Core Capital Ratio Meaning in Forex Trading: A Guide

The Core Capital Ratio, also known as the Capital Adequacy Ratio, is a measure of a Forex broker’s financial strength and liquidity. It is used to assess the broker’s ability to absorb losses in the event of significant market volatility, and is calculated by dividing the broker’s total core capital by its total leveraged positions. The higher the ratio the more capable a broker is in meeting its financial obligations in extreme circumstances. A Core Capital Ratio of 8% is considered an acceptable amount for a Forex broker, where it is higher it is considered as an indication of the broker’s strong financial profile.

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