ALpari-US Scam Alert Margin Call Level being moved from 20% to 100% in 72 hrs

Guys,

I just recieved this email from Alpari US, get your accounts to over 100% margin level ASAP. Reduce all drawndown positions and move your money to a new broker as soon as possible. If your drawndow you either make a deposit or suffer a margin call!!!!!

It is totally unsatifactory that this company would move their margin call level from 20% to 100% and only give their customers 72 hours notice via email at that!!!!!!! I will be closing my account within 30 days!!!!!

I talked to customer service and they claim their doing this to prevent entire accounts from being wipe out, this is bull crap. They are hoping that your account is drawn down, and you didnt catch the email, and wake up Monday morning with a margin call!!!!!! And practically an empty account!!!!!!!!!


Dallas


Dear ,

Effective January 18, 2009, Section 2 of the Customer Agreement and Section 6 of the Terms of Business are being amended as follows:

CUSTOMER AGREEMENT – SECTION 2. SECONDARY RISK DISCLOSURE: HIGH RISK INVESTMENT

Trading is very speculative and risky. Forex Trading is highly speculative and is suitable only for those Customers who (a) understand and are willing to assume the economic, legal and other risks involved, and (b) are financially able to assume losses significantly in excess of Margin or deposits. The Customer represents, warrants and agrees that the Customer understands these risks; that the Customer is willing and able, financially and otherwise, to assume the risks of Forex Trading and that loss of the Customer’s entire Trading Account Balance will not change the Customer’s life style.

The high Leverage and low Margin associated with Margin Trading can result in significant losses due to price fluctuations in the foreign currency markets. Alpari’s Margin policies may require that additional funds be provided to properly margin Customer’s Trading Account and that the Customer must immediately meet such Margin requirements. Failure to maintain a Margin Level in an amount equal to or exceeding 100% of Margin requirement may result in the liquidation of any Open Positions with resultant loss to the Customer.

TERMS OF BUSINESS – SECTION 6. STOP OUT

6.1. The Company is entitled to close the Customer’s Open Positions without the consent of the Customer or any prior notice if the Equity is less than 100% of the Necessary Margin.

6.4. When the last Open Position is closed in accordance with clause 6.1 and there is no Price Gap or Price Gap on the Market Opening, the Company will use reasonable endeavors to keep the Trading Account Balance within 0%-100% of the margin, which is required to maintain this position.

For an amended copy of the Customer Agreement and Terms of Business, please visit http://www.alpari-us.com/files/doc/terms.pdf and http://www.alpari-us.com/files/doc/agreement.pdf on or after January 18, 2009.

In accordance with these changes, effective January 18, 2009, Alpari (US) will increase its stop out level to 100% of the required margin.
Please refer to the following example for an explanation on how this will affect your trading:

Assume that the quote for the EUR/USD is 1.2600, and you have $5,000.00 in your account.

Assume that, today, you open a position of 1 standard lot of EUR/USD. If the price moves against you after you open your position, MetaTrader 4 will automatically close your position around $252.00 (20% of the required margin), with a loss of around $4,748.00.

As of January 18, 2009, you open a position of 1 standard lot of EUR/USD in your account. If the price moves against you after opening your position, MetaTrader 4 will automatically close your position at $1,260.00 (100% of the required margin), with a loss of $3,740.00.

Please note the following: all positions that are left open with insufficient margin after the market closes on January 16, 2009 will be automatically closed upon the market’s re-opening on January 18, 2009, without further notice.

Team of Alpari (US)

Risk Warning: Forex Trading is speculating in foreign currency exchange rates in an off exchange over the counter market (OTC). The funds in your account may not be afforded the same protection under U.S. Bankruptcy code as funds deposited for exchange traded contracts. You could end up being a general creditor if Alpari (US) were to become insolvent. Forex trading is very speculative, risky and is not suitable for all investors. In fact, you could lose all your initial investment and may be liable for additional losses. Alpari (US), LLC is registered with the CFTC as a Futures Commission Merchant and is a member of the NFA - Member ID: 0379678.

Sounds like they experiencing capitalization troubles?

Yeah guys, run away as fast as u can

This is no scam.
You should thank them if they close your position !!

And do yourself a favour - Redo your money management

If you have stop loss orders in place I don't see what difference it makes.

First,

I scalp so I dont incur massive drawdown (15 pip SL here) , but I do know many day and intraday traders with several positions open and thier accounts are quite often below 100% free margin.

My problem with the whole thing is a move from 20% to 100% for a margin call is massive change in your account policy; and to give your clients 72 hour notification and via email at that is totally unsatisfactory IMHO.

What about traders who are still on vacation with positions open on there terminal, and there accounts are under 100% free margin, ahh they will return next week and have a big surprise awaiting them.


And I agree with the other poster it totally smells like liquidity problems, or a move to force additional deposits!!!


