Oanda clears negative CHF balances

Clearing negative balances will just encour
OTM-Options said:
RE: Oanda clears negative CHF balances

What happens in this case? You have two traders that had an identical long EUR/CHF position that incurred a $20,000 loss
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Clearing negative balances will just encourage people to gamble/leverage up in the future knowing they will get a 'bailout' if things go wrong.

Ideally these firms should make punters pay something even if it is only 10% of what is owed to discourage this in the future.
Now if they are promising you will always cancel negative balances every time then thats a different thing. Then people are free to leverage up all they want.
 
blakpacman said:
Leverage is the Siren luring traders with the promise of riches and greatness. She is most effective in shipwrecking traders' margin accounts, continually luring them back again and again. Only the rare Odysseus can sway himself from the seductive and dangerous proposition offered by leverage.
However, most seafaring passengers are not so lucky, as evidenced by the flotsam and jetsam regularly seen floating in the financial waters.
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There is always a key lesson when an extreme event like this happens. While leverage is one of those things you have to manage carefully, I don't think that was the key lesson here as this big move would have spanked you regardless of the degree of leverage you had on. So what do I think the key lesson was this time? Know what you're trading. That means don't just take setups based on charts, indicators, and a false sense of loss protection from stops. The CHF was a pegged currency and that made it susceptible to the whims of the SNB. There is no moving average, Fib ratio, or oscillator that would have told you this. You had to understand what it was behind the chart.
 
southall said:
Clearing negative balances will just encour


Clearing negative balances will just encourage people to gamble/leverage up in the future knowing they will get a 'bailout' if things go wrong.
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Too-Big-To-Fail Big Banks got bailed out in 2008, so why not little Joe clicking away his salary?
 
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