Safety of Funds

N

noob trader

Hi,

I am new to this whole trading thing so was hoping for some help in gathering info to make a better informed decision. I am just starting out and would like a way to day trade in real time at relatively low investment risk just to get a feel for what its like to actually trade in real time as opposed to being on a fake simulator so have been looking into brokers who allow daytrading without the min 25k needed and I came across Capital Markets Elite Group www.cmelitegroup.com/.

I know one of the things mentioned often in these boards is to stay away from off shore brokers because they are not regulated and could run off with your money etc but this company states that they are licensed/registered with their countries securities and exchange commission and the accounts are SIPC insured 500k because they use a US clearing firm, Interactive Brokers.


It seems majority of the concerns I see on elitetrader in regards to these off shore brokers is safety of funds. Wouldn't the above alleviate these concerns? What other major concerns (specifically to the safety of account funds) would I need to worry about that I wouldn't need to worry about if they were a US based firm?


Thanks
 
Hello, Noob trader, welcome to the trading planet - it is not a "trading thing", it is art and business and hard at the beginning, beautiful and easy when you will master. It requires passion and respect.
And to answer your question - stay away from all these offshore firms, run and not think about, you better burn your money or take a trip - look what some of the biggest banks in the world [UBS, Credit Suisse, BNP Paribas] performed on us in the Bahamas and Switzerland [ https://letsmaketheworldfairer.wordpress.com/ ] or read the thread started here by me on 19 April 2018 in brokers-retail brokers forum.
So it is not that company is regulated, but it is wherein the first instance. And another very important fact to consider, if you are about to start your trading carrier, would be your orders execution. If you are our of USA, in those inviting offshore jurisdiction, you most likely will suffer from always wrong and bad execution, as it happened to us and it is nine years all together we did not have even one fair hearing in the court, our brokers-banks and their attorneys keep avoiding it by playing with technical tricks.
There is more about regulated vs. unregulated brokers on this thread https://www.elitetrader.com/et/threads/unregulated-vs-regulated-brokers.113438/.
It does not matter what they say where they are regulated, the question is how you can enforce any wrongdoing will occur? And the answer is plain and sad - most likely you can not or will spend years in courts, as we do.
Another aspect - you may hope to find truth in the USA, once you will trade USA securities. But also this way will be most likely close to you - we contacted SEC USA, back in 2009, and the answer was that even if we traded ETFs, but the orders were generated from the Bahamas, so we must deal with SEC Bahamas. ANd SEc Bahamas did nothing - meeting with no followings, calls, emails are not answered.
The good thing is that Trinidad and Tobago at the end is under Privy Council, [UK https://en.wikipedia.org/wiki/Judicial_Committee_of_the_Privy_Council], where the truth can be found but the price would be years of court pleadings, your lifetime consumed by this litigation. It is not why are you starting to trade, correct?
I hope other members will guide you further.
And to avoid 25K limit you may consider learning futures - there is free institute on CME group https://institute.cmegroup.com/ and there are many USA based brokers whom you can trust. Mine is AMP futures, where you also can find educational material.
Very alarming that the company you mention is using CME in its name, it looks to me like a bait.
All the best and hope our example and struggle will be sufficient for you to not be a victim of this offshore inviting traps.
 
Why did you choose "day" as the frequency, have you investigated what you would trade, how volatile it is, how much potential it has to yield a profit, your chances of being able to trade it to get a profit, etc ? ... or, did you see someone clicking buttons and making intuitive decisions on the fly and walking away with a profit on a television commercial or something ? Not every instrument will even yield a profit on that time scale, do you know which ones are which ? Do you know how to find out which ones are which ? Or are you just hopeful that you can start clicking some mouse buttons on a randomly chosen instrument and somehow learn to beat a market maker and the spread ?
 
eves_banished_children said:
Why did you choose "day" as the frequency, have you investigated what you would trade, how volatile it is, how much potential it has to yield a profit, your chances of being able to trade it to get a profit, etc ? ... or, did you see someone clicking buttons and making intuitive decisions on the fly and walking away with a profit on a television commercial or something ? Not every instrument will even yield a profit on that time scale, do you know which ones are which ? Do you know how to find out which ones are which ? Or are you just hopeful that you can start clicking some mouse buttons on a randomly chosen instrument and somehow learn to beat a market maker and the spread ?
More...

Im confused, how does trading frequency, volatility, clicking some mouse buttons on a randomly chosen instrument and somehow learn to beat a market maker and the spread, etc affect the safety of my funds in regards to it being with an offshore broker?
 
noob trader said:
Hi,

I am new to this whole trading thing so was hoping for some help in gathering info to make a better informed decision. I am just starting out and would like a way to day trade in real time at relatively low investment risk just to get a feel for what its like to actually trade in real time as opposed to being on a fake simulator so have been looking into brokers who allow daytrading without the min 25k needed and I came across Capital Markets Elite Group www.cmelitegroup.com/.

I know one of the things mentioned often in these boards is to stay away from off shore brokers because they are not regulated and could run off with your money etc but this company states that they are licensed/registered with their countries securities and exchange commission and the accounts are SIPC insured 500k because they use a US clearing firm, Interactive Brokers.


It seems majority of the concerns I see on elitetrader in regards to these off shore brokers is safety of funds. Wouldn't the above alleviate these concerns? What other major concerns (specifically to the safety of account funds) would I need to worry about that I wouldn't need to worry about if they were a US based firm?


Thanks
More...

First of all daytrading and "relatively low investment risk" is an oxymoron, just so you know.

Second, regarding your fund safety, you are guaranteed to recoup some or all of the funds that you have deposited with an investment company under the SIPC program ONLY when the company that you have DIRECTLY deposited your funds with is a member of the SIPC https://www.sipc.org, NOT its clearing firm, its partner company, its custodian firm... So unless this company Capital Markets Elite Group is a member of the SIPC, if anything happens to this company, your money will NOT be protected under the SIPC. You can find out whether a company is a member of SIPC or not via its website that I listed above.

And one more thing, only equities, options, bonds, GIC's and other securities besides cash that is held with a member SIPC company is protected (again you can find the complete list of eligible securities on the SIPC website). Any other securities such as Forex, Futures, CFD's which this company also offers brokerage services in are not protected by the SIPC.

My advice to you: Find a SIPC member firm and trade cash. You can still daytrade in cash if your deposit is less than $25K as informed to me by other threads on ET.
 
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