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I just read about "rip-off" brokers that try to lure you in for a deposit with very high leverage and then cash in your deposit when you lose the money.

But how does this work? If you lose all your money worth of the leverage they provided, well, isn't that money lost for the brokerage as well? (except for the commissions of course)

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    You can lose more than your initial investment. That excess loss usually comes with an interest charge, which I would assume to be exorbitant in case of a so-called rip-off broker. – ApplePie Apr 24 at 1:37
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A "rip off" broker makes money by charging exorbitant commissions.

Fraudulent brokers (ala Madoff) aren't investing the money at all. Yes, they "cash in your deposit" and then they pocket it.

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