Dallas

Has anyone phoned them? Is this aimed only at raising Capital money or an additional requirement from the farm bill amendment from last fall? I'm trying to remember if margin requirement minimum was addressed in the CFTC Cap Requirement change effective January 17th. regardless of Cap money on hand.

Update:
While I did not find what I wanted in my copy of the new legal requirements, it is addressed in this post. Now my only question is if margin minimums were raised for NFA members regardless of Cap. money on hand.

Ahhh,


Thank You for the update. Now it all makes sense, they are short on capitol so you press overleveraged accounts for deposits, or stiff them!!!! Thats really cute!!!!!!


Dallas

What leverage were they before and what leverage are they after the e mail to you? I do not use Alpari, so I am asking for information.

Leverage hasnt changed, what I meant by the statement was drawn down accounts. I guess the January deposit bonus wasnt generating the needed capitol!

Dallas

Couldn't you use this to your advantage,in a hypothetical, by setting up 2 small accounts for say $1000 each and buying on one and selling on the other and let Alpari close the loser, you keeping more of your money than the previous 20%, (which would have take about 94% of your account away), at 100%, (you would only lose about 74% of your account on a margin call) And then letting the winner run. Is my logic flawed? Or is Alpari now taking the greater risk on it?

they can simply take a little long to open your account.

Well lots of things could happen, your statement has nothing to do with their risk, but the point is their risk has effectively increased by them effectively guaranteeing a larger portion of your account from ruin.

If they were a STP ECN then their logic is sound, because they are saying you are less credit worthy and they will not take the risk on your account to 20 % of margin available.

However,

They are in fact a market maker, which means they are taking the opposite side of your trade. So, they are effectively limiting your loss and limiting their win from you and also on the other account, they are limiting their win and allowing your win to be unlimited. I don't think they thought this through, logically.

There is nothing scam in this email.

Forexwomen,



I respectfully disagree, lets use this example because in both cases you are technically borrowing money.

Lets say you just bought a new car and you put a sizeable down payment on the vehicle. Your bank some time down the road runs into financial trouble so they decide to raise your interest rate on your vehicle from 4% to 20% to generate more capitol; and send you an email stating that based upon the change in interest rate you need to pay X amount of dollars in 72 hours to keep your account current or your new car will be immediately repossessed. Ah I think almost anyone would consider this shady!!!!!!!

We as retail forex traders are not responsible for the financial criteria our brokers have to meet to stay in compliance. The NFA required minimum to do business is their responsibility. They could easily meet the 15 million dollar requirement of the NFA by reducing their leverage to 50:1. Then the 18 million they now hold would be sufficent. Instead they choose to embark on a policy change that will generate millions of dollars in forced deposits and or margin called accounts within 72 hours. What else would you call this but a scam?

Lets look at an example, say a swing trader has an $80,000 account thats now at a margin level of 70.0% which isnt uncommon, he could easily have to come up with $4000 just to bring the account to the 100% margin level to save existing positions. But in all actuallty we know that this wouldnt be enough because your account is still very close to the danger zone. Under the prior policy of 20% margin call with an account at margin level of 70% you have 3.5:1 differential. So lets say you determine under this new policy of 100% margin level you want to get your margin level up to lets say 300% until you can get out of some trades, you would easily have to come up with another $26,000 in 48 hours!!!!!!!!!!!!

What else would you call this, this is clearly aimed at the large accounts that are under 100% margin level, and it will take a sizeable deposit to put your account back into a manageble position!!

Now I've already heard the bad management theme from one post, i do not swing trade so I have no idea what good money management is for trades that you hold for indefinite periods of time!!! I will reiterate that I am not effected by these changes because I scalp, but I do know swing traders that consistently have a margin level of 90%!!! I was talking to one swing trader today that has a sizeable Alpari account at about 90% margin level, and he stated that he has to wire about $1200 just get back to 100% and an additional $24,000 so he has enough room to work himself out of his trades so he can close his account.

It doesnt seem all that bad until you actually do the numbers!!!!!!!!


Dallas

btw the 10% credit deposit is with alpari UK. I havnt recieved this email about change of margin requirement, it is just for US i presume.
Also I want to let other people know that the 10% bonus has expired on the 10th janruary

Usually the leverage for online forex brokers is about 1:100. If Alpari really did increase their margin level to 100%, that means they can vertically close anyones account at any point if we start losing our initial deposit. For example, I made a deposit of $100 into a forex account with a leverage of 1:100. When the margin level is %20, I must have at least $40 in my account or they can close my order at any point. But if the margin level is %100, they can close my order even if my account still have $199 deposited there.

My concern with the entire thing is a move from 20% to 100% for an edge call is huge change in your record approach; and to give your customers 72 hour warning and by means of email at that is absolutely unacceptable IMHO. Shouldn't something be said about traders who are still in the midst of a furlough with positions open on there terminal, and there accounts are under 100% free edge, ahh they will return one week from now and have a major amazement anticipating them.