**WARNING!!! MARGINE CALL CAN LEAVE YOU OWING THE BROKER BIG TIME**
Does your broker honor margine calls during fast moving markets such as news releases or suprise bank decisions that come out of nowhwere??? If not your account is GONE.
I realized this due to the CHF rate decision on 09/06/11
Let me explain...
I have a live mini account that I only put in $10.00 at a time so as to experience emotions rather than trading a demo without the luxery of emotions.
I had a trade on the USDCHF with .01 lot size which equates to a little over 1 cent per pip and NO stop loss, shame on me for not have been using money management, BUT IT WOULD HAVE NOT HELPED. Neither would have the brokers margine call of 100%
Here's why!!!
Price moved rapidly over 700 pips GAPPING up several times. Because price was gapping up against me so fast the 100% margine call did not close out my trade. I had to manually close it at 61.5% margine leaving me owing the broker a little over $1.30.
If I would have had a $10,000 standard account and made that trade using a conservative 2 lots I would have blown the account and owed the broker 700 pips X 2 lots = $6,800. A STOP LOSS WOULD HAVE NOT HELPED!!!
IBFX has a policy that says---
Buy stop, Sell stop and (Stop loss) orders do not guarantee an order will be filled at a certain price.
[All stop orders instruct the broker to open or close an order once a specified price is met or exceeded. ]
The specified price is known as the stop price. Once the stop price is met or exceeded, the order becomes a market order. Market orders instruct the broker to fill the order at the next available price. The execution price of a buy stop, sell stop or stop loss can vary from the stop price.
[This occurs most commonly during significant market moves or gaps.]
**Often these price gaps are the result of economic news releases. Keep in mind that in a volatile market substantial losses may occur and orders may not be filled as placed.***
Does your broker honor margine calls during fast moving markets such as news releases or suprise bank decisions that come out of nowhwere??? If not your account is GONE.
I realized this due to the CHF rate decision on 09/06/11
Let me explain...
I have a live mini account that I only put in $10.00 at a time so as to experience emotions rather than trading a demo without the luxery of emotions.
I had a trade on the USDCHF with .01 lot size which equates to a little over 1 cent per pip and NO stop loss, shame on me for not have been using money management, BUT IT WOULD HAVE NOT HELPED. Neither would have the brokers margine call of 100%
Here's why!!!
Price moved rapidly over 700 pips GAPPING up several times. Because price was gapping up against me so fast the 100% margine call did not close out my trade. I had to manually close it at 61.5% margine leaving me owing the broker a little over $1.30.
If I would have had a $10,000 standard account and made that trade using a conservative 2 lots I would have blown the account and owed the broker 700 pips X 2 lots = $6,800. A STOP LOSS WOULD HAVE NOT HELPED!!!
IBFX has a policy that says---
Buy stop, Sell stop and (Stop loss) orders do not guarantee an order will be filled at a certain price.
[All stop orders instruct the broker to open or close an order once a specified price is met or exceeded. ]
The specified price is known as the stop price. Once the stop price is met or exceeded, the order becomes a market order. Market orders instruct the broker to fill the order at the next available price. The execution price of a buy stop, sell stop or stop loss can vary from the stop price.
[This occurs most commonly during significant market moves or gaps.]
**Often these price gaps are the result of economic news releases. Keep in mind that in a volatile market substantial losses may occur and orders may not be filled as placed.***