Drawback of having a "foreign" broker? | Forex Factory

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Drawback of having a "foreign" broker?

  • #1
  • First Post: Jul 26, 2007 2:48pm Jul 26, 2007 2:48pm
To all you knowledgeable traders out there,

As the title implies, are there any drawbacks for people living outside the USA (who trade in USD) of going with a USA broker USA (I'm in Canada). Or put another way, what advantage do I get with sticking to a Canadian broker?
(I can't see any since my CAD $ cash will be converted into USD in both cases)

Thanks!
  • #2
  • Jul 30, 2007 3:02pm Jul 30, 2007 3:02pm
If you transferred your funds last week to a US Broker and paid 1.04 (thereabouts) and start successfully trading ending up... lets say 5000K up in 6 months ... when theoretically the US$ recovers to 1.10 you are up in 2 ways when you withdraw your money....

However, the Canadian brokers do go on about how funds are insured and protected in Canada. Seems like Canadians may be at risk if a broker
goes under in the US.
  • #3
  • Aug 6, 2007 6:29am Aug 6, 2007 6:29am
If you transferred your funds last week to a US Broker and paid 1.04 (thereabouts) and start successfully trading ending up... lets say 5000K up in 6 months ... when theoretically the US$ recovers to 1.10 you are up in 2 ways when you withdraw your money....

However, the Canadian brokers do go on about how funds are insured and protected in Canada. Seems like Canadians may be at risk if a broker
goes under in the US.
http://www.forexfactory.com/images/buttons/quote.gif

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  • #4
  • Aug 6, 2007 6:31am Aug 6, 2007 6:31am
Quoting Pipsqueak4x
If you transferred your funds last week to a US Broker and paid 1.04 (thereabouts) and start successfully trading ending up... lets say 5000K up in 6 months ... when theoretically the US$ recovers to 1.10 you are up in 2 ways when you withdraw your money....

However, the Canadian brokers do go on about how funds are insured and protected in Canada. Seems like Canadians may be at risk if a broker
goes under in the US.
http://www.forexfactory.com/images/buttons/quote.gif

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.
  • #5
  • Aug 6, 2007 7:10am Aug 6, 2007 7:10am
If you have a substantial account in another country, It can be like having a trade on with no stop loss (If you have your account in the foreign currency)...If you live in Canada and put your account in the U.S, you have basically transferred your money in to USD...Knowing that you have to withdraw the money at some stage and exchange it in to CAD, you are long USD/CAD with no stop loss in place...Sounds a bit extreme, but something worth thinking about..
  • #6
  • Aug 6, 2007 9:49am Aug 6, 2007 9:49am
Quoting Norman1
If you have a substantial account in another country, It can be like having a trade on with no stop loss (If you have your account in the foreign currency)...If you live in Canada and put your account in the U.S, you have basically transferred your money in to USD...Knowing that you have to withdraw the money at some stage and exchange it in to CAD, you are long USD/CAD with no stop loss in place...Sounds a bit extreme, but something worth thinking about..

Don't worry about that. Yes, you are long USD/CAD with no stop loss. But it's not the missing stop loss that kills you, it's the over leveraged trades. And being long USD/CAD the way you say it is not such a big deal, because you're 1:1 leveraged.
  • #7
  • Aug 7, 2007 3:28am Aug 7, 2007 3:28am
Quoting stefant
Don't worry about that. Yes, you are long USD/CAD with no stop loss. But it's not the missing stop loss that kills you, it's the over leveraged trades. And being long USD/CAD the way you say it is not such a big deal, because you're 1:1 leveraged.
Yeah nothing to worry about...I've been down about $50k and have had to hedge my account...but nothing to worry about..sure.
  • #8
  • Aug 7, 2007 5:54am Aug 7, 2007 5:54am
You must have a hell of alot money in your account then.. USD/CAD is down around 10% since 1st of February, so if you were to open that account exactly then (when the this move started, so you'd lose the maximum ammount of money) you must have half a million dollars in your account congrats, man! Also, if you were to open the account let's say, in September 2006, the move is no more than 5% down to the price today, so in order to lose 50K your account must've been @ one million dollars. Not kidding, I think you're the first forum-guy I "meet" with that much money. Keep it going. And yeah, with that kind of money in my account, I wouldn't have anything to worry about too
  • #9
  • Last Post: Aug 7, 2007 7:54am Aug 7, 2007 7:54am
Hi Stefant,

In my original post I did say "substantial account."

I agree with you, this is not an issue with a $300 micro account

You are right, I have wired a large amount of capital in to my account, but I guess it depends on who you speak to as to what "large" is..But it's not just what I've sent to the US that is costing me, it's also my profits that have are constantly reduced due to the decline of the US dollar..The easy answer to this is to withdraw (which I do) but it's hard to increase the size of positions whilst constantly withdrawing profits!

I can see why you were thinking it's hard for me to be down 50k on my account, because you assumed I'm Canadian...When I gave the example of the USD/CAD I was referring to the author's position, not my own..
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