I had a Refco futures account. The margin requirements were much higher than 500$ for intraday trading. Apparently not a guarantee. So your conclusion is wrong. The risk control has to do with the risk control, not with the margin requirements. Proof is the fact that Refco is out of business and many 500$ brokers aren't. 500$ per contract means 10 points of loss. It shouldn't be that difficult to close trades when they reach the 10 points loss. BTW the loss at Refco came from the people managing the company, not from client's losses.
Exactly. Don't slander reputable firms casually not only is it ethically wrong it is potentially libel.
def, Does a sweep into treasuries segregate your "at risk" capital from your treasury notes in the unlikely event that an "event" should occur. D. Thanks
My statement is based on facts from RCG. Can you show me this latest posting that shows how the fcm's rank ?'
So what about if they are offering $300 margins ? Usually those offering low day trading margins have very stringent risk control in place, but the possibility is always there.
http://www.cftc.gov/tm/tmfcm.htm duard, sorry, I don't know the answer to that question but If I had to guess I'd guess probably not.
A firm I was thinking about opening an account with seems to have a low capital reserve. I checked the CFTC website and found this: http://www.cftc.gov/files/tm/fcm/tmfcmdata0511.pdf I looked for York Business Associates and the numbers in their row seem very low compared to other brokers. Is this a sign that I should stay away from this broker? The futures firm is called TransAct Futures but it is actually a child company of YORK BUSINESS ASSOCIATES. I liked Transact Because they offered the lowest rates per R/T I could find anywhere. Any Advice? Thanks
The capital of a futures firm is the cushion that determines whether or not you will lose money in the event of embezzlement or uncovered trading losses by other customers. The larger the capital, the greater the chance that any catastrophe can be absorbed by the capital, without loss to customers. The smaller the capital, the greater the chance of a large uncovered loss wiping out the capital, and then requiring invasion of customer assets to cover the loss. A low capital reserve is absolutely a good reason to avoid a broker. I already explained, in this thread, why Interactive Brokers is a very safe futures broker. An even greater way to achieve safety at IB is to purchase T-bills and hold them in your SIPC- and Lloyds-insured securities account at IB. If you want to trade futures, IB will give you a margin loan, for up to 97% of the value of your T-bills, and IB will transfer that margin loan to your IB commodities account, where it can be used to meet futures margin requirements. If IB goes bankrupt, your T-bills would be insured by SIPC and Lloyds. If you lost any money in the futures account, due to IB's bankruptcy, this would be a wash, because this would be money you owe to IB anyway. So you would come out of any bankruptcy with full protection from SIPC and Lloyds, just like you were trading securities, even though you were actually trading commodities. This provides an unbeatable level of safety. I am not aware of any other retail broker who provides you, via T-bills, with futures trading with the full deposit insurance normally only available to securities trading accounts. If you do not hold your futures positions overnite, then at the end of each trading day, all futures account monies are swept back into your securities account, to pay down the margin loan, so that you will not have to pay any interest on the margin loan. This is the safest way to trade futures.