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Locked (hedge) trade can face a Margin Call

  • #81
  • May 23, 2009 8:50am May 23, 2009 8:50am
Quoting doblece
This is still just another hypothesis.

The only thing that I can figure out is that you already had earned the additional $15K prior to opening the longs on day 13. That would explain why you were able to open 10 eu lots within a roughly two hours time span and leaves you with:

23072.25 - 7330.17 = 15742.08 equity and 214% margin level

That's roughly 140 pips plus spread that can go against.

Price went 40 pips lower than the hedging price taken later on. Which is about 200 total pips x 110 = 22000
Equity = 1000 (23000-22000)
Margin...
when hedge,1 side is + , the other side is - .
  • #82
  • May 23, 2009 9:07am May 23, 2009 9:07am
Do you have to pay off the minus 4000 USD Account Balance you have now?
  • #83
  • Edited 11:10am May 23, 2009 10:48am | Edited 11:10am
Quoting doblece
I did some calculations to try to sort out this mystery.
Numbers between parenthesis are order numbers for the trades taken, as per the statement dates.

(1) usdjpy buy 1 lot...
I was about to make the calculation to point as something looked very wrong due regard to the size of the trades.

I had only once a problem with on of my broker (FXDD) and they solved it as it was indeed a feed error but i sent them a normal email and i did not treat them as scammer.

FXCM has been very nice with you m88 and if you go to the NFA about this you might have to face charges for false complaint so be carefull.

The only part which is abnormal is the 110 spread between the closing of the trades at the same time but they can argue that this is the only price they had at that time...
  • #84
  • May 23, 2009 11:44am May 23, 2009 11:44am
Here's what I found in a PDF document from FXCM:

"Margin Levels

FXCM Metatrader 4 will trigger a margin call when the accounts Margin Level reaches 100%.

The margin level can be found on the Trade tab in the FXCM Metatrader 4 terminal. Please see illustration below for location circled in red:"

Attached Image (click to enlarge)
Click to Enlarge Name: fxcm.PNG Size: 11 KB


It's also on the risk disclosure document previously quoted and linked anyway:

"Example: A trader has $10,000 in a standard account and his margin requirement is 1% (i.e., he has leverage of 100:1). For each position he opens (each position = 1 lot = 100,000 notional value), he is required to set aside $1000 in used margin. If he opens two positions, his required margin is $2000. The trader can lose up to $8000 before he starts dipping into his margin requirement. When his account equity reaches $2000, a margin call is triggered and all positions will be closed."

So apparently they don't allow losses to go beyond the required margin.

m88, were you fully hedged/locked over the week-end? (as statement shows you were not)
  • #85
  • Edited 12:16pm May 23, 2009 12:00pm | Edited 12:16pm
my point of view to u,M88, use your appeal wisely.
this is a good chance to fight back IF you are REALLY on the right side
and innocent.

overall, your full locked/hedge losses are really huge @critical level.


u r the one who well aware what happening.

what i mean, until now, did FXCM came back to u defending their
margin-called are the valid one according their agreements/rules?
Did u received a thorough reports on how their calculation to backup
or the explain why u got margin-called?

If their (audit committees) still can't come out with that then
you stand strong point,all the way to fight back ur money back.
Why not? Why we choose regulated brokers? Why we pity them?
No mercy to them if they're really cheating/mistaken?
Don't chicken out to bring it to NFA.
This is your first appeal. Why margin-called when sufficient margin? and
they can't prove that?

Your second appeal is obviously valid where closed-prices been
manipulated. Highlight it loud and clear. U got them in red handed!
Again & again, so called regulated brokers under what? NFA, FSA.... still doing such things to scam our money. What are those regulator doing?
Sleeping eh? no action?

Are they reliable or just a good branded name called "regulated"?
If those pro here trying to 'prove' you that u should have margin-called
already while FXCM can't and FXCM keeps avoiding this issue but to offer that $11K
to settle the case(their fault), i think u got power to negotiate for more.

And another thing i like to say, why ppl come into complaint-thread making 'entertainment or amusement'.
This is the most easy way to create unnecessary enemy.

m88, if u r really innocent or victim of their fault, hope u got the best compensation.
as a trader, like u, (no pity to any bad brokers) we stand together for our rights.
  • #86
  • May 24, 2009 5:57am May 24, 2009 5:57am
My suggestion to you is, withdraw your money first and get as much evidence as possible and later hire a lawyer to sue them with the money you got in your FXCM account....since u can profit in forex means u can profit in future....so if your lawsuit is a success, you can sue them with a 6 digit figure sum......
  • #87
  • May 24, 2009 9:15am May 24, 2009 9:15am
Quoting maxkh
my point of view to u,M88, use your appeal wisely.
this is a good chance to fight back IF you are REALLY on the right side
and innocent.

overall, your full locked/hedge losses are really huge @critical level.


u r the one who well aware what happening.

what i mean, until now, did FXCM came back to u defending their
margin-called are the valid one according their agreements/rules?
Did u received a thorough reports on how their calculation to backup
or the explain why u got margin-called?

