Brokers chasing you for negative account balance | Page 4 | Forex Factory

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Brokers chasing you for negative account balance

  • #61
  • Jan 19, 2015 6:43am Jan 19, 2015 6:43am
My SL was at 1.1995, and my platform CMC said on the day they stopped me out at 1.1898, it still shows this in my trade history.

One day later they just enter an account adjustment of several thousand, with no more details. Why would they show me that they stopped me out at 1.1898 but still have the adjustment one day later?
  • #62
  • Jan 19, 2015 6:45am Jan 19, 2015 6:45am
Anyone had anything come in from IG Index negative balances?
  • #63
  • Jan 19, 2015 6:51am Jan 19, 2015 6:51am
Quoting ChristopherM
{quote} It costs just £15.00 to form a UK company online and it is formed within 24 hours of submission. It would provide very cheap protection against the events of last Thursday - Black Swan as they may have been. The UK is really one of the best place to do business and possibly why is it is doing so much better than the rest of Europe. Greece is a completely nightmare and Italy (as Mario has confirmed) is little better. Almost everything can be done on line with the minimum of officialdom. For example small companies do not need audited accounts...
Do you mean create a website, and do your trading as a company rather than an individual?
  • #64
  • Jan 19, 2015 7:09am Jan 19, 2015 7:09am
Quoting verv
{quote} Do you mean create a website, and do your trading as a company rather than an individual?
What they mean is they open a limited liability Company, and then open a corporate account with the broker not in the Name of yourself but in the Name of your company. If things go south, the Company will go bankrupt instead of you as a Person.

That's the theory, however I don't know if that works in practice
Forex is a losers game.
  • #65
  • Jan 19, 2015 7:15am Jan 19, 2015 7:15am
With all honesty every broker that would chase clients for the negative balances is likely done for, or will loose a sizable portion of its clients. There is a fairly good reason for the fact many of the big brokers are starting one by one to forgive negative balances despite what their policy on the matter might be. This is probably the best PR move you can do in a century.

However, there are also a lot of brokers that will be put out of business if they don't do it. It is a complicated situation, and while many people here seem to think it is only logical to pay up, it really isn't that simple and it won't be that simple in court despite what ToS might say.

I suggest people who are really getting hunted down by the brokers to see if the brokers are willing to settle (if that is suitable for them). I myself have not suffered losses from the frank move, but a friend of mine has, and after ignoring the request to pay up the negative balance, the broker quite eagerly starting talking for a settlment 4 times less than what the balance shows.

I am also not particualarly suprised by how aggressive LMAX is with collecting its debts. Fact of the matter is they have very low profitability, and their statment that all is fine is likely based on the premesis that their debts get repaid. If you are in really big trouble and with huge negative balance, I would suggest seeking legal advice straight away. In situations like these, there usually are plenty of loopholes to make it possible to settle despite what the ToS might say and the contract you have signed.
  • #66
  • Jan 19, 2015 7:27am Jan 19, 2015 7:27am
Quoting verv
{quote} Do you mean create a website, and do your trading as a company rather than an individual?
I mean trade as a company with limited liability. Having a website is not necessary as all you need is the limited liability company.
  • #67
  • Jan 19, 2015 7:40am Jan 19, 2015 7:40am
Quoting trader121
If things go south, the Company will go bankrupt instead of you as a Person. That's the theory, however I don't know if that works in practice
Of course that works. It's the main reason those limited liability companies were invented for. If you're trading currencies or apples doesn't matter. But you might want to check that with your tax advisor (or similar) as it changes a lot regarding taxation and the way you can get your money out (of your company). Depending on the country you live in and how much you need for a living it could even be cheaper in tax.

I wouldn't bet on the broker forgiving me my negative ballance. They simply can't absorb everything.
  • #68
  • Jan 19, 2015 8:02am Jan 19, 2015 8:02am
Quoting JensG
{quote} Of course that works. It's the main reason those limited liability companies were invented for. If you're trading currencies or apples doesn't matter. But you might want to check that with your tax advisor (or similar) as it changes a lot regarding taxation and the way you can get your money out (of your company). Depending on the country you live in and how much you need for a living it could even be cheaper in tax. I wouldn't bet on the broker forgiving me my negative ballance. They simply can't absorb everything.
It's a good idea, but I'm sure brokers are going to adjust their rules quickly. If companies can get away with negative balance (and they can because if they don't have any property then effectively you can't collect anything) then brokers are going to impose stricter rules for companies.

