Beware City Index new margin stop out

[harrymonk]

Ok, haven't posted here for a while, but I have been reading the forums.

Have been doing great business over at IG Index so far and although there have been a few disagreements they have been sorted out.

I checked up on an old account I had with City Index and re-activated it with the hope of a few risky trades and putting my neck a lot further out than I would do with my usual account at IG.

Well, as most people probably also have a buy on DAX at the moment, not a suprise to know I had one also. Pyramided up slightly and set a nice low stop, everything going my way, then suddenly a little tree shaking, nothing to fluster me as my loss was only at 10% of the account at the time (about 6 points away from the bottom of the tree shaking) and thankyou very much City Index cancels the trade miles away from my danger zone and siting that some new margin sytem they have in place automatically closes the trade.... oh and guess what happens then...about 100 point move in my direction on the trade I had made.

I am not one to complain normally and I know that the spread companies have to make money, but to me this is one of the more dasterdly tricks to take our money from us.
I will be winning back my loss in a few days and closing the account... thankyou CityIndex and please beware other people the new system can definately work against you.

 

[lsimmo]

I have had the same issue with city index and will not use them because of this

 

[montmorencyt2w]

I'm with II, who I think are part of the same group. They recently have introduced a margin level indicator (top left corner of trading window) which is a percentage.

I think it represents the money you have left to trade with divided by your total margin, expressed as a percentage, so if it's 125% I think that actually means you have your margin plus 25%. If it's 200% you have your margin plus the same again, sort of thing.

I have not read all the small print (not sure I understood all the small print), but I probably need to watch this pretty carefully. Do they start closing positions if you get down to "100%" I wonder? hm.

 

[mrsoul]

Ok, haven't posted here for a while, but I have been reading the forums.

Have been doing great business over at IG Index so far and although there have been a few disagreements they have been sorted out.

I checked up on an old account I had with City Index and re-activated it with the hope of a few risky trades and putting my neck a lot further out than I would do with my usual account at IG.

Well, as most people probably also have a buy on DAX at the moment, not a suprise to know I had one also. Pyramided up slightly and set a nice low stop, everything going my way, then suddenly a little tree shaking, nothing to fluster me as my loss was only at 10% of the account at the time (about 6 points away from the bottom of the tree shaking) and thankyou very much City Index cancels the trade miles away from my danger zone and siting that some new margin sytem they have in place automatically closes the trade.... oh and guess what happens then...about 100 point move in my direction on the trade I had made.

I am not one to complain normally and I know that the spread companies have to make money, but to me this is one of the more dasterdly tricks to take our money from us.
I will be winning back my loss in a few days and closing the account... thankyou CityIndex and please beware other people the new system can definately work against you.

FXCM uses software that will close out your positions if your usable margin gets very, very low.
Just more sleazy broker tricks.

 

[montmorencyt2w]

Ironically, some time after my previous posting, and even being aware of the dangers, I fell into this exact trap. Full story here:

http://www.trade2win.com/boards/spread-betting/65334-spread-betting-fxcm-8.html#post910188

 

[Splitlink]

Finspreads, part of CI, has this new rule. Once you have got used to it I see it as a safety measure. If you deal with IB, or any other broker, there is the same rule, as far as I know. Let's face it, if you go over your margin and the trade goes bad, you owe money to the company. They are trying to reduce bad debts and, as bookies, I am sure that that is a frequent problem!

Reduce trade size, so that the price has room to move. If you put all your account on margin, except for a few points, you must expect to be closed out. It's like having the stop too close.

 

[tar]

Finspreads, part of CI, has this new rule. Once you have got used to it I see it as a safety measure. If you deal with IB, or any other broker, there is the same rule, as far as I know. Let's face it, if you go over your margin and the trade goes bad, you owe money to the company. They are trying to reduce bad debts and, as bookies, I am sure that that is a frequent problem!

Reduce trade size, so that the price has room to move. If you put all your account on margin, except for a few points, you must expect to be closed out. It's like having the stop too close.

