Maximum amount you would keep with your broker?

What is the maximum amount of money you would keep with your broker? Is it safe to keep $25,000 with your broker? The money is not FIDC insured, so I was wondering what most people who trade would keep with there brokers. Is it unheard of to keep hundreds of thousands with a broker? Thanks. Sorry for the grammar, I can't ever find the spell checker on here.

$25k wouldnt be big deal for a broker like Interactive brokers or Ameritrade. which broker do u use? I would start worrying after $100k.

I use Oanda. Thanks for the reply.

I have about $100k with Oanda and about $200k with FXCM. Also about $30k with Refco - hopefully will get that back!

Simon

Depends on the dealer, I would guess. I trade with the largest dealer in the world for the reason that I expect less problems. I've sent them the first figure you quote, and funds since then, never a problem.

Greg,

May i know the dealer name ? Thx..

I hold 5 institutional accounts in excess of several million in each and trade them through a custom trading platform that connects my machine to 5 different direct access points direct to Interbank (in most cases - not all the time).

I use two retail trading accounts for testing purposes only and both of those have an average of $50k in each. I grew my equity with the retail brokers that I use, so I decided to continue to give them my business for small scale testing since they were so flexible with me during my growth phase.



In general, if you do your homework, get to know the people behind the website in-person, then you will know where your equity will be most safe and you will also know where not to deposit one thin dime.



Right now, I trade for equity growth (non-test trades) mostly through very high-end entities from where I live here in the U.S. through access points outside the U.S. (only one is in the U.S. where I live).



If you are going to remain in the Retail trading game, look for "brokers" or "market makers" with proven Institutional Trading Platforms that have portfolio management capabilities including percent allocation functionality AND that allow hedging. These will typically be sophisticated enough to already have several established commercial accounts that they service and therefore, they will have the experience of handling larger cash accounts - all will be regulated within their own country (if your homework is complete) for some added mental comfort on your end.

Thank you, some good advice.

Jim,

I got your PM, but for some reason was not able to send it to you. So, I'll post my reply minus any of your private comments here:
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If you are trading at these levels now, then you are going to need to get up to speed quick on the distinctions between Retail and Institutional. Most so-called “brokers” and “market makers” in this business “say” they have “Institutional Account” capabilities, but when you close examine their shop from the inside-out, you quickly find that their business is geared primarily for the small retail trader with trading $25,000 or less on a routine basis and they rarely support or service large scale 7 - 9 figure players.

Most of the firms housing both sides of the business have different rules for what they deem to be retail –vs- institutional. The bottom line with most is how much capital you have on account with them. Some consider anything over $50,000 as “Institutional” while others won’t consider you an institutional trader until you come up above $300,000. Others are at the $100,000 level. So, you will have to do your homework to find out what range of equity levels you find appropriate for you relative to what they consider "Institutional".

Most Institutional accounts receive "perks" of various kinds ranging from better spreads to various "cash-back" schemes in the form of "rebates" per million traded and lots of other goodies in the middle - homework will sort this out as to which applies to you most appropriately. Most claiming to have Institutional Accounts will offer you a "different" trading platform. In most cases, the trading platform will be the exact same 32-bit Windows or Java based application, but with certain other functions enabled and with certain other trade conditions applied to the account.


Given the relationships that I’ve developed and the “retail” brokers that I use for certain purposes, I don’t have any problem going as high as $3 - $5 million per Broker. However, that is because I know these guys well – I’ve spent the requisite time with them – I know their business and I know how many other large scale private client traders they support at those levels (and above) as well. But, you have to spend the time to get to know them. At these levels, you don’t just open an account over the web. You get on a plane and go meet people, take the company tour, meet the President, CEO, Board of Directors (if possible), Operational VP’s and Directors, CFO and CIO, the IT Director, Developers and operational staff. You ask a million questions and you GET a million answers or you don’t do business with them - I would not.


They better roll out the red carpet upon your arrival – pay for your lunch, dinner and at least make the “offer” to pay for your hotel. They should have a company car pick you up form the airport. If they don’t treat you like you “owned” their firm, then they don’t think of your business highly enough and for me, they are not worth me wasting my valuable time or money going to meet. You will be transacting millions of dollars worth of business through them over your career as a trader and as your account grows – so, they had better respect that fact and respond to you like you were “their” CEO.

