you can lose more than your account trading futures.it may be slim but it can happen. years ago i was trading commodities.the commodity i was trading went limit for 3 days in a row.i owed them money when it was over.
Hi, the max. loss depends also on your country of residence and the current applicable law. eg. you are long 1 MiniSP at IB, have $2000 in margin, the market gets interrupted and re-opens 3 days later 100 pts lower, so your account is $-3000, which IB could sue you for. as far as i know, in germany there is no additional obligation to pay in funds after your loss exceeded the original account credit. your broker would not be able to sue you for the account debt. the situation in other countries is different
Someone asked what dates these surprise price spikes happened...I remember everyone of them clear as day simply because these things stop your heart whether you are long, short or flat...Not only that it is the euphoria and despair of those who were lucky or unlucky enough to have been exposed to these moves that really is the most amazing aspect of these price spikes... For what it's worth, the three that I clearly remember that are probably the most referred to occurred on the following dates: Oct 15, 1998...Fed reserve cut the discount rate following a private meeting about the illiquidity following the Russian crisis, Asian crisis and LTCM blow-up...This occurred on a Thursday one day prior to the October options expiration...I was lucky enough to have some OTM calls leftover from a spread I had unwound that day...That was as lucky as one gets, pure luck...Many others were positioned short and had no way to get out...This announcement occurred minutes after the bond market closed and provided an absolute rocket shot that propelled the market higher throughout the remainder of 1998 thru 1999...It became clear that day that the FED was willing to do anything to achieves its end goal... January 2, 2001...Fed cut the Fed funds 50 basis points mid-afternoon and caught many, many traders short the market...Once again, there was almost no way to get out of the market following this news spike... April 12, 2001...Again the Fed cut rates by surprise and sent the market flying higher... Each time this occurred, one could have(theoretically) exited the trade prior to a 50 handle run against them, but they would have needed to be at the keyboard...
German brokers must have some other safegaurds in place. That's one hell of a risk factor unless I'm missing something.
Vulture, thanks for the reply. From Forbes.com: "Each of the eight Fed meetings in 2001 resulted in a rate cut and on three occasions, policymakers eased credit between regular meetings. The 11 reductions have brought overnight rates down 4.75 percentage points since Jan. 3 last year. " How does it work that the Fed can adjust rates between regular meetings? Do they inform the public of these impromptu meetings in advance? I remember a few weeks ago there was a stir when someone at the Dallas Fed, I think, in reference to possible inflation said that rates COULD be hiked as "the data comes in". As opposed to during a regular meeting, I guess. Sneaky bastards ;-)