How Safe is your Money with your Current Broker?

Podcast: How Safe is your Money with your Current Broker?  In This Video: 00:43 The Dilemma of Putting all your Eggs in One Basket 01:48 Segregation leads to Greater Safety and More Opportunities 03:28 Capitalizing on Market Opportunities Is your money safe with your current broker? Let’s talk about that really important issue and lots more, right now! Hi Forex Traders, it’s Andrew Mitchem here and I’m the owner of the Forex Trading Coach. Today, it’s Friday, the 23rd of January and I want to talk about safety of funds and for you to know, is your money safe with your current broker? The reason, obviously, is to do with the Swiss National Bank announcement, the big gaps that we saw in the markets when I talked about this, this time last week, and as a result of that, a number of brokers and some well known brokers have either gone bust or are in severe financial difficulty. The Dilemma of Putting all your Eggs in One Basket And so, it’s sort of, as traders with our money in different places, different brokers, it’s really important for us to be assured the best that we possibly can that our funds are safe. You know, there’s no good having a hundred thousand dollars sat with a broker and making fifty thousand dollars in the year and then, just when you want to go and bring that money back into your own bank account, any of it or part of it, the broker doesn’t have sufficient funds there or they’ve gone bust. So it’s not a great situation of course! And so, for me it’s important to have segregated funds and try and find out from your broker, as best as you possibly can, about the safety of your own funds and the whole quality of them as a company. So that’s one thing just to be aware of and a tip that I’ve got for you – now I’m not saying you should have to do this but it’s a really useful tip, I believe - let’s say you had one hundred thousand dollars to trade with, in your Forex account. Rather than having the whole one hundred thousand there, why don’t you look at reducing that? Segregation leads to Greater Safety and More Opportunities Let’s say, reduce it to fifty thousand and keep the other fifty thousand in a bank account, in your home country, or some place that you can access it and it’s likely to be safe. But then, trade the fifty thousand that’s left with your broker at double the normal risk that you would. So, for instance, if on a hundred thousand account, you’re trading at half of one percent risk per trade (0.5%) , if you felt more comfortable to bring fifty thousand back, into your own, normal, bank account and keep fifty thousand in your trading account, trade that fifty thousand with, lets say, 1% risk knowing full well that you do have other money in reserve if your account should get a touch low. But even with one percent risk, to be honest, it’s quite a low amount. So, it’s just something to consider that you could do especially in the light of what’s happening with the brokers out there right now or some of them. So, of course, due to that announcement out of the Swiss Bank, we’ve seen a lot of movement in the Forex markets and, to be honest, as a trader there’s been some really good movement, apart from the big gap that the news announcement caused, last week. It’s given us some great opportunities and there’s been some really big movements. The Euro, for instance, has continued to go down and down and down and down – It’s now at a level, as I am recording this, that’s not been seen since September, 2003. So, you know, that’s a long time, that’s twelve-thirteen years ago or twelve years ago, that we’re now at such a low level. And I’ve taken short positions on the Euro today, looking for that to continue even further. Capitalizing on Market Opportunities