Help on regulations needed

Hi, I am newbie to FOREX. I have been trading with a demo account on FOREX.com and I am considering opening a live account. I have asked about retail client protection to the service provider but the answers I get from “helpdesk” on live chat either do not entirely match or are not well specified (in my point of view) in the Customer Agreement. My question is this, can a Retail Client loose more money than the total money he has on the account? When I ask this in live chat they basically say “NO”, but from what I gather in the text of the Customer Agreement, it states otherwise. I can see a number of situations where a stop loss order cannot prevent you from selling below a price which, in fact, puts your account into negative. I also did not manage to find Retail Client protection description in FSA site so my questions to you are: 1. Do you know where can I find this legal information “Retail Client protection” (a link, maybe) and 2. If you trade in FOREX.com do you know if a situation which ends up in forcefully closing client transactions and liquidating the account (margin not enough to provide for current losses) can[B] EVER[/B] incur in [B]further[/B] losses for the client (me) beyond the loss of all the money I have, [B]at that moment, in the account[/B]. (Considering that I am (will be) a [B]Retail Client[/B], not a Professional Client)

Theoretically, it’s possible, I suppose.

As a practical matter, does it ever happen? Not in my experience. Nor do I personally know any trader who has suffered a negative account balance and, consequently, has ended up owing his broker additional money.

I understand there are brokers who explicitly state that customer accounts can never go negative. I couldn’t say which ones those are, though. Maybe others can offer names. Otherwise, you’d likely have to do individual research.

Probably that’s what I shall have to do, anyway, FOREX.com helpdesk explicitly states that, but the real Customer Agreement says otherwise :stuck_out_tongue:

Yes it is technically possible. Have i heard of people who have had it yes. But they were trading much larger positions so their slippage factor is much larger due to not getting everything filled at once. This could also happen trading small odd lots but the chances are smaller. Basically you could have a stop limit order somewhere and during high volatility/ low liquidity be slipped on your stop loss and end up having to feed the kitty. Depending on how much leverage and how big your position size the amount you owe will differ. Although it is unlikely and if you are getting to the point where you are risking your entire balance you should probably stop trading anyway.

As Clint says, it IS possible, but it would have to be extenuating circumstances.

The most likely culprit would be a weekend gap, or something like the big push the SNB just did.

Just this last weekend, the euro opened almost 100 pips lower than Friday’s close. If an account was close to margin call already, and since the broker was closed during the weekend, once trading opened on Sunday, there could be a problem.

Bottom line is, watch that leverage;)

As Master Tang says it is possible because of the gap.
Though it is strange the client support did not explain it to you. May be you should change your question a bit next time to get a more precise reply?

Tang is correct, as Tang usually is.

What do you call a trader who is close to a MARGIN CALL and leaves a position on over the weekend? — IDIOT

Support told me they have a “no negative account policy”, and that they would “fund” the account to go to zero whilst, at the same time, closing transactions and eventually closing the account. Now, loosing all my account money and closing my account wouldn’t be a problem to me since I will only be putting there “disposable money”, my problem would be if, later on, some “Man in Black” type guys ring my doorbell asking me for “da dough” I owe them… :wink: