How safe is your money and shares at a reputable broker?

Discussion in 'Retail Brokers' started by john7722, Dec 7, 2020.

  1. Sig

    Sig

    I think I might not understand your question. The treasuries are the collateral, you wouldn't have a separate cash balance. The treasuries mark to market is fairly predictable, but yes if their value went down your buying power would go down.
     
    #11     Dec 12, 2020
  2. snowman80

    snowman80

    so if a trade goes against me the broker sells off some of the collateral to settle any losses?
     
    #12     Dec 12, 2020
  3. Sig

    Sig

    No, it's just like margin. The collateral would need to be topped off if you went below 50% just like if it was cash.
     
    #13     Dec 12, 2020
  4. snowman80

    snowman80

    if i put up 500k in bonds as collateral and proceed to lose 50k trading where is the cold hard cash coming from to cover the losses? is the broker fronting the money?
     
    #14     Dec 13, 2020
  5. Sig

    Sig

    If you ignore the haircut for the treasury piece, it's the same as if you put up $500k in cash and bought $550k in stocks and lost $50K. You've got a margin loan for $50K at that point, same as with the bond. You eventually have to pay it back and will pay interest until you do.
     
    #15     Dec 14, 2020
    snowman80 likes this.
  6. I think the more regulations a broker has, the more safe can it be thought of from the trader’s perspective.
     
    #16     Dec 23, 2020
  7. My broker is cysec-regulated, that’s one of the things I had checked before opening an account with them.
     
    #17     Dec 24, 2020
  8. Same here, all the brokers I use - Fxview, XM, eToro are regulated, which makes it compulsory for them to pay up to 20k euros in case of something going amiss. Do you research well in advance.
     
    #18     Dec 24, 2020
  9. Sig

    Sig

    20K euros? Seriously? Is that supposed to be a joke?
     
    #19     Dec 24, 2020
  10. outhoe

    outhoe

    While trading there’s always the risk of money being lost. As long as 1 uses multiple brokers and only regulated ones, it’s all good.
     
    #20     Dec 28, 2020