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Leveraged trading brings either big rewards or big risk, however, there are creative ways to limit your risks. One is by the use of stop orders, so that you can limit your losses. Another is by using the time honored technique of hedging. In finance, "hedging" is a strategy used to minimize exposure to an unwanted risk, while still allowing the investor to profit from an investment activity. Some brokerages, such as Forex.com, offer a no debit balance account which serves as a final, irrevocable stop order to keep you from losing more than you have.
|Jennifer Mathes, Ph.D.|