Broker diversification?
- Thread starter kmiklas
- Start date
Yes but mainly for logistics reasons. Most of my money is with 2 institutions.
FDIC insures bank accounts: checking and savings. Brokerage accounts for stocks and bonds are insured by SIPC. Currency (forex), commodities and futures are specifically not covered by SIPC. I learned this the hard way when PFG went bust due to fraud. Check the SIPC web site for details and coverage limits.
Yes
Yes especially if you have large amount of assets as each broker is only insured up to a certain amount by the SIPC and for only certain categories of assets. Not all assets are insured. https://www.nerdwallet.com/blog/investing/sipc-insurance-what-it-does-and-does-not-protect/ So if you own a certain category of assets that is not in the insured categories by the SIPC and/or above the insured amount, if the broker ever goes under, whatever the amount that is not outside of the SIPC coverage is gone unless you can recover it yourself like this guy in China. https://www.forexlive.com/news/!/this-is-the-definition-of-moral-hazard-at-an-fx-broker-20150115
Unless the broker is also a bank and is a member of FDIC, the answer is no. Your cash in your trading account would be covered by the SIPC unless it's part of a trading account trading assets that are not covered by SIPC.
I have account with IB, Tradestation (high charges if not trading big enough) , Schwab and E*TRADE (They are very cheap, but might replace one of them with another broker like who has Sterling pro, Takion, Realtick as i need pre-market 4:00AM Trading and GTC+ premarket order ).
Since i am not living in US and not US citizen and no US bank account, and traveling to US will be difficult, for safety of my fund i spread among 4 brokers, but trade actively from 1 broker and another 3 brokers are kept with trades holding of weeks to months. Also Technology wise no brokerage is superior to other brokerage in all department and you can also use them as back up for different reason.
An ET sponsor Brokerage here told me " what's the point of having several brokerage" and I had to reply to him Politely.
Since i am not living in US and not US citizen and no US bank account, and traveling to US will be difficult, for safety of my fund i spread among 4 brokers, but trade actively from 1 broker and another 3 brokers are kept with trades holding of weeks to months. Also Technology wise no brokerage is superior to other brokerage in all department and you can also use them as back up for different reason.
An ET sponsor Brokerage here told me " what's the point of having several brokerage" and I had to reply to him Politely.
Ar
Def from IB here, while ago said Thailand will be on their plan in future. It's growing exchange volume wise.
Def from IB here, while ago said Thailand will be on their plan in future. It's growing exchange volume wise.
Sometimes it is best not to think about it. But if you do, it is best to diversify to preserve your sanity. I have most of my money on Pepperstone, and then a little with an offshore broker Tenkofx, where I enjoy higher leverage/low spreads and make more profit. Some of my colleagues use up to three brokers.
That’s actually a great strategy. I did this mistake initially and blew my sole account with etoro. That’s when my friends suggested me to always trade with at least 2-3 brokers.