Tier 1 Capital Ratio: Understanding Forex Trading

5 min read

A Tier 1 Capital Ratio is a measure of a Forex broker’s financial strength and capital adequacy. It is calculated by dividing the broker’s equity capital by its total risk-weighted assets. Brokers with higher Tier 1 Capital Ratios have stronger capital adequacy and can, therefore, better survive the ups and downs of the Forex market. Having a sound Tier 1 Capital Ratio is essential for any Forex broker since it helps reflect the broker’s reliability and creditworthiness.