mercredi 5 août 2015

Account Blow-Up

Hi All,

I always trade the big currency pairs with a leverage (mostly 10 or 20) and a stop loss.
I understand that a broker is not always able to close my trade exactly at the stop loss due to slippage (Are there also other reasons?)

But what if slippage is so extreme leaving me with a negative account balance? Is this possible?
See what happened with EUR/CHF earlier this year where the price moved extremely fast.

Example:
I've got 10000USD and use a leverage of 100 (I never use such a high leverage, it's an example).
Let's say the trade goes against me really quick for 10% (10x100=1000% on my 10000 account) without the broker closing my trade at stop loss.
Who's responsible for the negative amount on my account?

I can imagine users trading with only 100USD in their account and using high leverage.
If the trade goes well, lucky them, otherwise the trade will be closed by the broker because of the margin. That's what they expect to happen.
But also here, what if the broker was not able to close the trade in time and the account becomes negative?

Thanks for your help.


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