They can decrease the leverage, or they can require much higher minimum deposit.
Shift happens...
  • #69
  • Jan 19, 2015 8:15am Jan 19, 2015 8:15am
Quoting ChristopherM
{quote} I mean trade as a company with limited liability. Having a website is not necessary as all you need is the limited liability company.
Quoting trader121
{quote} What they mean is they open a limited liability Company, and then open a corporate account with the broker not in the Name of yourself but in the Name of your company. If things go south, the Company will go bankrupt instead of you as a Person. That's the theory, however I don't know if that works in practice
Interesting thought.

How does the tax look for a trading as a limited company?
  • #70
  • Jan 19, 2015 8:20am Jan 19, 2015 8:20am
Quoting blackgeorge
{quote}They can decrease the leverage, or they can require much higher minimum deposit.
Many brokers probably did that a while ago, but I wouldn't expect too much here. The brokers are still fighting for new customers (actually, more now than they did before), and leverage is one key thing for many traders. And lets not forget: things like that don't happen that often. Don't overreact guys, the sums I heard about FXCM, Alpari, CitiFX, LCG ... not so big in the end. And how many do you think will go that limited liability way anyway? Not so many, I believe, as there are more than enough implications for people who don't make regular winnings and withdrawals.

As I said earlier somewhere, I see that problem of "ignored" SL up to the point of bankrupting the client or the broker tackled via insurance. As we can see in the current campaigning by some brokers, they're alreading exploiting that "you lost more than you deposited" problem.
  • #71
  • Jan 19, 2015 8:28am Jan 19, 2015 8:28am
Quoting verv
{quote} {quote} Interesting thought. How does the tax look for a trading as a limited company?
as I said before, check that with your tax advisor. it's a little bit more complicated than that. You'll pay corporate tax which is usually lower than capital gains tax, but you need to get your money out, which really depends on the country you live in. If you pay yourself a salary, you need to be able to do that (the company needs enough money), you could pay yourself an annual divident, which is probably the cheapest way to get your money out, but its just annual. You could hire your wife, if shes not working, and do similar things.

In the end: if you don't make enough for a living from trading its probably not the best way, founding that LTD is not even half the work. If you do make enough money from it, then you will probably have a good tax advisor at hand anyway. YOU WILL NEED HIM TO DO THAT!
  • #72
  • Jan 19, 2015 8:50am Jan 19, 2015 8:50am
Quoting wookey
{quote} 1. You may not have a positive slippage here because you have so many stop orders that your buy limit will be matched with one on those stop orders. So you will be executed at your limit price precisely and someone stop will be filled. 2. Saying that, if your broker does not have positive slippages at all, you should change it. Because they are clearly playing not fair. My small FXCM account never had positive slippages, that is why I will never trade with them. LMAX on the other hand had positive slippages so they will get business from...

1. True but those stop orders did NOT happen because there was NO market, NO trading, NO price quotes, NO nothing and the limit price did NOT get filled just like someone else's stops did NOT get filled during that one hour that liquidity "providers" chose to shut down the market. So if there was no market, HOW do you know those stop orders and/or the tp limit orders would've gotten filled? At what price? When? How? By whom? We can't answer any of these questions because there was NO market no NOTHING there for that one hour where the liquidity stoppers shut down the quote system. See this is why I have been stressing the importance of 1) Price completeness and 2) Price continuity which IS liquidity "providers"s JOB to provide, a JOB that they have taken on themselves and very well compensated for.

2. Well that's broker's business but that still ultimately boils down to what he's getting from the liquidity "providers"/stoppers.
Make your losses in demo. Earn your profits live.
  • #73
  • Jan 19, 2015 8:53am Jan 19, 2015 8:53am
Under no circumstances pay them. Let they get it from you.
Forex rules
  • #74
  • Jan 19, 2015 8:56am Jan 19, 2015 8:56am
Quoting Forexia
{quote} 1. True but those stop orders did NOT happen because there was NO market, NO trading, NO price quotes, NO nothing and the limit price did NOT get filled just like someone else's stops did NOT get filled during that one hour that liquidity "providers" chose to shut down the market. So if there was no market, HOW do you know those stop orders and/or the tp limit orders would've gotten filled? At what price? When? How? By whom? We can't answer any of these questions because there was NO market no NOTHING there for that one hour where the liquidity...
edit
  • #75
  • Jan 19, 2015 9:02am Jan 19, 2015 9:02am
Quoting Forexia
{quote} 1. True but those stop orders did NOT happen because there was NO market, NO trading, NO price quotes, NO nothing and the limit price did NOT get filled just like someone else's stops did NOT get filled during that one hour that liquidity "providers" chose to shut down the market. So if there was no market, HOW do you know those stop orders and/or the tp limit orders would've gotten filled? At what price? When? How? By whom? We can't answer any of these questions because there was NO market no NOTHING there for that one hour where the liquidity...
It is also the LP's JOB to mitigate risk. The LPs likely have an algo that detects a large percentage move and triggers a suspension of trading, just like Nasdaq, CME, BATS etc etc. You can't simply expect a financial company to accept open ended risk. Who would insure them, invest in them? Which banks would be willing to extend credit to a company that has such a massive hole in its risk management? How would the financial regulator feel about it? I know you're upset, but don't you see the impossibility of what you're proposing? The LPs were probably also suffering the effects of billions of requote requests hitting them all at the same time. It was a perfect storm - no one is geared up for that kind thing.

