Can you lose your entire account? | Forex Factory

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Can you lose your entire account?

  • #1
  • First Post: Sep 21, 2009 11:29pm Sep 21, 2009 11:29pm
In general, is it possible for a stop loss to not trigger and an entire account get wiped out? I'm thinking of trading with no leverage and risking 2-5% of my account per trade. Could something happen in the market or with a broker that could wipe my account out even though I have a stop and did not risk the entire account?

Thanks!
  • #2
  • Sep 21, 2009 11:53pm Sep 21, 2009 11:53pm
Yes that can happen.
  • #3
  • Sep 22, 2009 12:01am Sep 22, 2009 12:01am
It's certainly possible. We all have our accounts on the line everyday. It's a risk that goes with the territory.

If you are going to trade with a broker that no one here has ever heard of.... your chances of losing your money go way up.
  • #4
  • Sep 22, 2009 12:12am Sep 22, 2009 12:12am
What is the best way to protect your account against this? Use a reputable broker... and?

I guess one could move funds out of their account regularly so if it were to happen the max loss could be contained.
  • #5
  • Sep 22, 2009 1:02am Sep 22, 2009 1:02am
Quoting jerzhere
In general, is it possible for a stop loss to not trigger and an entire account get wiped out? I'm thinking of trading with no leverage and risking 2-5% of my account per trade. Could something happen in the market or with a broker that could wipe my account out even though I have a stop and did not risk the entire account?

Thanks!


If you're trading major currencies with no leverage you can never get wiped out, think about it!


....well not unless your broker runs off with the cash or goes bust, if you're worried about that then trade with an FSA regulated broker or trade futures.
  • #6
  • Sep 22, 2009 1:11am Sep 22, 2009 1:11am
Quoting pipmutt
If you're trading major currencies with no leverage you can never get wiped out, think about it!

....well not unless your broker runs off with the cash or goes bust, if you're worried about that then trade futures
Pff... come on. Who would be so stupid to trade with no leverage?
  • #7
  • Sep 22, 2009 1:14am Sep 22, 2009 1:14am
Quoting Xaron
Pff... come on. Who would be so stupid to trade with no leverage?
Ummmm let me see...the OP? (".....I'm thinking of trading with no leverage.....")

Hehe, I know it's early but.........
  • #8
  • Sep 22, 2009 1:35am Sep 22, 2009 1:35am
hehe Oh, I get it..... Xaron trades with 1:1 leverage !! I trade with too high of leverage, so that's where my chances of losing all of my money go way up !!
  • #9
  • Sep 22, 2009 1:38am Sep 22, 2009 1:38am
.....actually thinking about it, if you were really determined to get wiped out you could just keep trading and paying spread until your capital eventually runs out, it might take a while though, if you get a couple of good runs you'll be back where you started, lol
  • #10
  • Sep 22, 2009 7:56am Sep 22, 2009 7:56am
Quoting Xaron
Pff... come on. Who would be so stupid to trade with no leverage?
I know, it's a novel concept.
  • #11
  • Sep 22, 2009 8:31am Sep 22, 2009 8:31am
Does your b roker offer guaranteed stops (GS). They cost a bit more in spread but if your machine and your telephone go down and Iran bombs Israel at least you're covered (possibly).

Some of the spread-betting firms do GS in the UK, so it might be worth checking where you are.
  • #12
  • Sep 22, 2009 8:43am Sep 22, 2009 8:43am
If one missed STOP can kill your entire account then you truly need to re-assess your trading abilities and equity. All traders need an ample amount of equity withstand huge draw-downs and mis-predictability from time to time. In addition, traders must understand the concept of risk and idea of managing that risk. That includes knowing how many LOTs you can trade effectively.

