How should I protect myself against what happend on January 15 2015? How do I make sure that my stop loss will work?
You cant.
If brokers can go bust, what chance do retail traders have?
That’s. One of the big risk in trading hopefully not any more coming down the pike. Its one of the risks that u have to be wiiling to take.
- Don’t trade a pair that is well known that a central bank is intervening in such a major way,
- Verify that your broker won’t hold you accountable for a negative balance,
- Keep the bare minimum of funds required to trade with your broker, keep the rest in your own bank,
- Always use a stop loss,
I think there is no one or anything that it can guarantee you the stop loss at such events
No there is nothing that can guarantee you this but you can always check the economic events or read to analysis in order to know what happening in the markets.
Even then you can predict the effect which might be huge as the SNB one
You can predict that such economic events can make a big effect to the markets and you should always check what is going around the markets.
I agree with you andyCullen but you have to read analysts predictions and views for the day. You can subscribe to brokers newsletters to receive their predictions.
Two things:
1.) Trade position sizes so small that a 20% move in some pair (the swissie moved about 19% that day) will not move your account value by 20%. For reference, Chesapeake Capital lost less than 1% on that 19% move.
2.) Deposit only enough with your dealer to meet your margin requirements and some small cushion. Example: put 5% of your trading capital with your dealer and risk half of that (2.5% of your total). If a tsunami hits, you will have 95% of your trading capital in a bank at home. Even if your dealer does not offer negative balance protection, you could still benefit as many dealers forgave negative balances last January. Thus, traders that trusted their dealers and put all their money with them lost big and those that did not got negative balance forgiveness.
-Adrian
Make sure you are trading a high probability trade to begin with. Then make sure you have a tight stop and try not to trade during economic news releases that might cause chaos in the market volatility. Stick to the same time periods and dont’ take your eyes off of the monitor. keep a hand on the mouse ready to pounce and close that trade manually if you see it has violated your stop because a gap or something. If you can do all those things you wont have a problem.