You are the one who can make them look really good to “their” bankers and their Interbank peers. Your large scale dollars (relative to most of their retail business below $25,000) make them look good to their peers from a credit and liquidity standpoint and you need to know that before you walk through their door. This will also give you some power when negotiating leverage levels, spreads and other "perks". You are in control when you walk through the door and you need to fully understand that fact. They need your business and then need more large scale entities to gain higher compensating balance leverage with their bank(s).


Depending on who you trade through, your cash will be “reasonably” safe. For example: there is no way on earth that I would feel comfortable giving certaion firms who shall remain nameless, any capital of mine – but that’s just me. Any firm unable to support traders moving several million into and out of the market each day, is not going to impress me enough to trade even several hundred thousand through them on a daily basis.

Also, their attitude on the phone, live chat sessions, email and in-person matters a great deal to me. Poor attitudes in any of these channels of communication is a red flag for me. The inability to contact them easily by phone, email, live chat, etc., are all indicators of whether or not I will want to do large scale business with them as well.


Are they regulated? And, if so – how? There are Forex intermediaries all over the world and not all of them are registered in the U.S., or regulated out of the U.S. (where I live), but there should be a regulatory entity or two in their home country that they should have to answer to on some level. You will also find that some firms hold various types of “insurance” to protect client funds – you will have to check into the exact details directly with those firms that have this type of insurance, in order to know whether or not it would apply to you and if so, to what extent are you protected.


(Given the dollars that you mentioned in your PM, you also need to look into proper entity structuring and make sure that you are executing your trades through the proper legal entity – not from under your own personal social security number. At these levels your trades should be executed through a corporation, llc, llp, trust, qualified plan, etc. – not through you as Mr. Joe Trader’s personal retail trading account. Leave that to the small traders. This is a completely different topic of conversation, however. Get a good entity structuring attorney who can get your entities in order and structured correctly for high lot size trading and large cash inflows.)

I digress...

When you are trading large scale lot sizes, you have to make this kind of homework just as important as the trading system you use. Growing your capital is one thing – protecting it from external forces trying to separate you from your money – is quite another.

Hope this helps.

Blue,

You are welcome.

All I can say is... wow. That was about the most interesting thing I have ever read. You hear about people trading at that level, and the sort of issues they deal with in the wizards books, but somehow hearing it from a real person makes it so much more... well, real.

Thanks!

It does!

This is the issue which I described in other thread as "the house cares". Growing money and keeping them safe are two different things.

NaysayerTrader, could you reveal your personal rank of brokers? I've got a feeling you may not want to tell us the names. Actually I have less then 25000 but First: I plan to grow and I do and Second: even having a small amount anyone would be comfortable knowing his broker is good - because the people who know the businness inside-out rank him high!

Thanks so much for your reply. What you have mentioned helps immensely.

NaySayTrader,

I just wanted to say... WOW!

Darkstar, Jim, WTB – no problem. You will discover the same things once you do the leg work across the board.

Zazzy,

Unfortunately, not. For obvious reasons and some not so obvious, I won’t directly mention who I have arrangements with as a basic protocol and practical matter for some aspects of security – after all – this is still the “internet” and even PM’s are not truly “private”. However, I will say that for the retail side of things (I guess that’s what you are referring to) for the account level that you are referring to, I like IFX and Saxo for a number of different reasons. Primarily, because I can grow fairly well with both of them (if I were a small trader), their back-end technology, their overall client/customer support, who regulates them and their overall willingness to work with me on doing things that way I need them done.

One firm is relatively tiny while the other is relatively large (for trading the Forex). IFX is the smaller of the two, but that’s ok with me because I like their “business attitude”. I like the way they supported me when I was growing and I like the fact that they actually took some of my input and made it a part of their trading platform. They want your input so they can grow-up, too! Saxo is much more “polished” and the feel you get when dealing with them is very different. You can do a good size of business through them as you grow. They have some pretty cool/neat things coming up soon related to a new Trading Platform (I won’t get into that here). The service is personal and professional at the same time which I find rather a nice touch. The followed up with me rapidly and I have had no complaints relative to their SLO (Service Level Objective). One is smaller and one is larger, but I still place these two above many out there who will remain nameless.