Agree

 

[montmorencyt2w]

Finspreads, part of CI, has this new rule. Once you have got used to it I see it as a safety measure. If you deal with IB, or any other broker, there is the same rule, as far as I know. Let's face it, if you go over your margin and the trade goes bad, you owe money to the company. They are trying to reduce bad debts and, as bookies, I am sure that that is a frequent problem!

Reduce trade size, so that the price has room to move. If you put all your account on margin, except for a few points, you must expect to be closed out. It's like having the stop too close.

I agree in principle of course, but in this particular case, all they really needed to do was to close out that last trade. Closing out all of them was too harsh. However, it taught me two valuable lessons:

1. Not to overtrade
2. I need a bigger account.

For better or worse I cut my trading teeth on a limited risk account with guaranteed stops. While this was a safe environment for a newbie to trade, it shielded me somewhat from the realities of margin requirements, which I'd never really had to learn properly. So long as my stop was nowhere near being hit, I was always ok. Although I've been trading on non LR (mostly) accounts (various providers) for about a year now, this problem had never hit me before. Either I was lucky or the way they implemented it was different or I wasn't overtrading to the same degree....whatever.

 

[Splitlink]

I agree in principle of course, but in this particular case, all they really needed to do was to close out that last trade. Closing out all of them was too harsh. However, it taught me two valuable lessons:

1. Not to overtrade
2. I need a bigger account.

For better or worse I cut my trading teeth on a limited risk account with guaranteed stops. While this was a safe environment for a newbie to trade, it shielded me somewhat from the realities of margin requirements, which I'd never really had to learn properly. So long as my stop was nowhere near being hit, I was always ok. Although I've been trading on non LR (mostly) accounts (various providers) for about a year now, this problem had never hit me before. Either I was lucky or the way they implemented it was different or I wasn't overtrading to the same degree....whatever.

Yes, I see what you mean now.

 

[Black Swan]

My tuppenenth; if you can't make it 'work' on a limited account with G. Stops then don't move onwards/upwards. And by "work" I mean building up some equity to move your account and trading style on...
Whilst LR & G.Stops are arguably the most expensive ways to trade, (approx. 3 pips per trade more expensive) they are without doubt a great insurance scheme, the margins are not that onerous either, on most forex pairs - 15/20. New and intermediate traders need to crawl before walking...

 

[montmorencyt2w]

My tuppenenth; if you can't make it 'work' on a limited account with G. Stops then don't move onwards/upwards. And by "work" I mean building up some equity to move your account and trading style on...
Whilst LR & G.Stops are arguably the most expensive ways to trade, (approx. 3 pips per trade more expensive) they are without doubt a great insurance scheme, the margins are not that onerous either, on most forex pairs - 15/20. New and intermediate traders need to crawl before walking...

Hm..well the people I am currently actively trading with (III) seem to charge 5 pips for guaranteed stops with a minimum stop distance of 50 pips for FX pairs.

Update: I have also noticed since the market opened that my margin has been fluctuating randomly in a fairly short time for no reason I can see.
Of course my PL is fluctuating as the market moves and that makes my effective capital fluctuate, which in term varies my Margin Level. That's fair enough. I don't see why my Total Margin is changing though, given that I haven't opened or closed any trades or moved any stops.

They do say that the margin does vary depending on volatility, etc, but I keep looking at the margin factor that is quoted for each of the instruments I'm trading, and it's always the same. So what precisely is the factor they are using to decide it? There is just no transparency here.

 

[tan5ki]

Does anyone know of any spread betting firms that do not operate one of these auto close out policies? I use IG & City Index who both have them now and I've heard CMC have had it for years which is one of the many reasons my barge pole doesn't go near them!!

Is it just industry standard?

 

[brendansvest]

It is industry standard but vary from provider to provider. In respect of CMC you will have enough warnings with an email sent every 30-60 mins when you are on margin call. CMC standard auto stop out is when the account balnce is 50% of margin requirement.