If their (audit committees) still can't...

>>>what i mean, until now, did FXCM came back to u defending their
margin-called are the valid one according their agreements/rules?
Did u received a thorough reports on how their calculation to backup
or the explain why u got margin-called?

i believe is FXCM system error.that day,monday is the first day for non hedging in FXCM US account.my account already switch to FXCM UK b4 that.
no any report yet.just receive an agreement to sign and receive usd11200.

how can a locked trade facing 'MARGIN CALL'.Locked should b a side + and a side -.

the closed-prices been manipulated!!!!
  • #88
  • May 24, 2009 9:17am May 24, 2009 9:17am
Quoting shadowman
My suggestion to you is, withdraw your money first and get as much evidence as possible and later hire a lawyer to sue them with the money you got in your FXCM account....since u can profit in forex means u can profit in future....so if your lawsuit is a success, you can sue them with a 6 digit figure sum......
how much the figure r u suggesting?
i really feel hurt.this HURT already affect my health.i can't sleep well since monday.this is wat i want to tell judge.
  • #89
  • May 24, 2009 10:43am May 24, 2009 10:43am
get all the evidence and sue them....i believe your not the only that got scammed by them....many more being scammed but they keep quiet.....do something.....demand at least 200k from them to pay lawyer fees and also yourself
  • #90
  • May 24, 2009 10:44am May 24, 2009 10:44am
Quoting m88
how much the figure r u suggesting?
i really feel hurt.this HURT already affect my health.i can't sleep well since monday.this is wat i want to tell judge.

Don't forget since you switched to FXCM UK you are under UK jurisdiction
regarding any complains you should find out ,if they labeled you as retail trader, which they must unless they informed you otherwise and if you are a retail trader you can have access to a free ombudsman in the UK .
  • #91
  • May 24, 2009 11:07am May 24, 2009 11:07am
Quoting Kiado
Don't forget since you switched to FXCM UK you are under UK jurisdiction
regarding any complains you should find out ,if they labeled you as retail trader, which they must unless they informed you otherwise and if you are a retail trader you can have access to a free ombudsman in the UK .
ya,i received a agreement to sign which is from FXCM UK,london.
how to get free ombudsman?
  • #92
  • May 24, 2009 11:10am May 24, 2009 11:10am
Quoting shadowman
get all the evidence and sue them....i believe your not the only that got scammed by them....many more being scammed but they keep quiet.....do something.....demand at least 200k from them to pay lawyer fees and also yourself
i think at least 200k GBP......am i only worth 200k GBP???? i would like to request.may be 500k GBP or i think to go 1,000,000 GBP......
  • #93
  • May 24, 2009 11:15am May 24, 2009 11:15am
Quoting m88
ya,i received a agreement to sign which is from FXCM UK,london.
how to get free ombudsman?
http://www.financial-ombudsman.org.u...ty/index.htm#2
  • #94
  • May 24, 2009 11:24am May 24, 2009 11:24am
Quoting Kiado
http://www.financial-ombudsman.org.u...ty/index.htm#2
thanks mate.
  • #95
  • May 24, 2009 1:34pm May 24, 2009 1:34pm
Quoting m88
i think at least 200k GBP......am i only worth 200k GBP???? i would like to request.may be 500k GBP or i think to go 1,000,000 GBP......
If you want to make yourself look like a complete idiot. Yeah go ahead.
Seriously you guys have no sense for reality.

Do you even know how to read? You ask "HOW CAN LOCKED TRADE GET MARGIN CALL??!??!?!?!?" over and over again.

-->>>http://www.fxcm.com/execution-risks.jsp<<<---

Just read.

Quote
"Traders have the ability to enter the market without choosing a particular direction for a currency pair. While the ability to hedge is an appealing feature, traders should be aware of the factors that may affect hedged positions.

Diminishing Margin
A margin call may occur...."

You should have read that before beliving you're going to make millions trading forex and it's going to be soooooooooooooooo easy.


If you want to be taken serious by FXCM don't act like some 15 year old Teenager. They'll only laugh their asses off.
  • #96
  • May 24, 2009 2:06pm May 24, 2009 2:06pm
I wouldn't be too quick to judge the situation. Obviously FXCM believes they are partially responsible, or the settlement offer would not have been forthcoming.

