EUR/CHF wipeout/margin call ... negative balance ... what to do?

[lucysparabola]

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.

yeah, IB is not a pure spot FX dealer; they're not going to forgive the debt and they have every recourse against you.

Just have to suck this one up and pay it back. admitting that you expected them to auto-liquidate your account will not work in your favor should you decide to take this any further legally.

 

[jaygould]

If IB does not forgive these negative balances while Oanda does they are basically telling people not to do business with them.
This could have happened to anyone.
Don't believe me ? What happens when Germany announces randomly that they're leaving the Euro and you just happen to be in a Euro trade ?
That's the equivalent of what was done here.
The leverage argument is BS. Even with 5X leverage you'd have been under.

I'm an IB customer and will be watching how they handle this closely.
They are not going to get the money back likely, anyway, but they will definitely lose future business from current and potential customers if they hound people over this.
You are right they have no obligation to forgive the balances, but they should.

 

[i am nobody]

I read here everywhere that 90% of traders lose money. Especially forex is risky business. I have many years of experience in forex and saw many people start trading. Not a single trader survived it. They all stopped or wiped out their account.

I tell this to explain what the problem is for these wiped out accounts in USD/CHF now.

1. If you lose 10K you will need to do a lot of trades before IB can recover these losses in commissions, if they would agree to take your loss. That is the first problem.
2. On top of that in this period they have to work for free and take again risks for you. You can wipe out your account again. That is the second problem.
3. The third problem is that you will have to put money in your account again before you can start trading again.
4. And the fourth problem is that statistically the possibility that you will never survive trading is very real.

If IB takes even 50% of the losses, they will have to work months for free but still their operational expenses. All this for losses they are not responsable for. IB has their own losses already.

The final question is: will it be cheaper to take part of these losses from clients or will it be cheaper to force clients to pay and lose them as client?

 

[ExperiencedJoe]

You are right they have no obligation to forgive the balances, but they should.

It all depends whether IB took the other side. If they did, then they can forgive some of the losses by opting for a smaller profit. If they didn't take the other side, then they will go bankrupt if they forgive any of the losses. If the choice is between going bankrupt or not getting your future business, then they are going to choose survival.

 

[sprstpd]

If IB does not forgive these negative balances while Oanda does they are basically telling people not to do business with them.
This could have happened to anyone. The leverage argument is BS. Even with 5X leverage you'd be under.

I'm an IB customer and will be watching how they handle this closely.
They are not going to get the money back likely, anyway, but they will definitely lose future business from current and potential customers if they hound people over this.
You are right they have no obligation to forgive the balances, but they should.

If I was leveraged short on a stock and it was taken out, would a brokerage forgive my negative balance? Is a currency transaction any different? I understand that this currency move was extraordinary, but I really don't have sympathy for people who do not take responsibility for their actions and do not read the customer agreement that brokerages make you sign. IB is not a currency shop like Oanda or FXCM.

If IB loses any business, it will be from clients that maybe they would be better off not retaining.

 

[newwurldmn]

There are IB customer service people on this board....

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.

 

[sprstpd]

I just wanted to add that if people could not get out of their CHF currency positions because of IB's poorly thought out, poorly implemented, and potentially disastrous price capping algorithm, then IB should pay up. It is only a matter of time before IB is going to get taken to arbitration on their price capping algorithm by someone who loses a lot of money. If you are an IB rep reading this, please eliminate the price capping algorithm.

 

[Turveyd]

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:

• 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.

You get it didn't happen in 1 day, or 1 hour, or 1 min, it happened in 0.01seconds, your SL hit, went market order and your down 30,000pts or what ever it was, nothing you could do about it, SL can't help.

You understand even a moderate account say $1000 trading a $1 per pip on a CHF which is fine for 1K, was suddenly SL's out at -$30000 don't you ?? in 0.1 seconds right ??

It's an extreme circumstance.

 

[slacker]

FxPro is advertising "Negative Balance" protection, however, they are a 'Contract For Difference' derivative of the forex market. Has anyone traded with CFDs? How do they compare with spot or futures? What are the spreads like?

Thank you,

 

[Turveyd]

The 1's writing the Negatives off, likely didn't pass your trades they took the risk on them, themselves , they'll still have to keep what ever was in your account but atleast it's ZERO and not -30K.

Downside is, they'll have to pay out all of the profits made, but if they can take that then cool, most people will lose it anyway so guess they think they'll get most of it back