(In continuation of our discussion about TST's unique black swan protection. Maybe this should become a distinct thread?)
I wonder if incorporating a trading company as a proxy for one's trading would suffice as protection from a negative balance at the broker. My intuition tells me no: the corporation I had here in Canada a while ago, I had to endorse (co-sign) to finalize its bank margin so I bet a broker wouldn't grant a margin trading account to a corporate entity without the same kind of personal guarantee from its owners.
Or more simply, it'd be interesting if "balance insurance" existed, for small traders. I'd consider buying it. (Obviously, judicious use of options on every leveraged position could serve this purpose, but that world is so damned complex that I haven't dared enter it yet. I have both McMillan books on my shelf, waiting...)
Unless I'm mistaken, Topstep doesn't allow holding overnight... is this correct? I bring this up because they know the risk of thinly traded markets, or the possible gap bewteen Friday and Sunday. But since they allow trading during the RTH session, they must have done their own cost/benefit analysis. I imagine that they would conclude that although there is a slight right of some major world event which could lead to huge slippage during even RTH, or even a trading halt while still in a position, its a risk they can assume because if even this is too much risk, then trading isn't the way to make money.
Likewise, for a retail trader, staying clear of holding overnight, and only trading a liquid market is I think sufficient enough to eliminate most of the risk. I suppose you can always just trade stocks and hence not get into margin, and also make sure to never be short, so the only money you could ever lose is just fully your account if all your stocks go to zero, but to dedicate so much time into learning to trade and then not be willing to take on any risk is I think counter intuitive.
Depending on your type of work (miner, fire fighter, etc), or perhaps even the act of travelling to work, this might be more risky than a black swan event that happens during RTH for a retail trader who uses stops and is trading a liquid market and never holds over night. Heck, trading is all about controlling risk. How as a truck driver do you control risk if you already have your seatbelt on but can't control other drivers or road conditions? How does a nurse who works with HIV patients control the risk of a needle prick if she is already wearing gloves and hence as protected as she can be? I think the trader has more control over his risk, and if something so drastic should happen that his trade causes catastrophic losses from a black swan event, we also need to consider that people die every day driving to work, earthquakes cause buildings to collapse and you can be trapped and die a slow crushing death, or a crippling virus such as bird flu could enter your body while on public transit, etc.
(I considered going for Oanda's CFDs as well, but the wildly fluctuating spread sizes and actually lower leverage aren't appealing for day trading, and for longer positions, there's always ETFs.)
