[Trap of Fund Management] The Realities of “Account Bankruptcy” Caused by High-Leverage Trading on Ocean OFX

Hello, this is Jerusalem.

In the previous article, I talked about risk management during times of crisis.

This time, I will discuss “how to choose a securities company (broker)” for system trading, including my personal experience.

When starting automated trading, many people choose the OOFX broker.

I myself have used the OOFX broker for my preferred indicators (mainly products from HappyAngel) through my listing ‘Loop-Turnaround_EA’, and used brokers with narrow spreads for CFD Gold and brokers with small minimum trading units for stock index CFDs (such as 0.1 lot for Nikkei 225). In this way, I have leveraged OOFX brokers.

However, OOFX has a clear disadvantage (trap) of “account collapse due to high leverage.”

Because OOFX accounts allow extremely high leverage, it is possible to aim for large profits from small amounts, but when you have unrealized losses, you may mistakenly think you can endure them.

As a result, with just a bit of volatility, many accounts cannot withstand the unrealized losses and quickly blow up (collapse).

In automated trading, the most important thing is not temporary huge profits (which have very low probability) but to survive in the market for a long period and reduce long-term losses.

To achieve that, it is essential to deliberately keep leverage low and operate with ample capital as a cushion.

Choosing OOFX solely because “the leverage is effective” is dangerous, in my view.

Next time, I will talk about the domestic FX’s overwhelming advantage (in terms of taxes), which is closely related to this leverage issue.