Some forex broker policies into the US election are absolutely brutal
Watch out for margin calls and worse
Many forex brokers have sent out notices of temporary changes in margin and whatnot. Some start as soon as today and run for all of next week.
That's probably over-prudent but you can't blame brokers for an abundance of caution after the SNB, Brexit and GBP flash crash.
Still, I prefer to manage my own risk rather than getting micro-managed by my broker.
What's brutal is that some brokers have gone beyond changing margins.
EToro, for instance, announced today that it's limiting take profit positions on Tuesday:
as of 07.11.2016 at 15:00 GMT (and at any time thereafter until further notice
from us) the maximum Take Profit for setting new positions or editing existing positions will be 200%. Additional TP/SL limitations might apply during the event.
So if you're short USD/JPY at 104.00 into the result, the most you can make is double your trade. Even worse is that they're saying the policy can and will be reinstated "at any time thereafter."
Another troubling change is from Pepperstone, who sent out a note saying: "We reserve the right to make further changes without notification such as increased margin requirements, trading restrictions on certain products or any other such matter."
So they could snap-change margin requirements and take clients out of a trade.
Another risk is that traders don't see the announcements of margin changes over the weekend and are forced out of trades at the open on Sunday when trading is ultra-thin and spreads brutally wide.
Here are some of the brokers who have changed or will change margin requirements
- Hantec to 33:1 from 100:1
- OneTrade to 33:1
- MaxFX 200:1 from 500:1
- Tradeo to 1:50
- Z.comTrade to 1:50
- LCG to 1:100 as of today (and 1:20 on USD/MXN)
- Alpari 1:100
- Ayondo - guaranteed stops no longer apply. Margin to 50:1 from 100:1
- ActivTrades cut margin 4x
Big thanks to our friend Konstantinos for the heads up on the announcements.
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