I think I might not understand your question. The treasuries are the collateral, you wouldn't have a separate cash balance. The treasuries mark to market is fairly predictable, but yes if their value went down your buying power would go down.
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How safe is your money and shares at a reputable broker?
- Thread starter john7722
- Start date
I think I might not understand your question. The treasuries are the collateral, you wouldn't have a separate cash balance. The treasuries mark to market is fairly predictable, but yes if their value went down your buying power would go down.
so if a trade goes against me the broker sells off some of the collateral to settle any losses?
No, it's just like margin. The collateral would need to be topped off if you went below 50% just like if it was cash.so if a trade goes against me the broker sells off some of the collateral to settle any losses?
No, it's just like margin. The collateral would need to be topped off if you went below 50% just like if it was cash.
if i put up 500k in bonds as collateral and proceed to lose 50k trading where is the cold hard cash coming from to cover the losses? is the broker fronting the money?
If you ignore the haircut for the treasury piece, it's the same as if you put up $500k in cash and bought $550k in stocks and lost $50K. You've got a margin loan for $50K at that point, same as with the bond. You eventually have to pay it back and will pay interest until you do.if i put up 500k in bonds as collateral and proceed to lose 50k trading where is the cold hard cash coming from to cover the losses? is the broker fronting the money?
I think the more regulations a broker has, the more safe can it be thought of from the trader’s perspective.Honestly, I can understand and do share the same feeling in this.
First thing I tend to notice is if the broker is regulated with strong regulation bodies, because if they are, it means that they can be trusted and relied on.
But yes, even I do sometimes think of the fact that even a regulated broker can also scam me. This is not uncommon to think of. But what can be helpful is to see if those broker are member of ICF (Investor's Compensation Funds), which is a good indicator to tell you that the regulated bodies will have to compensate the funds to you, when your broker goes south.
My broker is cysec-regulated, that’s one of the things I had checked before opening an account with them.
Same here, all the brokers I use - Fxview, XM, eToro are regulated, which makes it compulsory for them to pay up to 20k euros in case of something going amiss. Do you research well in advance.
20K euros? Seriously? Is that supposed to be a joke?Same here, all the brokers I use - Fxview, XM, eToro are regulated, which makes it compulsory for them to pay up to 20k euros in case of something going amiss. Do you research well in advance.