I thought I had zero risk on this .The broker closed
me out on a 600 pip margin and I lost $50k plus.
I know this is illegal in USA under FIFO rule 2-43.
Is this anything close to fair ?Surely I should have been netted.The broker knew there was zero risk
for him and me .
Can someone give me advice on this issue
Iāve never heard of anyone doing this.
But I have heard that some brokers donāt net off an opposing position when calculating margin. So even though its physically impossible for both to close simultaneously at a 100% loss, they require margin for both trades as if they were the only trades open at this time. What do your firmās T&Cās say?
T and C basically vague .I just think the broker has
broken the fair trading rules .???
Broker running an algorithm .No manual trader would be this stupid .
What reason do they give for closing your trades?
That the 600 pip spread on the algorithm closed out my account of $50k plus .My argument is why
did they not net the accounts.
Some brokers net off opposing positions, some donāt. Just because its not illegal doesnāt mean they will all do it.
On top of this, some brokers regard the opening of the second position as an instruction to close the first one - IG have said this -
āThe āForce Openā option, when selected, causes any deal you are placing to be opened as a new position, irrespective of your existing positions (our dealer will normally net off opposing positions in a logical manner: e.g. āsellingā 1000 shares of Paladin Energy when you have an open position long 1000 shares of Paladin Energy will leave you with no position).ā
It seems their platform has this āForce Openā option button. If you do not select it, or if it is unselected as a default setting, the second trade will close the first.
Does this apply?
In the USA FX hedging is banned to stop brokers doing what was done to me .Thats why some brokers operate these
FIFO systems (as you describe)My point is that a broker has to be fair when closing out a perfect hedge .
In a flash crash the spread may blow out for a few minutes.There is no risk to the broker as the spread will will always close again .
Please advise.
Hi.
Iāve been watching this thread since this morning.
On what basis do you make this statement or assumption if I may ask???
Itās not only in the USA. UK as well. Common denominator: REGULATED brokers. There are REASONS for the regulation. And youāve just found out the hard way but ONE of the reasons for the regulation.
I do sympathize though. I really do.
But then I have to ask myself WHY somebody with that amount of capital is a) trading with an unregulated broker and b) is trying to get smart with a hedging system and c) is trading retail spot FOREX.
I donāt know how much capital you have left. But I urge you to take a step back and digest what Iām saying here.
And Iām sorry: I know none of the above is anything that you wanted to hear. But it is what it is.
Matter of fact: I mentioned your loss in another thread about an our ago or two. PROPER trading would result in a minimum of around $5.5K per month. Thatās nothing to sneeze at.
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I was dealing with a reputable regulated broker in a supposedly safe environment.I am no risk taker.
The regulator refuses to take action .
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Well why donāt you mention the broker then. Letās check them out and see if we can help.
Just by the way:
I am trying to help. And Iām not blaming you nor raking you over the coals. And unlike some: I donāt get pleasure from hearing about other peopleās losses. ESPECIALLY when it involves the amounts you are talking about.
I cannot say you were doing anything illegal. Opposing positions are not illegal in your jurisdiction.
But nevertheless, I have to think that your very eccentric strategy was designed to take advantage of an anomaly in the way brokers offer markets to clients. That you had not found an efficient way to trade the markets so much as a cunning way to play the broker.
Then it turns out you had not sufficiently researched what the broker would do when you played this game.
Huh??? Was there more information posted somewhere that I never saw???
Maybe, the OP has two threads running on this same issue with his broker.
Oh. Didnāt realize that.
P.S.
Not that I can find.
As a new member I exceeded 14 posts and was stopped from posting for a set time .
I acted with total integrityā¦I only did the hedge as a safety measure over the Christmas New Year period .If I knew the broker could close me out I would have closed the entire position.
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But itās JULY now.
Margin requirements can vary hugely across holidays and even weekends. But if the firm is facing unacceptable levels of market risk, varying margin affects all clients. Maybe they just couldnāt face/afford cover for the risks your large positions entailed and closed you individually at their discretion (despite what they say).