In today forex faq, we are going to talk about an important issue regarding our forex broker.
Below is the question:
Yesterday I went short on USDCAD on the daily chart.I didn’t place a limit on my position, however my broker closed my trade without my authorization. This is the second time my broker does it and I am a little bit upset about this broker. Do you think brokers can do this? Does your broker close your positions without your authorization? Thank you and look forward.
This situation usually occurs when you have used up all your usable margin. When you place a particular trade, you will used up part of your capital and your trading platform will then tell you your available usable margin.
If you did not place a stop loss for your trade and the market moves against you. It will eventually trigger automatic stop loss that is when your available margin has been totally used up.
At this point, there will be no one informing you about your position being closed as it is due to your own negligence that your margin has been used up. No matter which forex broker you use, they will do the same thing as they will not be using their own money to fund your position.
In fact, this is a good thing to you as it will only allow you to lose your capital and not turns into debts. Therefore when you are trading, you must always check your available margin especially when you are funding your account with hundreds of dollars only.
In this post, I shall emphasize again the importance of placing a stop loss for every trade as this is what we call responsible trading. It will prevent your getting your account totally wiped out and give you another chance to trade another day.
Lastly I will like to clarify something with you guys here in this blog. I believe that you must have read about forex brokers trying to make you lose money by trading against you. This is not true as your brokers are making money from the spread of the currency pair that you trade in.
No matter you win or lose, they make the same amount of money which is the spread the offer. Theoretically, they should be happier if you win as you will continue to trade under them and they can continue to make money from the spread. I don’t see any reason why they want to trade against you and eventually wipe you out so that you cant trade anymore. So whatever losses you see in your trading is usually due to your inability in executing your strategy or you do not have a good trading strategy on hand.
If you are still struggling in your trading, you should start to pick up a course and then learn from it and put it into practice until you are able to profit from it consistently. I hope that I have gave you a good answer for the question above.