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NFA (National Futures Association)

The self-regulatory organization for the US futures and retail forex industry, operating under CFTC oversight.

Futures brokers and forex dealers in the US must be NFA members. NFA sets conduct rules, caps retail forex leverage at 50:1 on majors, and provides BASIC, a public database of member firms and disciplinary history.

It is the futures-industry counterpart of finra.

Example: a trader checks NFA BASIC before funding a forex account and finds the firm is registered and has no disciplinary actions.

Related: cftc, finra, leverage, futures-contract

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

Margin and leverageA small deposit controlling a much larger position, and the point at which losses trigger a margin call.Position you controlnotional value $100,000your margin deposit: $5,000$100,000 / $5,000 = 20:1 leverageYour deposit absorbs every dollar of loss$5,000$2,500$0Equity leftMARGIN CALLequity has fallen to $2,5000%1%2%2.5%3%4%5%How far the price moves against you
Margin and leverage. A $5,000 deposit can control a $100,000 position, which is 20:1 leverage. Because the loss is measured on the full $100,000, a 2.5% move against you halves the deposit and brings a margin call, and a 5% move uses all of it.

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