What about joining a prop firm? When you sign up, your liability is limited to the amount that you deposit with them. You take the risk that you lose your deposit when other traders blow their account, but I suppose it could give you protection if you blow up.
I heard someone mention that many traders make sure that their wives own the house to limit the downside of bankruptcy.
Of course. The odds of such an event are extremely remote (unless terrorists are able to detonate a nuke or dirty bomb in a major city like New York?)... This possibility is one good reason to NOT have your account with a small start-up firm, one with the minimal "asset cushion" of thier own money, and who attracts small traders and allows them to trade the highest leverage on ridiculously small margin. (In the early aftermath of the '87, crash, Refco temporarily had a policy of asking clients to NOT trade the SP500 contract for a while, but if we did Refco *required* us to have $50,000 margin per contract... which they are well within their right to do.)
I remember that $50k margin, but I'm sure it was an exchange requirement. I was working for a broker in London and everyone was using that as min margin.
What you should really be worried about is when you have a stop set, then some fat fingered SOB puts in an order 10 pts away, which triggers your stop. It hasn't happened in awhile, but it will. That's one reason I never set a hard stop. I always use a mental stop. Most traders blow out in futures because they use the leverage. You should limit your leverage based on your account and tolerance for risk, not on the broker/exchange requirement. A an example, on the ES I use a minimum of $10,000 per contract intraday. For overnight I use $40,000 per contract.
" That's one reason I never set a hard stop. I always use a mental stop. " lol there is a columbian proverb: "one learns best with blood" for people who set "mental stops" with futures, their day will come. love it.
Whitster, can you elaborate a bit about what you mean. Arnie seems to have a point. If there is a nuke or some other major event, I bet the market will drop right through stops and not trigger them. However, nothing would frustrate me more than to have my stop hit, and then watch the market instantly bounce back. I'm about to start trading futures myself, so I am curious just how fast my broker will apply the margin call to my account. Will they sell me out in a few seconds, even if the market snaps right back, or is there some leeway? Any info is greatly appreciated. Thanks.