Is Everything Just a Scam? #Askfinmag
- For the first week of #Askfinmag, our social media followers wanted to know if Greek brokers pose a risk and if the SNB crisis is just a lie
This Tuesday we told readers and social media followers that whether you're new to investing, are an experienced player concerned about a future Black Swan Black Swan A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in Read this Term event, Finance Magnates’ newly launched #Askfinmag campaign is here to help.
For the first week of the campaign, our social media followers wanted to know if Greek brokers pose a risk, if the SNB crisis is just a lie and if any binary options trading is legal for Americans.
@financemagnates Forex brokers in/from Greece, are they an additional risk to clients? #askfinmag @ZuluTrade @OANDA
— StarshipCaptain (@DawieE76) April 28, 2015Well StarshipCaptain, I think that the answer to this depends mainly on the banks the brokers use. Nobody knows for sure what is going to happen with Greece, not even Angela Merkel or Alexis Tsipras, and it can all turn out fine at the end.
Still, your fears are warranted - a Greek exit from the euro zone might do good to both economies in the long run but there will definitely be pain in the immediate term. A run on the banks and even government confiscation of foreign currency deposits can't be ruled out in extreme cases.
Luckily, most brokers should already be wise enough to have contingencies for this case, considering they had a similar scare with the European Cypriot bailout that created similar conditions. A rather simple solution is to spread out client's money in various safe jurisdictions. I will suggest you ask your broker where are your funds held, what countries and which banks.
@financemagnates very interesting article. then how can so many brokers (eg, IG) say there was no lqdty to trade? just a big excuse / lie?
— retail clients (@IG_casualties) April 27, 2015Without commenting on the specific interview, let me say that is a major point of disagreement between Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term providers and the brokers. When the liquidity providers say that their systems operated perfectly as they were designed to under such circumstance they are right of course - the systems were designed to protect the liquidity providers and they did - at the expense of the brokers.
Many people would prefer this to be just some big lie or excuse, most notably perhaps FXCM stockholders and Alpari UK's clients, but sadly this was a real problem. With such a drastic move, as we seen on Black Thursday, even a few seconds of no liquidity were enough to have catastrophic effects on brokers with major exposure to CHF. But again, from the perspective of the big banks and other institutional liquidity providers the systems worked and prevented them from suffering losses. This question is likely to only be resolved in the courts or by regulators but that is probably years away.
Are Binary Options CFTC Regulated?
The third top question we got this week arrived on my Google+ profile. And the answer is yes, binary options trading when conducted on a designated contract market, such as Cantor Exchange and Nadex, is CFTC regulated and completely legal for retail U.S clients.
The new brands we are about to see unleashed on the American market are basically just appealing platforms meant to be more user friendly and accessible but they are just gateways to the designated contract market. If you wish to trade binary options legally in the U.S check the CFTC and NFA license of your provider on their website.
And for the last question of the week:
@financemagnates Who's your daddy? :-)
— Kasper Elbjørn (@Elbjorn) April 29, 2015The answer to that is most obviously Michael Greenberg - the daddy of Finance Magnates.
This Tuesday we told readers and social media followers that whether you're new to investing, are an experienced player concerned about a future Black Swan Black Swan A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in A Black Swan event is most commonly associated with an unforeseen calamity or event. In its most basic form, this event results in disastrous consequences for multiple parties, markets, or individuals and are characterized as extraordinarily rare in frequency, yet are seemingly predictable in retrospect. In the foreign exchange space, the most noteworthy of these events in recent memory was the Swiss National Bank (SNB) crisis which roiled currency markets back on January 15, 2015.During this in Read this Term event, Finance Magnates’ newly launched #Askfinmag campaign is here to help.
For the first week of the campaign, our social media followers wanted to know if Greek brokers pose a risk, if the SNB crisis is just a lie and if any binary options trading is legal for Americans.
@financemagnates Forex brokers in/from Greece, are they an additional risk to clients? #askfinmag @ZuluTrade @OANDA
— StarshipCaptain (@DawieE76) April 28, 2015Well StarshipCaptain, I think that the answer to this depends mainly on the banks the brokers use. Nobody knows for sure what is going to happen with Greece, not even Angela Merkel or Alexis Tsipras, and it can all turn out fine at the end.
Still, your fears are warranted - a Greek exit from the euro zone might do good to both economies in the long run but there will definitely be pain in the immediate term. A run on the banks and even government confiscation of foreign currency deposits can't be ruled out in extreme cases.
Luckily, most brokers should already be wise enough to have contingencies for this case, considering they had a similar scare with the European Cypriot bailout that created similar conditions. A rather simple solution is to spread out client's money in various safe jurisdictions. I will suggest you ask your broker where are your funds held, what countries and which banks.
@financemagnates very interesting article. then how can so many brokers (eg, IG) say there was no lqdty to trade? just a big excuse / lie?
— retail clients (@IG_casualties) April 27, 2015Without commenting on the specific interview, let me say that is a major point of disagreement between Liquidity Liquidity The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent The term liquidity refers to the process, speed, and ease of which a given asset or security can be converted into cash. Notably, liquidity surmises a retention in market price, with the most liquid assets representing cash.The most liquid asset of all is cash itself.· In economics, liquidity is defined by how efficiently and quickly an asset can be converted into usable cash without materially affecting its market price. · Nothing is more liquid than cash, while other assets represent Read this Term providers and the brokers. When the liquidity providers say that their systems operated perfectly as they were designed to under such circumstance they are right of course - the systems were designed to protect the liquidity providers and they did - at the expense of the brokers.
Many people would prefer this to be just some big lie or excuse, most notably perhaps FXCM stockholders and Alpari UK's clients, but sadly this was a real problem. With such a drastic move, as we seen on Black Thursday, even a few seconds of no liquidity were enough to have catastrophic effects on brokers with major exposure to CHF. But again, from the perspective of the big banks and other institutional liquidity providers the systems worked and prevented them from suffering losses. This question is likely to only be resolved in the courts or by regulators but that is probably years away.
Are Binary Options CFTC Regulated?
The third top question we got this week arrived on my Google+ profile. And the answer is yes, binary options trading when conducted on a designated contract market, such as Cantor Exchange and Nadex, is CFTC regulated and completely legal for retail U.S clients.
The new brands we are about to see unleashed on the American market are basically just appealing platforms meant to be more user friendly and accessible but they are just gateways to the designated contract market. If you wish to trade binary options legally in the U.S check the CFTC and NFA license of your provider on their website.
And for the last question of the week:
@financemagnates Who's your daddy? :-)
— Kasper Elbjørn (@Elbjorn) April 29, 2015The answer to that is most obviously Michael Greenberg - the daddy of Finance Magnates.