taken into consideration when calculating the average.

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Although some countries like the United States have reduced the leverage legally available to retail forex traders, any sensible trader needs to remain cognizant of the magnified risks they are taking by using leverage when trading forex.

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With many retail forex brokerages, offering trading forex for as little as $100, the high use of leverage has become one of the main attractive points for the retail category of traders.

>foreign currency trading basics

Some of the currency traders overlook the fact that making deposits and withdrawals could actually end up taking a huge chunk of the little fortune you made.