If you want to step up to an ECN type model of trading, then you always have players like COESfx or HotSpot FX for the Retail side and HotSpot FXi for Institutional trading. These trading platforms are a little bit more involved but they are some of the best “off the shelf” solutions that meet a specific need for most mid-size lot traders. So, you would have a lot of room to grow through sources like these depending on what you consider “large lot transactions”. COESfx for example, takes you direct to interbank and they have no dealing desk with which you must compete with before getting filled. Both give you greater control over where you filled, how you get filled and when you get filled. Each of them have their little quirks, but that is a matter of mostly familiarity with their respective trading platforms – the more you use them the easier they are to use on a daily basis.

Between the retail world of an IFX or Saxo and the more “commercial” institutional world of a COESfx or HotSpot FXi, you can expect to pay spreads ranging from a low of 1 pip to a high of 4 pips. I think, 4 pips is too high for a $25,000.00 type trade, but you will have to blend the relevant issues of customer service attitude, trading platform availability every 24hrs, back-end technology uptime, spreads, maximum number of lots allowable through the online trading platform, available leverage per trade/per day and the ability to control multiple accounts and/or multiple simultaneous trades on a daily basis, who they bank with and who regulates their FX business, etc. All of these things will need to be considered before you can make an intelligence decision about whether or not your funds are safe, and whether or not you can grow through them effectively enough.

Then, of course, there are those intermediaries outside the U.S., such as Swiss, etc., concerns for added tax benefits and account privacy functions – but I won’t be getting into that here. It does not take much homework to find these things out on your own.

You put your money in different places for different purposes and different reasons. You have stop and think about why you are trading, who you are trading with, what kind of privacy they can offer you against all the other concerned listed above. If you want more privacy for example, you might be sacrificing some technology – it al depends on where you go and what you want/need to accomplish.

Trade with a strategic purpose in mind (figure out why you are in the business in the first place), and that will help guide your research into the right intermediary(s) for your needs.

Hope this helps.

Any one out there Know anything about Refcofx dilution trying to get more info on the next court date but no one gets back to me from the refco group ...

Thanks for the further advice

NaysayerTrader, Scale of 1 to 10 what would you rank Oanda for the traders with accounts under $25,000.... Mind to share any other opinions?



Mike...

NaysayerTrader,

From what point (account size wise) would you consider commercial brokers (InterbankFX, Oanda, FXCM and the like) to be unsuitable for a regular trader, meaning you gotta start doing your "research homework" as you put it?

Thanks.

A 100% Java based trading platform and good under $25k lot level control and flexibility at trade execution. However, I’ve found their customer service to be rather suspect on my earlier attempts a few years ago – but that was back then – things could have changed – not sure. Oanda, can’t serve my needs now as they don’t come anywhere near the transactional lot levels that I require – so I have not spent much time on them lately. The charting is not worth the code it was written on, if you need solid charting capability – it was very weak the last time checked.

I personally find many of the pure Java based platforms to lack the level of flexibility that I need and to be overly subject to network traffic issues that seem to degrade application console operations more so than most C++, or Fat Client trade execution applications. However, more and more you are now seeing brokers and intermediaries jump on the Web Application bandwagon, so at the same time, I’m seeing some of the Java based applications get better over time. The actual trade execution speeds that I remember where quite good, however – based on the demo platform that I tried a few years ago.

In fact, at the time, it was the best I had ever seen for a pure Java based platform. However, I do remember their spreads jumping around to some pretty ridiculous levels during fairly stale periods in the market making risk to reward ratios better at another broker. So, overall - I remember not liking the experience all that much for the small lot size trader. I think you can do better than Oanda these days if Web Applications are what you seek. As far as capital security is concerned with them, I think they are good for $25k, but I would not go much higher with them under the current management. Oanda, I think, had (at the time I investigated them) a lot of potential – but they needed to expand their business and drop of overly rigid approach to customer needs – long term.

Try calling some of those mentioned above - they are good sources, especially for $25k and under. In general, for me personally, there just aren’t many out there that I’m all that impressed with – only a handful. I’ve mentioned most of those that I like and the reasons why. Remember, that much of the industry is not “Standards Based”. That is a term very common and well understood in the Enterprise Software business. The irony here is that “software” is the very link to these companies for the trader on a daily basis. So, this industry will do it self a big favor by becoming “Standards Based” – sooner, rather than later. Not just on software and technology but also on terminology, business model operations and most importantly (at least to me) Account Conditions & Protocols as well as Execution Functionality. A lot of this, of course, is being driven by the Interbank relationships that these “brokers”, “market makers” and “intermediaries” have developed. At the same time “bigger” does not always mean “better”. FXCM is a great example of this, but I won’t get into FXCM here.

Hope this helps.