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  • #21
  • Apr 13, 2012 11:29am Apr 13, 2012 11:29am
Global3 yes if you're neither a us/uk citizen but trading with a us/uk registered broker the situation is a little bit complicated, I'm not sure if it can be done, it probably depends if the insurance company has an agreement with an overseas partner (somewhat like medical insurance when traveling abroad). Best get in touch with a general insurance company in your country regarding this particular situation. Regarding insurance by FSA SIPC etc well i haven't really gone into it in depth but most people well versed with the subject tend to agree with what you say, which is its pretty much useless, the segregated account banter brokers mention is the same. Here in India some exchanges have a guarantee fund whereby the exchange collect money from all members on a regular basis and this goes into a fund which the exchange regulates and its purpose is to guarantee payment to all members trading through the exchange in case the counter-party defaults. But this will only protect your open trades not your money held with brokers or clearing houses, and this is only for exchange traded products.
  • #22
  • Apr 13, 2012 12:23pm Apr 13, 2012 12:23pm
Thanks fugly,

Unfortunately, the real situation is very disappointing until of course you have about US$250,000 that will allow you to keep your deposits with a safe bank, with a bank guarantee, while simultaneously having an arrangement with the bank and broker to directly access those funds as needed to enter each trade. Dukascopy.com in Switzerland offers that Custodian Banking Service starting from US$250,000 and a Bank guarantee arrangement starting at US$100,000 so until that time one's trading capital will be at risk. So it's just as the saying goes, "No Pain, No Gain."

Bank Guarantees & Custodian Banking Services:
http://www.dukascopy.com/swiss/engli...ng-facilities/

Anyone knows which other brokers offer these facilities? Even with these type of arrangements, if the bank goes bankrupt or is shut down by regulators, I suppose that you will still only get the deposit insurance limit of that country plus any additional funds the regulator's receivers can salvage from the sale of the remaining bank assets.
  • #23
  • Apr 19, 2012 2:16am Apr 19, 2012 2:16am
If you are a consistent profitable trader and have a sizable account with a broker, all profits made each month should be withdrawn until your starting capital is complete and all you have left in the account is just profits.

After that, then start making bulk withdrawals every 3 months. If you then wake up one day to hear that your broker is burst, you wunt pass out
The only way not to think about money is to have a great deal of it
  • #24
  • Apr 19, 2012 2:29am Apr 19, 2012 2:29am
Quoting Makavelli7
If you are a consistent profitable trader and have a sizable account with a broker, all profits made each month should be withdrawn until your starting capital is complete and all you have left in the account is just profits.

After that, then start making bulk withdrawals every 3 months. If you then wake up one day to hear that your broker is burst, you wunt pass out
Yeah, or just keep 50% of your trading capital with the broker and use more leverage, keeping the other 50% in an easy access current account.
  • #25
  • Apr 23, 2012 6:30am Apr 23, 2012 6:30am
I cant help you much with an answer here as I have not had that big money on my account before, but I can say that its comfortable to let the money on your account if you trust your broker, but if you dont I dont see why to open an account with them at all )
  • #26
  • Apr 25, 2012 6:40pm Apr 25, 2012 6:40pm
Quoting saidsaid
I cant help you much with an answer here as I have not had that big money on my account before, but I can say that its comfortable to let the money on your account if you trust your broker, but if you dont I dont see why to open an account with them at all )
Just for the record, I trusted my broker but in the end I still lost many many thousands of dollars when the same broker I trusted went under, so trust is not enough.
  • #27
  • May 14, 2012 8:23pm May 14, 2012 8:23pm
Since March 13th, 2012 the NFA have created new rules that require FCMs to file DAILY segregation reports, however, as one reader posted in the comments section of the article below:

Quote
These "rules" are useless. An FCM can "file" (whatever that means) a report on seg funds daily, or hourly, or whatever, but the information contained therein can simply be wrong. It is my understanding that MF Global filed seg funds reports that were wrong. Filing untrustworthy reports more often doesn't help.
http://leaprate.com/forex-industry-n...ion-rules.html

