Globalfutures, Advantagefutures or Velocityfutures ?

[Swan Noir]

Devin,

You need to learn something about the business you are in. What you have just said is 100% incorrect. The primary strength that Global has is that it clears through RCG -- a strong firm -- which in turn banks at Harris. Show these posts to management and ask them what they think.

Quote from Devin Brady:

I was a broker at REFCO when they had their blowup, and it had nothing to do with futures that were held in segregated accounts. It was with the unregulated FX. I am currently working with Global and like everything there are risks, but keep in mind your funds are held by Harris Bank, not the FCM. Harris bank holds most FCM's accounts, and any failure would bring systemic risk to the global financial markets.
If you are interested in leaning more about Global Futures my email is: dbrady@globalfutures.com

 

[Preston Forbes]

I believe that is stating the obvious and an unnecessary post.

Brokerage firms and fcms all do not hold money and in this particular setup the money is held at Harris Bank.

Third party banks hold segregated funds for FCMS which of course hold the accounts that exist at Brokerage Firms.

Quote from Swan Noir:

Devin,

You need to learn something about the business you are in. What you have just said is 100% incorrect. The primary strength that Global has is that it clears through RCG -- a strong firm -- which in turn banks at Harris. Show these posts to management and ask them what they think.

 

[jeb9999]

Quote from EdgeHunter:

I agree that some of the daytrading margins with Global Futures and Velocity seem low ... but it really depends on how they work the SPAN RISK Software formulas on their traders throughout the day... how they monitor that SPAN RISK with their software every minute of every trading day... to watch their RISK in real time...

also, and most importantly...

We ALL just went through a Major 100 year Economic BUST Event and Global and Velocity are still standing fine as far as i know... So if they are fine thru that.. then common... ?

I would lean more toward Global with your account since your money is going to go into a monster clearer RCG seggregated funds.. ... not so with Velocity...

It wasn't the worst financial crisis in 100 years. It wasn't even as bad as the early 1980's let alone the 1930's.

The fact that no futures firms went under in the recent past means little. Historically the failure of futures firms has a very low correlation with general financial crises. The vast majority of futures firms failures are due to specific events in the futures markets or fraud.

The biggest risk to your futures account is that another customer blows out and takes down the clearing firm. This risk is minimized by using a clearing firm that has strict risk management policies and procedures and is well capitalized.

The $500 amd $1000 day trade margins don't exist to benefit customers, they exist to maximize commission revenue before traders wipe out their accounts. Firms that want their customers to be successful and expect to maximize their commission revenue over the long term do not let their customers hang themselves with excessive leverage.

 

[olias]

Quote from jeb9999:

It wasn't the worst financial crisis in 100 years. It wasn't even as bad as the early 1980's let alone the 1930's.

The fact that no futures firms went under in the recent past means little. Historically the failure of futures firms has a very low correlation with general financial crises. The vast majority of futures firms failures are due to specific events in the futures markets or fraud.

The biggest risk to your futures account is that another customer blows out and takes down the clearing firm. This risk is minimized by using a clearing firm that has strict risk management policies and procedures and is well capitalized.

The $500 amd $1000 day trade margins don't exist to benefit customers, they exist to maximize commission revenue before traders wipe out their accounts. Firms that want their customers to be successful and expect to maximize their commission revenue over the long term do not let their customers hang themselves with excessive leverage.

I see your point, but it feels like you are painting IB and similar firms with higher day margins as 'more concerned with their clients success' and I think that is hogwash. For whatever reason, they see the higher margins being in the firms best interest, or they are not as equipped to offer lower day margins like these other places.

I get a little bothered with the firms that constantly advertise their low margins as their main selling point though. That's kind of creepy.

 

[jeb9999]

Quote from olias:

I see your point, but it feels like you are painting IB and similar firms with higher day margins as 'more concerned with their clients success' and I think that is hogwash. For whatever reason, they see the higher margins being in the firms best interest, or they are not as equipped to offer lower day margins like these other places.

I get a little bothered with the firms that constantly advertise their low margins as their main selling point though. That's kind of creepy.

Do you understand the concept of "risk of ruin" ?

The higher the leverage the greater the risk that an adverse move will wipe you out. The futures traders that survive over the long term are not the ones that seek to maximize their leverage.

At 1170 the S&P emini is worth $58500. The overnight margin of $5625 gives you better than 10 to 1 leverage and IB's daytrade margin of $2813 gives you better than 20 to 1 leverage. How much more leverage do you want? 30, 40, 50 or more to 1 leverage?

If you have spent any time in the futures business you can tell the difference between those firms that are acting in their customers best interests and those that are acting in their own best interests.

IB clearly has the technology to offer lower day trade margins for futures, but they don't. IB does business their way knowing that they lose customer business and short term commission revenue because of their futures margin policies. They also lose futures business because their futures commissions are too high. IB isn't interested in having the business of the overleveraged futures trader who is here today and gone next week.

 

[Swan Noir]

For any large clearer to be "equipped" requires them to decide to do it. There is nothing to equip.

I agree that their own self preservation is at the heart of a decision to require higher margins but that is quite a reasonable decision.

Quote from olias:

or they are not as equipped to offer lower day margins like these other places.

 

[increasenow]

one more time I'll say it...the BEST in futures trading is www.GlobalFutures.com ya gotta go with them...gotta...

 

[traderhf]

Following passage is from Advantage Futures' "Commodity Futures Client Agreement". I do not understand why they have the last line - where they talk about liquidating clients' Treasuries without any reason and notice to clients. Why would they do that? Is this clause in anyway designed to help Advantage during times of distress? Will this clause work for customers or against them in times of distress?

Any informed opinions are welcome!

Thx,




[Trading Limitations. Client agrees that Advantage may, in its sole and absolute discretion, refuse to accept or execute any order from Client, including, but not limited to, in the event Advantage believes that the acceptance or execution of Client’s order would be in contravention of any rule or law. In addition, Advantage may at any time, in its sole and absolute discretion, limit the number or types of positions which Client may maintain or acquire through Advantage, and Client agrees not to exceed such limits. Advantage is under no obligation to effect any transaction for Client’s Account that would create positions in those accounts in excess of the limit Advantage has set. If Client exceeds position limits imposed by Advantage, the Commodity Futures Trading Commission or a commodity exchange, Advantage shall have the right to liquidate positions in excess of the applicable position limit. In addition, Advantage shall have the right to liquidate Client’s positions in government securities at any time without notice to Client.]

 

[Swan Noir]

Treasuries (TBills), as I am sure you know, frequently serve as a proxy for cash margin. They want to be able to go to cash. I believe having the bills is a more "perfected" step in segregation and since that is all a client has as protection in a failure I think it is not to the clients advantage.

Quote from traderhf:

In addition, Advantage shall have the right to liquidate Client’s positions in government securities at any time without notice to

Client.] [/B]

 

[traderhf]

SwamNoir - Thanks for your note!

That is what I thought - since earlier Treasuries used to be performance bonds for margins - if Advantage Futures wants to sell T-Bills at their wish; it clearly means that in the event of a failure, they are willing to use client's TBills to manage their cash position. Very Bad from a client perspective!!!

I haven't read through other future broker's agreements, I trade with IB. However, I have been thinking of opening another account with high intra-day margins to do some death-match speculation. Advantage Future policy seems 'Pretty disturbing'. Seriously considering with whom to go now.