Re: how to avoid loss ?
Dear Megapixel
Some live experience about that from my side and I guess in India it will not be much different.
As posted in the past in the following thread: http://www.traderji.com/beginners-guide/61782-never-ever-put-all-your-eggs-one-broker.html , do not put all your money with just one broker. Be selective by choosing them.
If your broker goes bankruptcy, all accounts will be closed and during that period your positions are open. If you then want to close them during that time, you have to open an other account with an other broker and place again enough money there to secure your margins. During the time of this transaction, you take the full risk of any loss which occurs.
To avoid such situations, always have at least two accounts with two different brokers.
If the broker got bankrupt, you usually also will loose some or maybe all of your money you placed there, as there is a reason for his bankruptcy.
As you see in the other thread, I faced two times such a situation. The last actual bankruptcy in the States was from PFG (Peregrine Financial Group). http://www.foxbusiness.com/industries/2012/07/11/pfg-collapse-deals-blow-to-futures-industry/ in which I luckily not have been involved as we checked the company shortly before this was announced. The company was locked at because of his great platforms for option trading and the seriousness it showed to the outside world. What a bluff it was, as the owner cheated for many years and nobody saw it. So be careful with any broker you choose, even in India !!
Good trading and lets hope that nobody must suffer such bad experiences.
DanPickUp
Nowadays many small brokers are coming up with attractive brokerage plans. I'm worried about trade safety.
Suppose you shorted a future / option and your broker shuts down the business( due to bankruptcy/run away/some reason) some days later.
How do we close open positions in such odd scenario to avoid unlimited loss (assuming your trade is in loss) ? This is bit scary if the exit route also shuts down when broker is down.
do we have any exit routes in such situation ? Does NSE/SEBI has any guideline here ? Does the client suffer in these cases ? Also what are possible outcomes in such situations ? Please enlighten with facts.
Suppose you shorted a future / option and your broker shuts down the business( due to bankruptcy/run away/some reason) some days later.
How do we close open positions in such odd scenario to avoid unlimited loss (assuming your trade is in loss) ? This is bit scary if the exit route also shuts down when broker is down.
do we have any exit routes in such situation ? Does NSE/SEBI has any guideline here ? Does the client suffer in these cases ? Also what are possible outcomes in such situations ? Please enlighten with facts.
Some live experience about that from my side and I guess in India it will not be much different.
As posted in the past in the following thread: http://www.traderji.com/beginners-guide/61782-never-ever-put-all-your-eggs-one-broker.html , do not put all your money with just one broker. Be selective by choosing them.
If your broker goes bankruptcy, all accounts will be closed and during that period your positions are open. If you then want to close them during that time, you have to open an other account with an other broker and place again enough money there to secure your margins. During the time of this transaction, you take the full risk of any loss which occurs.
To avoid such situations, always have at least two accounts with two different brokers.
If the broker got bankrupt, you usually also will loose some or maybe all of your money you placed there, as there is a reason for his bankruptcy.
As you see in the other thread, I faced two times such a situation. The last actual bankruptcy in the States was from PFG (Peregrine Financial Group). http://www.foxbusiness.com/industries/2012/07/11/pfg-collapse-deals-blow-to-futures-industry/ in which I luckily not have been involved as we checked the company shortly before this was announced. The company was locked at because of his great platforms for option trading and the seriousness it showed to the outside world. What a bluff it was, as the owner cheated for many years and nobody saw it. So be careful with any broker you choose, even in India !!
Good trading and lets hope that nobody must suffer such bad experiences.
DanPickUp