The problem was, and still is, that the regulators only make spot checks on the validity of these reports so whenever they do, clients segregated funds may have already been misused, so it may be too late. Therefore, the stage is still set for yet another MF Global type fiasco to happen.
  • #28
  • May 14, 2012 10:57pm May 14, 2012 10:57pm
Quoting global3
Since March 13th, 2012 the NFA have created new rules that require FCMs to file DAILY segregation reports, however, as one reader posted in the comments section of the article below:

http://leaprate.com/forex-industry-n...ion-rules.html

The problem was, and still is, that the regulators only make spot checks on the validity of these reports so whenever they do, clients segregated funds may have already been misused, so it may be too late. Therefore, the stage is still set for yet another...
If JP Morgan can lose $2 billion undetected, Im sure anything is possible.
Go with a broker that has a good regulator and a respected financial centre.
Australia is ideal because of it size, rules and education.
Brokers are closely monitored and leverage is generous simply because they are.
  • #29
  • May 15, 2012 10:13pm May 15, 2012 10:13pm
Quoting global3
Just for the record, I trusted my broker but in the end I still lost many many thousands of dollars when the same broker I trusted went under, so trust is not enough.
Hope that example was once only. Be careful with the huge lot opening)
very nice, good price..!
  • #30
  • May 16, 2012 5:34am May 16, 2012 5:34am
Quoting lasty
If JP Morgan can lose $2 billion undetected, Im sure anything is possible.
Go with a broker that has a good regulator and a respected financial centre.
Australia is ideal because of it size, rules and education.
Brokers are closely monitored and leverage is generous simply because they are.
Hi,

Which Australian based brokers would you recommend?
  • #31
  • May 16, 2012 6:07am May 16, 2012 6:07am
Quoting lasty
If JP Morgan can lose $2 billion undetected, Im sure anything is possible.
Go with a broker that has a good regulator and a respected financial centre.
Australia is ideal because of it size, rules and education.
Brokers are closely monitored and leverage is generous simply because they are.
I am in Australia and have opened but not funded an account with Go Markets. I have been using their demos for some time and am happy with everything in that area, however the ASIC regulations in Australia only require clients money to be be held in an account that is segregated from the broker's account.

Go Markets and a couple of others including Vantage FX use one of the big four Australian AA rated Banks ("NAB") for their segregated accounts, but the money is not completely safe.

The broker can use the money for hedging purposes (though as a straight-through / NDD broker this should not happen), and as the client's money is "co-mingled" with other client's money in the "segregated" account, a default by one client can theoretically cause the loss of my money also.

I haven't been able to determine the circumstances that these losses could occure but it has been reported in the press and has been campaigned against by some brokers (who are not NDD brokers - so that introduces counterparty risk). See the following article:

http://www.smh.com.au/business/mf-gl...103-1mxg1.html

If any one has any solutions to safely operate an fx account in Australia, I would be glad to hear.
Still learning - No guarantees...
  • #32
  • May 16, 2012 7:10pm May 16, 2012 7:10pm
Quoting Ozefex
I am in Australia and have opened but not funded an account with Go Markets. I have been using their demos for some time and am happy with everything in that area, however the ASIC regulations in Australia only require clients money to be be held in an account that is segregated from the broker's account.

Go Markets and a couple of others including Vantage FX use one of the big four Australian AA rated Banks ("NAB") for their segregated accounts, but the money is not completely safe.

The broker can use the money for hedging purposes (though...
At the moment you are stuck between a rock and a hard place.

I have looked into this at length as I also am worried about this hence I haven't jumped in with any Ozzie broker as yet.
I have been told that a few leading FX and CFD brokers like
IG markets
Capital CFDs
CMC
GFT

Are lobbying to ASIC to have the rules changed to ensure full segregation of funds and to disallow the use of any client funds for hedging purposes.

I know a few of them in that list are already adopting more stringent rules above and beyond what ASIC require but it is not mandatory.

It will be good on one hand if the rules go through as it will offer protection and especially good for the companies above but it might not be so good for choice as some of the smaller STP FX brokers might not be able to follow the rules, unless they have deep pockets to use their own funds to cover all trades.

