Dukascopy lowers leverage on Natural Gas trading
Geneva-based retail forex broker Dukascopy has announced that it is temporarily reducing leverage on gas commodity CFDs (GAS.CMD/USD) to 1:10.
Leverage for natural gas trading at Dukascopy was previously 1:30, in line with leverage offered for trading of other Commodity CFDs.
Dukascopy said that it was making the move due to the possible increase of volatility in the price of gas in the coming weeks.
The leverage reduction measure will be applied in two steps:
- For clients with no open positions in the instrument, the change will be done immediately.
- For clients that have existing open positions in the reference instrument, the reduced leverage will come into effect as of the market opening, on Sunday, 31 May.
The prospect for increased price volatility in natural gas, including the possibility of negative natural gas prices in the coming weeks, is something that Dukascopy and a number of energy analysts seem to be concerned about. The continued lockdowns in Europe, combined with dwindling storage capacity, has the potential to cause the natural gas sector to mirror what happened last month in the US crude oil space. That episode caused some large losses at retail brokers offering leveraged crude trading – the traders who were “right” made a killing, while those who were wrong only lost their initial balances, thanks to negative balance protection.
The company said that it invites all traders with open positions in GAS.CMD/USD to consider the necessary adjustment of their exposure before the weekend market closure.
The reduced leverage will stay in force until further notice.