I think happen to Gain Capital too, not sure how their business is setup, could be a dealer too. They turn a profit on this mess.
EUR/CHF wipeout/margin call ... negative balance ... what to do?
- Thread starter Pentaquark
- Start date
First of all I want to say that I don't take pleasure in other people's misery or bad luck.
Second: I also wiped out a 50K account in past in less than 1 day. So I made mistakes in past too.
Third: I learned from my mistakes and never took any margin call, nor big loss anymore. I learned my lesson.
I am amazed about the reactions in this thread. On ET most people give the impression to be professionals or at least very profitable traders with a lot of experience. I agree that what happened with the Swiss franc was unpredictable. But everybody who trades should know about these risks. Because of these risks good traders use stops and they use a capital management system. If everybody on ET would do this there would be limited losses or at least accounts would not be wiped out. If you want to trade with the big boys you know that there are big risks.
I don't understand that people post here:
Well these things can happen, that's the market. If you don't understand that, you should not trade these markets. They should make a compromise? Did you ever propose a compromise when you did a terribly good trade?
It reminds me of 2 interesting things:
1. The huge losses taken by lots of traders/investors in the Volkswagen/Porsche battle in 2008. http://content.time.com/time/business/article/0,8599,1854760,00.html
2. On ET a long time ago somebody posted he made big returns. Bashers started to calculate that , if this was true, he should be richer than Buffett. The poster answered: I never trade all my money. Every month I put away a big part of my profits. If later I wipe out my account I still can start over again, and again and again.... In this situation he would have wiped out his account probably too. But tomorrow he can start again. It is possible that some of these bashers wiped out their account now and have no money left, even not to pay the open loss on their account. The poster will not be as rich as Buffett but surely better off than the bashers. He left profits on the table by using a capital management, but has in return a high probability that he will never go broke.
Second: I also wiped out a 50K account in past in less than 1 day. So I made mistakes in past too.
Third: I learned from my mistakes and never took any margin call, nor big loss anymore. I learned my lesson.
I am amazed about the reactions in this thread. On ET most people give the impression to be professionals or at least very profitable traders with a lot of experience. I agree that what happened with the Swiss franc was unpredictable. But everybody who trades should know about these risks. Because of these risks good traders use stops and they use a capital management system. If everybody on ET would do this there would be limited losses or at least accounts would not be wiped out. If you want to trade with the big boys you know that there are big risks.
I don't understand that people post here:
- There was literally no orders until several 1000nd of pips later, no sellers so the price just ran straight to the first available order being hugely up there, it's a stupid way for a market to trade really.
- Not trading in between means your SL's go to market order, which means loads of buyers pushing it higher via market orders.
- Hopefully they'll come up with a compromise, go 50/50 or something with you, in order to get some money back ??
- Someone on another thread said he couldn't get a quote on the futures.
Well these things can happen, that's the market. If you don't understand that, you should not trade these markets. They should make a compromise? Did you ever propose a compromise when you did a terribly good trade?
It reminds me of 2 interesting things:
1. The huge losses taken by lots of traders/investors in the Volkswagen/Porsche battle in 2008. http://content.time.com/time/business/article/0,8599,1854760,00.html
2. On ET a long time ago somebody posted he made big returns. Bashers started to calculate that , if this was true, he should be richer than Buffett. The poster answered: I never trade all my money. Every month I put away a big part of my profits. If later I wipe out my account I still can start over again, and again and again.... In this situation he would have wiped out his account probably too. But tomorrow he can start again. It is possible that some of these bashers wiped out their account now and have no money left, even not to pay the open loss on their account. The poster will not be as rich as Buffett but surely better off than the bashers. He left profits on the table by using a capital management, but has in return a high probability that he will never go broke.
depends on how much money it is...
option 1 : don't pay, move addresses, move countries - to hell with it - you are not the only guy they have to collect from.
option 2 : negotiate a settlement... i had erroneous trades on IB one time..... expired options out of the money executed causes losses.... they paid me damages. if they have to send you account to debt collectors they immediately lose half, so offer them a third now and be willing to go to a half.
option 3 : pay them out.
option 1 : don't pay, move addresses, move countries - to hell with it - you are not the only guy they have to collect from.
option 2 : negotiate a settlement... i had erroneous trades on IB one time..... expired options out of the money executed causes losses.... they paid me damages. if they have to send you account to debt collectors they immediately lose half, so offer them a third now and be willing to go to a half.
option 3 : pay them out.
The thing was a dot-shot. IB is under no obligation to honor a stop that was gapped. This is not an NYSE stock where it traded a few times at 120.50 on your buy-stop. Yes, your liability is the debit. Pay it if you can or arrange some payment plan if you cannot. Walk away if you have no reasonable expectation of paying it back, but understand the consequences as Mav74 pointed-out.
You may have a case to recover anything from the mark in which you attempted to work the order and the time it was filled with IB's assistance. My guess is that it wasn't an issue.
You may have a case to recover anything from the mark in which you attempted to work the order and the time it was filled with IB's assistance. My guess is that it wasn't an issue.