Do I believe m88 deserves more money? No. He was obviously over trading the account and had already lost most of it already before FXCM screwed up. It's not fair to expect FXCM to pay him back for money he already lost.

However, the law isn't always fair. I for one hope m88 lets us know how it works out with the ombudsman. I think it'll be very educational.
  • #97
  • Edited 4:29pm May 24, 2009 4:08pm | Edited 4:29pm
Quoting m88
how can a locked trade facing 'MARGIN CALL'.Locked should b a side + and a side -.

the closed-prices been manipulated!!!!
Maybe an example would explain better (rounding to $1000 margin per standard lot)

Margin level = equity / margin * 100
When margin level < 100% = margin call

Margin required for 11 lots opened $11000
Negative equity at the moment of hedging = $17900
(156 pips locked loss on 10 lots at $100 per pip = $15600
230 pips locked loss on 1 lot at $10 per pip = $2300)

For you to be able to open those trades, the balance should at least
have been higher than:
margin required + negative equity = 11000+17900= $28900
which roughly corresponds with the amount you said you had at a
certain point in the account.

Normal spread is 2 pips
Let's say your margin level is at 105% thus your equity $11550

Spread widens by 5 pips (this usually happens a lot on week-ends
BTW) = your equity is reduced momentarily by $550. Your margin
level is now at 100% (equity = margin = $11000).

If spread widens by 1 pip more, you get margin called.
(11000-110 = 10890 and margin level 99%)

If spread didn't widen but comes the daily negative swap on 11 lots
let's say by a quarter point = 0,25 * 110 = 27.50
11000 - 27.50 = 10972.50
Margin level 99.75%

I can't believe you still don't understand that all this is clearly explained in their risk policies and how the fluctuations of rates, swaps and spreads can affect the overall equity and free margin remaining, so a full hedged position is NOT a guarantee that it won't move, because the prices move, the spreads move and the hedged swaps will always be on the negative side.

In fact now I understand why the $11200 amount, most probably that was the amount of the total margin required and equity required for 100% margin level, at which point the margin call should have occurred.

I wonder if you are willing to dedicate at least half the passion in finding out what went wrong in the first place from your own side, as to the failed entries taken in the first place, but most particularly as to the blatantly careless use of leverage and risk taking and the absolute need to develop a sound money management strategy so this doesn't happen again in the future. IMO that would be a much more productive use of your time. You can never lose what you learn and understand.

P.S. BTW I don't see any swaps mentioned on the statement... don't they charge/pay swaps at FXCM?


Additional note:

As sometimes it is hard to find the essential information when reading a very large piece of text, here are the three concrete reasons listed in the risk disclosure document of your broker:

Diminishing Margin
A margin call may occur even when an account is fully hedged, since spreads may widen, causing the remaining margin in the account to diminish.

Rollover Costs
It is important to note that rollover charges will be higher than rollover accruals. When all positions are hedged in an account, although the overall net position may be flat, the account can still sustain losses due to the spread that occurs at the time rollover occurs.

Exchange Rate Fluctuations (Pip Costs)
When a trader's position is hedged against exchange-rate risk, it is still exposed to exchange-rate volatility if the counter currency of the pair being hedged differs from the denomination of the account.

The third condition wouldn't apply in your case if you had only EURUSD positions, but you also had an USDJPY open hedge, so though small (9.09%) in regard of the overall positions, it still can have an incidence.
  • #98
  • May 24, 2009 5:45pm May 24, 2009 5:45pm
HEDGING is banned in the US. they have work-arounds and the biggest problem with the work-arounds is you can easily margin call the losing side of the accounts. they are doing it through a spit account. and they are not allowed to offset each other.

meaning your buys are not countered by your sells they are considered separate. thus margin call on your losing side.

i would take the money and don't get greedy. or they will just fight you and make an example of you.

just take the money.
the markets moving, time to get in!
  • #99
  • May 24, 2009 5:56pm May 24, 2009 5:56pm
So basically how many lots(100,000) are open at both LONG and SHORT before you get the "margin" call.

That would help find out if its margin call or something else.

And time they are closed as a result of "margin call"

On a side note, what does hedge can do anything. Im still trying to find out. It only makes you lose over time.
  • #100
  • May 25, 2009 12:46am May 25, 2009 12:46am
Quoting MoreYummy
So basically how many lots(100,000) are open at both LONG and SHORT before you get the "margin" call.

That would help find out if its margin call or something else.

And time they are closed as a result of "margin call"

On a side note, what does hedge can do anything. Im still trying to find out. It only makes you lose over time.
Apparently, 22 hedged lots plus 6 additional lots after the hedge, that he mentions here:
http://www.forexfactory.com/showpost...1&postcount=79

As for the times and such, they appear on the platform history which is shown on the picture of the first post...
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