Safety of online forex dealers

Quote from saschabr:

The last trade chart: spotty
The last bid chart: very continous
The last ask chart: very continous

It is only that not many traders are into the game at 2:30 AM.
More...

Thanks for the info. I think I would feel more comfortable trading GLOBEX through my IB universal account rather than opening an account with a online FX dealer.

From what you have said I plan on setting my overnight stop orders to execute on bid/ask versus last price. I'm thankful that IB lets us determine our own stop trigger methods.

Thanks again for the information,

Banker
 
You better double check with IB on stop orders for overnight orders. My understanding is only Globex stop limit orders work in the overnight markets, not the stop orders held on IB's servers.

-- ITZ
 
Also, be aware that MMs will pull their quotes during
fast markets ! Your stop order could then fall into a hole.
This is not the normal circumstance, but may happen, e.g.
due to important econ. news (Japan) or some kind
of terrorist attack etc...
 
...but still, the futures are favourable over online FX.
The trading cost is lower and there is far more transparency.

Also, the MM cannot play dirty tricks on you, like
bidding 2 pips lower when he realizes you want to
get out of your long --- AND YES ! they do this !
 
Gain Capital replied to my e-mail questions.

In brief, you can place your funds in a non-interest bearing segregated account for FDIC protection. In return for letting Gain keep funds in a non-segregated account, they pay interest.

In the unlikely event of GAIN’s bankruptcy, they belive that funds would pass outside of any jurisdiction and be returned to clients.

Gain also has Financial Institution Bond and Bankers Professional Liability insurance policies protect customer funds against failure of service, dishonesty, forgery, alteration, and other employee fraud.

It does not however cover against GAIN bankruptcy. The coverage on these policies is on an "omnibus" basis, and would cover funds not used for margin purposes.

Gains' recommendation, if you are concerned about GAIN’s bankruptcy, would be to open a segregated account. However, they also advise that the information they provided me cannot be considered legal advice and they strongly recommend that if you are concerned about this you should contact your own attorney.

All in all, I'm satisfied with Gain's reply -- it is as expected.

I still like the clearinghouse safety of trading futures though, and the potentially tighter spreads of futures.

-- ITZ

-- ITZ
 
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