LeapRate Exclusive… LeapRate has learned
that retail forex broker Gain Capital Holdings Inc (NYSE:GCAP) and its
Forex.com unit have sent messages to clients (see example below) that
they will not be required to repay negative client balances in their
accounts.
That marks a quick reversal for Forex.com. On Tuesday we reported that Forex.com (as well as some other forex brokers) were going after traders to repay negative client balances owed to the company from losses incurred on Swiss Franc trades last Thursday.
What exactly is a ‘negative client balance’?
A lot of retail forex traders (which were short the Swiss Franc) lost on paper more than their money on deposit last Thursday. A lot more. For example, a trader which had $1,000 on deposit with a broker and used it to back a 100x leverage trade long EURCHF would have lost about $20,000 as the EURCHF rate dropped by 20% virtually instantaneously. But the broker only had $1,000 of the trader’s money on deposit. That would leave a $19,000 ‘negative client balance’ which the trader technically owes to the broker.
Read more Click here / www.trade4x.net
That marks a quick reversal for Forex.com. On Tuesday we reported that Forex.com (as well as some other forex brokers) were going after traders to repay negative client balances owed to the company from losses incurred on Swiss Franc trades last Thursday.
What exactly is a ‘negative client balance’?
A lot of retail forex traders (which were short the Swiss Franc) lost on paper more than their money on deposit last Thursday. A lot more. For example, a trader which had $1,000 on deposit with a broker and used it to back a 100x leverage trade long EURCHF would have lost about $20,000 as the EURCHF rate dropped by 20% virtually instantaneously. But the broker only had $1,000 of the trader’s money on deposit. That would leave a $19,000 ‘negative client balance’ which the trader technically owes to the broker.
Read more Click here / www.trade4x.net
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