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

I had a webinar for my clients last night and some of the results that people are sending through, telling me about – just tremendous results. I had a lady, in her first week of trading, in her first week made +2.3% on her live account, so fantastic news there! Another guy, last night, said that he made a 4 to 1 return trade on, I think it was an Aussie-Yen trade on the six-hour chart. And so, with a half-percent risk, that was a 2% gain on his account, just on one trade. So, it just shows that with these big movements, there are some fantastic trading opportunities out there for us to make some good money.

So, I hope you’ve had a good week, I hope you’ve made a lot of money from the big movements out there. Just to let you know that this time next week, my weekly video and webinar and podcast will be coming to you from London. I’m off, over to the other side of the world for a couple of financial conferences, next week. And so, I’ll be recording from London, where it’s only about one degree as opposed to outside, right now, here where it’s about thirty degrees. So, I’m going from very, very hot to very, very cold – not sure it’s a great idea, leaving here in summer, but I’m really looking forward to catching up with a lot of people at the couple of financial conferences in London, this time next week. So, I’ll talk to you then from the other side of the world.

Bye for now!