I will wait and see
  • #33
  • May 23, 2012 7:49am May 23, 2012 7:49am
Quoting global3
Just for the record, I trusted my broker but in the end I still lost many many thousands of dollars when the same broker I trusted went under, so trust is not enough.
Hi, sorry for late reply I did not notice your answer to my post, maybe trust is not enough, maybe you just left your money there too long ( ... I am trading with hotforex and I believe they are safe and reliable, and if you have lost big money with your broker, you should have some solutions to get it back and fight against them.
  • #34
  • May 23, 2012 12:18pm May 23, 2012 12:18pm
Quoting saidsaid
Hi, sorry for late reply I did not notice your answer to my post, maybe trust is not enough, maybe you just left your money there too long ( ... I am trading with hotforex and I believe they are safe and reliable, and if you have lost big money with your broker, you should have some solutions to get it back and fight against them.
In most situations, if the broker (or company) has no money, legal action will not help. It will just cost you more.

One method that I am using to minimise risk is to use the maximum leverage possible, then reduce your lot size by the same proportion. That way you can leave less money in the account for the same trading position. Notice I said "reduce your lot size".

If for instance, you can increase your leverage from 1:100 to 1:400 (which for my broker can be done up to an account size of $25k), you can trade with an effective account size 4 times larger than the money you have deposited. You could then do the same thing with a different broker, or several.

Probably not much use if you're in the US and are limited to 1:50 leverage though!
Still learning - No guarantees...
  • #35
  • May 24, 2012 6:49pm May 24, 2012 6:49pm
Quoting Ozefex
~~
The broker can use the money for hedging purposes (though as a straight-through / NDD broker this should not happen), and as the client's money is "co-mingled" with other client's money in the "segregated" account, a default by one client can theoretically cause the loss of my money also.
There is nothing wrong from a regulatory point of view, with a broker taking the other side of your trade and then hedging their risk. Let's face it if you are trading 10 cents a pip what else can the broker do! Surely it's safer for the client to have the broker's risk hedged.

MFGlobal and others used their clients funds as collateral for their own trading activities. Something I understand not allowed in AU unlike the US and UK.
Good Trading
  • #36
  • May 24, 2012 7:19pm May 24, 2012 7:19pm
This is a loaded question..and of course, if a broker is a scam broker, you would not want to deposit any funds with him/her. This is why it is important to build up that trust with a small acc and work your way into the big league.
You can start with a micro account, do a few dry runs with a few brokers and slowly up the account as you develop the trust factor and you're sure that the broker is for real..
  • #37
  • May 27, 2012 7:16am May 27, 2012 7:16am
As poundtrader said some brokers offer custodian services meaning you can keep your money at your bank or a supported bank and that bank simply money guarantees your trades exposures to your broker. The broker does not directly get your money.

Other than that keep as little as possible. If you only trade 1% risk and don't scale in then only keep enough for the margin + SL of a few trades and transfer more if you are in a loosing streak or willing to step up the game.

First of all brokers are brokers... no matter how serious they are! If you think mfglobal is the only one doing rehypothecation and the like well keep on dreaming. A broker is a company and every company can go bust - chance is along with your money. Even if it is insured or whatever - this can take years to get something. As stated above no matter how small / big you are in the game, keep exposure as minimal as needed.
  • #38
  • Jun 6, 2012 1:21am Jun 6, 2012 1:21am
Frauds and scam brokers used to be common until few years ago. However, today this phenomenon is less common because of tight regulation, though clearly we hear about frauds once in a while. If you are not sure about a broker, you can always read about it in different forums, although sometimes bad reviews are planted by competitors. I always keep 2 accounts to reduce the risk and currently I have accounts at Alpari and sunbirdfx. Both are great ECN brokers that process withdrawal requests within 2-3 days.
  • #39
  • Jun 12, 2012 2:52am Jun 12, 2012 2:52am
The simplest way to choose is stick with brokers regulated by FSA, NFA, and probably ASIC. They have strict regulation on keeping client funds on segregated accounts.
  • #40
  • Jun 19, 2012 2:23am Jun 19, 2012 2:23am
Quoting unknown4x
As poundtrader said some brokers offer custodian services meaning you can keep your money at your bank or a supported bank and that bank simply money guarantees your trades exposures to your broker. The broker does not directly get your money.
All you've done is shift your credit risk from your broker to your custodian.
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