Hi Guys,
Myself and anyone else who has been in a similar predicament in the past would have nothing but sympathy over the recent events. You have been given some good advice here. Take stock of your situation, negotiate the best outcome you can, get yourself re centred and then back into the fray. It doesn't matter how many times you get knocked down only how many times you get back up. As for the smartarse tossers, their behaviour is the quickest way to recognize who the true losers are, because they will never get it.
Cheers John.
Myself and anyone else who has been in a similar predicament in the past would have nothing but sympathy over the recent events. You have been given some good advice here. Take stock of your situation, negotiate the best outcome you can, get yourself re centred and then back into the fray. It doesn't matter how many times you get knocked down only how many times you get back up. As for the smartarse tossers, their behaviour is the quickest way to recognize who the true losers are, because they will never get it.
Cheers John.
Pentaquark, you should commit to paying off your broker if you want to open a trading account again one day. Perhaps offer to work for them for as long as it takes to pay off the balance. They will be impressed by your integrity and if you're lucky you'll be taken up on your offer, and learn something working at the broker in the process. Get things in perspective. Nobody died. It's true that whatever doesn't kill you makes you stronger. Redouble your efforts. You've got your health, hopefully... Some of the older traders on here have money in their bank account but their health is shot. They'd swap positions with you if they could because you can always recover your bank balance.
First move by IB:
--------------------------------------------------------
Mr. P,
Please note that IB has the right and not the obligation to liquidate your position when there is a deficit.
As the owner of the account, you remain responsible of your position and you need to manage your risk accordingly. When your account has a deficit, you need to manage your positions and closed them as you see fit and in a timely manner.
Due to the market conditions and this sudden drop of around 30%, the volume and volatility significantly increased and trading on certain CHF related product became relatively harder. IB acted on a best effort basis to manage all the account risk and not drive the market further down.
We have notice that your account ha a Net Liquidation Value of -XXXXX CHF. You will need to manage this position and bring it into compliance as soon as possible.
Regards
IB Trade Desk
--------------------------------------------------------
My initiation:
Dear XXX,
I'm writing to you with regard to the hefty losses incurred in my account with regard to my CHF/EUR trade, leaving me with a -XXk account balance. I understand that you are very busy these days to sort out the mess and that it will take time to get back to me.
On my part I was prepared to loose my account balance but was expecting your auto liquidation algorithm, for which you are famous for, to kick in once my margin was depleted. As you know it didn't.
Are you considering a step like Oanda to waive part or the entire negative client balance? LINK../chf-eur-crisis
As far as I am aware, a collections procedure would be unfavourable for you as well as me. Hence I think it is of interest to both to potentially negotiate a settlement.
Please let me know on how to proceed when you have time.
With kind regards and thanks for your cooperation,
P
--------------------------------------------------------
As a reaction IB opened a complaint ticket. I am hoping that they see the potentially positive marketing effect by partly participating in resolving their clients account balance mess. Positive thinking!
--------------------------------------------------------
Mr. P,
Please note that IB has the right and not the obligation to liquidate your position when there is a deficit.
As the owner of the account, you remain responsible of your position and you need to manage your risk accordingly. When your account has a deficit, you need to manage your positions and closed them as you see fit and in a timely manner.
Due to the market conditions and this sudden drop of around 30%, the volume and volatility significantly increased and trading on certain CHF related product became relatively harder. IB acted on a best effort basis to manage all the account risk and not drive the market further down.
We have notice that your account ha a Net Liquidation Value of -XXXXX CHF. You will need to manage this position and bring it into compliance as soon as possible.
Regards
IB Trade Desk
--------------------------------------------------------
My initiation:
Dear XXX,
I'm writing to you with regard to the hefty losses incurred in my account with regard to my CHF/EUR trade, leaving me with a -XXk account balance. I understand that you are very busy these days to sort out the mess and that it will take time to get back to me.
On my part I was prepared to loose my account balance but was expecting your auto liquidation algorithm, for which you are famous for, to kick in once my margin was depleted. As you know it didn't.
Are you considering a step like Oanda to waive part or the entire negative client balance? LINK../chf-eur-crisis
As far as I am aware, a collections procedure would be unfavourable for you as well as me. Hence I think it is of interest to both to potentially negotiate a settlement.
Please let me know on how to proceed when you have time.
With kind regards and thanks for your cooperation,
P
--------------------------------------------------------
As a reaction IB opened a complaint ticket. I am hoping that they see the potentially positive marketing effect by partly participating in resolving their clients account balance mess. Positive thinking!
In the future, if you want to be forgiven for negative balances, you should be trading somewhere else, like Oanda. Even though I realize you got a bad beat, I am not very sympathetic to trying to get out of your debts after the fact. And as an IB account holder, I would be lying if I said I was rooting for you in your efforts. I also think that publishing IB's response to pressure them is mildly lame considering you have no leg to stand on.
sprstpd...Thanks for your comment. I don't see how I put pressure on them. They are not even participating here. I have started this thread with transparency in mind and I am following through with it. Thank you for honoring that! After all its the sharing of content and information that creates value to others. Your post added none of the two.
You are displaying IB's response to your inquiry in a public forum, an action which I find to be in poor taste. I think that I add value to this conversation because I believe in paying back debt in full.