Forex Brokers: A Traders Tale
Okay, I’m going to say this right from the top – Do Not, under any circumstances, use a Forex Broker that does not have a physical presence in the UK AND/OR does not carry FCA approval and regulation. The reasoning behind this statement will become crystal clear as you read on.
The school of hard knocks !
In January 2015, my forex broker, Alpari UK, applied for insolvency after the Swiss National Bank’s surprise decision to abandon the CHF 120 peg against the euro. The effects were felt immediately, throwing financial markets around the globe into turmoil and causing a number of forex brokers to suffer severe losses, with some going bankrupt.
This kind of totally unexpected event, sometime referred to as a black swan event, can happen at any time and cause chaos, wiping out not just retail traders but institutional traders, hedge funds, family offices, brokerages and even entire institutions.
I was at my screens as the event unfolded and within seconds was unable to either close my open positions or get through to the Alpari dealing desk on the phone. I simply had to watch helplessly as prices plummeted, jumping my stops, taking out my broker and the balance of my trading account with it.
The upshot was that as of 9.15am on Tuesday 15th January 2015 my trading account had evaporated. Gone.
The good news was that I had taken the time prior to making a deposit to ensure that the broker I was considering was FCA regulated and as such my deposit was held in a segregated client fund account and was “insured” by the FSCS.
Not sure what this means in practice ? Then you really need to read on…
Charles Clifton – Forex Trader