Thread: The One Nobody Talks About

A recent concern of mine is a difference at price that could happen in the ECN market.Suppose you exchange with high leverage, and a slice of news strikes that sends the next tick a million pips below your stop. Automatic margin call? No.In the actual market, another tick is exactly what you get... which will send your account into debit.How bad can it get? What if a nuke went off? What would the market do?The bottom line: who want to owe the broker $10,000 since the market gapped on them at a transaction, and filled them beyond a margin call? Improbable? Yes. But theoretical and I want to hear thoughts on this.

So what about brokers such as FXCM who claim never cover a balance - is that only b.s?

This:
You've account in euro, open brief [email protected]
Price falls 15000 pips. You shut place with 15000 USD profit, and change them to deposit currency what provides you minus 7500EUR.
What could you do?

Account can't go below 0. Because theoretically, you are trading the money which you have.

In case you don't have that cash, u cant trade. Unless you are trading on lending. You're an idiot to start with. Because no one should trade with money that is loaned. This is the reason our banks are in a deep hole at this time.

Individuals who trade with leverage are asking for it 1000 distinct ways, if that were to occur they would, at least in a feeling, get what was coming to them. 95 percent of the trading people shouldnt even use leverage over... say 10:1? Even that's high for my taste given my abilities (or lack of?) . People who live on the edge should take this into concern. I dont believe this can occur during a nuke because you say, 400:1 during some news release such as AUD falling the rate tomorrow to 1 percent might trap somebody and find a balance.

Also, wouldnt it be miserable if a nuke went off and people heard you crying and shouting and they say Wow, the poor man, he is really, really sick about all those people dying, I wish I could comfort him. ... meanwhile you're yelling at your computer screen along with the -xxxxx.xx account balance, that gives a rip about what caused it?

Originally Posted by ;

Account can not go below 0. Because theoretically, you are just trading the money which you have.

If you don't have that cash, u cant commerce. Unless you're trading on lending. You're an idiot to begin with. Because no one should exchange with money. Unfortunately this is the reason our banks are in a deep hole.

In the stipulations for two of those three brokers I've signed up along with your first sentence would not be accurate. The next, that knows what they will say if anything happened?

Originally Posted by ;

A current issue of mine is a difference at price that could occur in the ECN market.Suppose you trade with higher leverage, and a slice of news hits that sends the next tick a million pips on your stop....

In futures trading, that's always been an issue.
It becomes worse.
Your market can open up/down the limitation for days and you can't get out. A person could lose what they have or ever will have. I saw platinum do.

Assuming you've stop losses in your transactions. If so, then when it gaps that down, it is going to start searching for an exit. It's all an issue of bandwidth, although there's no telling exactly where you'll get filled. The majority of people who trade w/ higher leverage often exchange time frames, do not trade overnight or over the weekend, and limit their trading to occasions when liquidity is high. This will help to mitigate risk quite a bit since there's likely to be a counter party someplace for a stop. But there's always a chance that liquidity can dry up along with the spread could widens much that you are broken by it. That is just a part of this risk leveraged traders take.

Originally Posted by ;

In futures trading, that's always been an issue.

No joke. Less liquidity and lock limitations. Price goes up and up, way up, you opt to go long, price breaks short a bit and then boom... lock limitation. Can you say hosed? Sure... I knew you could! Reason to not buy in the daily large or market in the daily low, eh?

Originally Posted by ;

Your market can start up/down the limitation for days and you cannot get out. Someone can get rid of everything they have or ever will have. I found platinum do this many decades back.

Nod. But that usually depends on the position size. You can find someone to take another side of a trade, if you are not sized exceptionally. If you are not careful, but yea, you can get stuck at a bad situation. Not sure why the topic is called The 1 Nobody Talks About a few people do, infact, talk about it. Anyone trading across weekends over the last several months would have exposure to the risk.

We'd not have to make a deposit When we had been trading on loaned money.

If a broker is charging you for negative balance, good fortune them doing this if you live in a different country to them. Considering they won't have any juristiction where you are.

Utilize logic thanks. Terms and conditions are made to frighten you. However, in fact, unless you are in the united states and trading with a US broker, or switzerland etc, where the regulations really attempt to do some thing (I'm convinced they wont chase you up for a few bucks).

Anyone suggesting that negative balance will be chased requires a reality check.

Originally Posted by ;

In futures trading, that's always been a concern.
It becomes even worse.
Your market can open up/down the limitation for days and you can't get out. A person could lose what they have or ever will have. I found platinum do.

I know someone who lost, in a couple of minutes, over 200k--all the money he had in account. His partner lost a few of which he didn't have in account or any place else for that matter. Both happened at the exact same time--at first they thought that the price spike has been an error. The first guy got out at the conclusion of his cash but his partner waited a minute or two longer, then could not get out in any way. Today you can not cite Soros around either of these.

Originally Posted by ;

if we were trading on loaned money, we'd not have to make a deposit.


Use logic thanks. Stipulations are made to frighten you. However, in fact, unless you are in the US and trading using a US broker, or switzerland etc, where the regulations actually try to do some thing (I am convinced they wont chase you to get a few bucks).

Sure, trading small amounts in retail forex is relatively safe. It is unlikely you will ever lose more than your account balance. The retail brokers are satisfied with getting your entire account and the bigger share of these only hold you accountable to the extent of your balance. And if you're a little trader it wouldn't be worthwhile to them to go after more. And they didn't even put your trade on the market anyway so they're not left holding a true debt . .

But, everyone isn't trading an account of a couple of k using a retail broker. And a lot people (I'll go out on a limb and say many people ) do use brokers that are indigenous to our own nations, provided we reside in a country that has valid brokers.

In the case of futures like Billbss brought up: If you get to a serious negative balance scenario, you may lose everything you own and be pushed into bankruptcy--here in the U.S.