I hope you learned more than just this lesson. It does not matter with how much leverage you trade if your firm allows >50:1 leverage on all its account and thus invites cowboys to gamble. Of course most of the time all goes well (for FXCM's pockets of course) but every now and then the empire strikes back. I feel compassion for a lot of people who got hurt by SNB's decision. But I do not feel any compassion for FXCM whatsoever. I actually wished they payed a dear price in response to their years of market and especially customer abuse and blatant violation of their fiduciary duty in what is spelled out in their legal agreements with their clients. This firm is built on lies, stop hunting, systematic cleaning out of weak hands. A business model like this does not deserve to stand the test of time. But I let time and markets judge!!!
CHF mess
- Thread starter TraDaToR
- Start date
LOL
Not too good at math are ya?
A 30% adverse movement would wipe out 100% equity - regardless if leverage is 50:1, 20:1, 10:1, 5:1... or anything > 3.33X (lowest leverage).
Then you might be on the hook for any deficit
No one here trades FX on such "reasonable" low leverage (< 3.33X) given FX movements are generally so small (barring yesterday)
The only salient advice is not to have positions too concentrated or correlated & to have stop loss (whether honored is a different matter)
Not too good at math are ya?
A 30% adverse movement would wipe out 100% equity - regardless if leverage is 50:1, 20:1, 10:1, 5:1... or anything > 3.33X (lowest leverage).
Then you might be on the hook for any deficit
No one here trades FX on such "reasonable" low leverage (< 3.33X) given FX movements are generally so small (barring yesterday)
The only salient advice is not to have positions too concentrated or correlated & to have stop loss (whether honored is a different matter)
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Those that were long CHF either in forex or futures,
Did your broker honor the fills price ?
Did your broker honor the fills price ?
There are other ways too. Most people don't understand size for instance. Also spread the risk to different type of brokers can offer some benefits. For instance Oanda could afford to forgive all negative account balances from the chf BS. They could do that probably because they took the other side of the bet, and needn't clean people out beyond what was in the account, which would be plenty of money anyway.
Oanda paid, as far as I know.
http://www.reuters.com/article/2015/01/15/swiss-snb-shorts-idUSL1N0UU1W620150115
"Similarly, a forex options trader at a large brokerage who trades on the CME floor in Chicago said his firm stopped trading options in the Swiss franc a few weeks ago because overall volumes were increasing, leading the firm to think something was imminent."
"Similarly, a forex options trader at a large brokerage who trades on the CME floor in Chicago said his firm stopped trading options in the Swiss franc a few weeks ago because overall volumes were increasing, leading the firm to think something was imminent."
Sick. I wonder if they leaked out to their wives again
The Risk guy who took the decision deserves his bonus, for once...
Where have I even done any math? I could care less if a few spot fx traders are wiped out.
My point is how easily highly leveraged brokers can be wiped out when offering insane leverage.
Thankfully I was long DX futures when it happened.