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I'm newbie in Forex and have a simple question, I guess.

Disregarding leverage and things alike, I would like to know what's the difference between opening a position in Forex on a pair through a broker, for example, and effectively buy some currency in a traditional bank-to-bank transition (id est, if I have EUR and want USD, I open an bank account in USA and send some amount in EUR to be converted to USD). In the first case my account could be wiped out if the market went against me (stop-loss, gap, margin-call etc.), but in the second the worst that could happen might be a devaluation. Yes, "wiped out" anyway, however at least I would continue to have the money and so continue to gain bank's interest rate, moreover it would be completely possible that the market could reverse and fortunately go in favor of me, even if it took years.

Anyway, is it possible to say that someone who is doing this is "trading Forex"?

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How should we disregard leverage when it's the leverage that creates the 'wipe-out' potential? If you simply convert 100K EUR to USDollars, you dollars might then fluctuate a few thousand, maybe even 10K over a year, but the guy that only put up 1000 EUR to do this has a disproportionally higher risk.

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Disregarding leverage and things alike, I would like to know what's the difference between opening a position in Forex on a pair through a broker, for example, and effectively buy some currency in a traditional bank-to-bank transition

The forex account may pay or charge you interest whereas converting your currency directly will not. Disregarding leverage, the difference would be interest.

protected by GS - Apologise to Monica May 29 '15 at 13:02

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