Those who think FX is about starting an account with $100 and becoming a millionaire within a year, is seriously mistake of how this market really works. An higher equity balance understanding of leverage can ensure that you stay in the game a lot longer than most.
  • #13
  • Sep 22, 2009 3:53pm Sep 22, 2009 3:53pm
Quoting Jhig
If one missed STOP can kill your entire account then you truly need to re-assess your trading abilities and equity. All traders need an ample amount of equity withstand huge draw-downs and mis-predictability from time to time. In addition, traders must understand the concept of risk and idea of managing that risk. That includes knowing how many LOTs you can trade effectively.
Right, I could see how bad money management could lead to one trade killing your account. I am more wondering could something happen in the market, i.e.; an attack, that could cause the stop to be ignored and allow all the funds in ones account to be sucked up. I guess the simple question is can a stop be ignored by a broker. I am using Alpari and so far them have been a good broker.
  • #14
  • Sep 23, 2009 6:24am Sep 23, 2009 6:24am
Quoting jerzhere
Right, I could see how bad money management could lead to one trade killing your account. I am more wondering could something happen in the market, i.e.; an attack, that could cause the stop to be ignored and allow all the funds in ones account to be sucked up. I guess the simple question is can a stop be ignored by a broker. I am using Alpari and so far them have been a good broker.
It may not be probable, but it is possible. For example you are short EUR/USD and a nuclear attack on USA happens... Suddenly everyone holding dollars is trying to sell them and so are you with your stop order.
What you refer to as Stop Loss is in reality a Stop Market order, that means once the price in your stop order is reached a market order is placed.
Now if everyone is trying to sell dollars in the same moment, there will be no buyers, so value of dollar will go pretty much to zero and the EUR/USD rate will head to infinity.
What impact that will have on your account depends on how much leverage you used... if your leverage was higher than 1 (assuming you had no other hedges), you will lose your whole account and more... you will actually be in debt.
A little bit safer way of protection would be to buy a call option on EUR/USD although you would still have a counterparty risk, for example in that catastrophic case of nuclear attack it is probable that the seller of that option would not be able to fulfill his obligation.
I'm not insane; my mother had me tested.
  • #15
  • Sep 23, 2009 6:33am Sep 23, 2009 6:33am
Quoting RoBiK
Now if everyone is trying to sell dollars in the same moment, there will be no buyers, so value of dollar will go pretty much to zero and the EUR/USD rate will head to infinity.
If everyone is trying to sell dollars but there is no-one to buy them, at any price, then wouldn't you just be stuck with your dollars?

This is fiction, it's not even hypothetical, in fact there's more chance of seeing a pig flying over Central Park than seeing the dollar or any of the major currencies ever go to zero

The OP says he's not using any leverage so he can never lose his whole account, the worst can happen is he'll be holding a currency which is worth less than he paid for it.
  • #16
  • Sep 23, 2009 6:44am Sep 23, 2009 6:44am
Quoting pipmutt
If everyone is trying to sell dollars but there is no-one to buy them, at any price, then wouldn't you just be stuck with your dollars?

This is fiction, it's not even hypothetical, in fact there's more chance of seeing a pig flying over Central Park than seeing the dollar or any of the major currencies ever go to zero
hypothetically, yes you would be stuck with your dollars... but it would be only a number in some electronic system... you couldn't even wipe your behind with that electronic dollars

anyway... i know that that scenario extremely improbable, but i just used the most extreme thing that came to mind to illustrate that there is the possibility to lose the whole account and even more even if one has a stoploss in place.
Other far less severe scenarios are quite possible... If suddenly there is a drop in price the price could go way past your stoploss and depending on how leveraged you are you could be wiped out.
I'm not insane; my mother had me tested.
  • #17
  • Last Post: Sep 23, 2009 7:10am Sep 23, 2009 7:10am
anything can happen.
just today, i made a trade where everything seemed fine according to my trading rules and system, then after a few hours the trade went completely against me.

This has happened a lot in the last time. no worries though, i applied sound money management rules
Twitter: @forexpokerpro
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