If you think this is bad, just wait until the derivative bubble bursts. That one is gonna set us back decades.
"Risk comes from not knowing what you're doing." - Warren Buffett
  • #76
  • Jan 19, 2015 9:10am Jan 19, 2015 9:10am
Quoting Spili
{quote} It is also the LP's JOB to mitigate risk. The LPs likely have an algo that detects a large percentage move and triggers a suspension of trading, just like Nasdaq, CME, BATS etc etc. You can't simply expect a financial company to accept open ended risk. Who would ensure them, invest in them? Which banks would be willing to extend credit to a company that has such a massive hole in its risk management? How would the financial regulator feel about it? I know you're upset, but don't you see the impossibility of what you're proposing?

forexia is trying to gain support for a ridiculous attempt to regulate us even more so that when that does happen he can sue the LP's for his money back. There is nothing he can do now as the fault lies entirely with himself.

It is entertaining, I don't see it gaining any traction at all, the longer he goes on the more he ridicules himself here.

He doesnt realise that his call for more regulation will only hurt small traders in the end.
A contrarian; I always disagree.
  • #77
  • Jan 19, 2015 9:26am Jan 19, 2015 9:26am
Quoting goldfinch
{quote} forexia is trying to gain support for a ridiculous attempt to regulate us even more so that when that does happen he can sue the LP's for his money back. There is nothing he can do now as the fault lies entirely with himself. It is entertaining, I don't see it gaining any traction at all, the longer he goes on the more he ridicules himself here. He doesnt realise that his call for more regulation will only hurt small traders in the end.
True. Well, I've changed my avatar picture to cheer him up a little! lol
"Risk comes from not knowing what you're doing." - Warren Buffett
  • #78
  • Jan 19, 2015 9:30am Jan 19, 2015 9:30am
Quoting Spili
{quote} True. Well, I've changed my avatar picture to cheer him up a little! lol

Added a sig just for Forexia. Going to have some Swiss cheese on my sandwich here and get me some swiss chocolate at the shops, too bad I hate cuckoo clocks....
A contrarian; I always disagree.
  • #79
  • Jan 19, 2015 9:41am Jan 19, 2015 9:41am
Quoting goldfinch
{quote} Added a sig just for Forexia. Going to have some Swiss cheese on my sandwich here and get me some swiss chocolate at the shops, too bad I hate cuckoo clocks....

Swiss Rule or Swiss Roll? lol

Well, I'm going to spend the rest of the day cutting out pictures of the Swiss alps with my Swiss Army knife.

All joking aside though, it must be pretty upsetting. I swiss him the best of luck in getting it resolved.
"Risk comes from not knowing what you're doing." - Warren Buffett
  • #80
  • Jan 19, 2015 9:43am Jan 19, 2015 9:43am
LMAX just lost it's all reputation in my opinion.

Not only I was slipped a lot on EURCHF and I couldn't close my trade for more then 20 minutes, now I am learning that LMAX is also deducting IB's commission when their clients got negative balance and they also threaten their clients to pay for the negative balance!

http://www.forexfactory.com/showthread.php?t=521668

I think I will be contacting Financial Conduct Authority (FCA) - if anyone wants to complain to FCA regarding LMAX behavior, please contact me.

Quoting rsmith911
Please post here if your broker is chasing you for money to repay a negative account balance following the EURCHF debacle, whether you are going to pay and what action is taken if you haven't paid. I wasn't involved fortunately but I contacted my broker LMAX (who I have always found to be brilliant and the best broker I have used up until now) to find out what would happen in such a scenario. They just said that I would face legal action if such a debt wasn't paid. Which is kind of scary! Makes me think about whether I should be using them in future....
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