because the brokerage took the risks not the trader. this trader was not honest and did all the wrong things. he should have gone to his boss immediately he found out he was making real trades. after that point the trader was totally dishonest and out of control. and does not deserve a penny of the money. he is lucky he is not in jail for criminal actions. he certainly should never be hired by any firm as a trader. He is totally dishonest.
The top management of this brokerage should be kicked out. It is totally unacceptable that what happened could happen (if it happened ). First rule is to avoid all possible risks at the max. Making sure that the position is covered by enough margin is the first and most basic rule. If that does not work nothing will work. From what I understand the trader worked for his own account, he was not hired for trading. The trader's reaction was understandable. Because of an error from the brokerage firm he got in a position that would mean the end of his life, losing 1 million that he never can pay back. So he had nothing to lose anymore. 1 million or 10 million would make no difference, he would never be able to pay it back. And he was lucky with the final outcome. But I don't believe all this happened in reality. You must be the most idiotique broker in the world if this could happen.
You are correct. I made a mistake. I thought he was trading for the firm. I posted off the first page in reply to the quote that I quoted. I was thinking I should first read the entire thread but I wanted to respond to the posting. But I was very wrong on this point. I had previously read about this story on a different website and got the wrong impression there. At that previous reporting they missed a lot of info on this story that is reported here. But trading his own money he lost so much more than his starting capital that he lost all his money and did not have money to continue trading. I wonder if this entire story is not true and never happened. the entire story is so crazy. the only reasonable way this could happen was if it was a bucket shop. As a bucket shop the entire operation might have been illegal.
1. I also have a hard time believing it, but life is usually stranger than fiction. I can believe the demo/real mix up, but not the letting him to trade with 50 times margin. The brokerage wasn't even aware of being in the red by a million. 2. For the second time, a bucket shop doesn't execute orders outside of the shop, so no real money loss or gain would have happened.
Did the trader get back his account money. The 20,000 euro? Or did the company keep the account money? I did not read that he was suing to get back his account money. I never trade Forex because all Forex is basically a Bucket Shop operation even when they yell up and down they do not hold the positions but put them off. In reality they are taking kickbacks or using a company they own. I would trade curriencies only on CME Globex to get fair executions.
I agree it's a bit hard to believe that a brokerage would let somebody who just opened an account with $23K to incur a loss of $1 million+ without doing anything when it was all real money!!! Even the bucket shops weren't that "generous". During the Black Swan event of SNB removing the floor to support EU, all the bucket shops went after all the traders that lost.
If the trade did not go to the exchange then it was an over the counter trade between the shop and the trader. There was a real loss and gain involved between the two parties. However the bucket shop used the old 'lied on his form when opening his account' excuse to avoid paying out on the deal.
1. That is not how bucket shops work. 2. And the shop didn't notice they lost 10M? (if the trader was up, the shop had to be down the same in your scenario)