What is Tier 1 Capital? | A Guide to Forex Trading

4 min read

Tier 1 capital is a measurement of a bank’s financial strength and the amount of capital on hand to back its liabilities. In the Forex market, Tier 1 capital is typically comprised of common shareholders’ equity, retained earnings, and other disclosed reserves. It is an important measure of a bank’s liquidity and the amount of leverage that the bank is taking on. A higher Tier 1 capital helps ensure that a bank can absorb losses due to unfavorable market conditions while also providing the resources it needs to finance its trading activities.