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 MARKET REPORTS |
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Resident trader
Handling a trade dispute with your broker
Will Kraa, December 19, 2007
On Monday morning as I opened the trading platform on which I do my smaller Forex trades I was in for a surprise. During Friday I had done some short term trades and finished the day with an account balance of $6,037. I always check the account balance in the small Client Positions window before closing the platform when I finish for the day. When I shut it on Friday evening there was the $6,037 of Total Equity there and a Total Margin balance of 0.00, indicating there were no open trades.
But on Monday morning as I opened the platform there was only Total Equity of $4,625, a lot less than I expected and a Total Margin in use of of just over $800. I clicked on the ‘Spot/Forward FX Positions’ tab and to my great surprise found there was an open trade of 50,000 EUR. After I closed for the evening on Friday the Euro had dropped by over 200 pips and in early trade on Monday had dropped another 45 pips so that my account now was about $1400 less than I expected due to the open Euro trade.
I had a look at the Executed Trades for Friday and found that one of the first trades which was opened with !50,000 EUD showed as being closed with 100,000 EUD, leaving a trade size of 50,000 EUD. After that I did a couple more trades, each time buying and selling 150,000 EUD. Between these trades there was no position open and no movement in the Equity in my account so I find it hard to believe that in the background there was an open trade running all the time. Also it should have shown up in my Summary window as Margin required at the end of the day on Friday.
Fortunately the alleged position was not a large one but of course the size of the move in the Euro made it a sizeable loss.
After digesting this on Monday morning I noticed that the Euro was moving up again and I decided to add another 100,000 EUR to the 50,000 that was carried over with a stop at 1.4387 as shown on the chart for a risk of 18 pips or US$180 added to the unwanted 50,000 trade. As the trade moved on it continued in my favour and I moved the stop up as it progressed.
I was not able to monitor the trade continuously but was able to move the stop up to protect the trade from time to time. Notice that the stop at 1.4428 shown on the chart was almost hit but fortunately missed by one pip and I was able to move the stop up to 1.4439 where it was executed.
The small recovery in the carried over trade with the added 100,000 EUD trade bought my equity up to be over $5,000 (the opening value of the account). I did another trade for 100,000 EUD later in the day when I thought the EUD was going up again but this trade did not perform as expected so I closed it before the initial stop was hit for a loss of 9 pips. After that the EUD fell quite a bit again but I did not have time to place a short trade which would have made a very good profit if it had been done.
After these trades the equity in the account is back to about $5,240 which is a small profit but it would by now be much more if it had not been for the trade which should not have been there. I have asked the dealer if there could have been a mistake seeing the trade was not there when I closed the paltform on Friday evening. I have been told it would be investigated but so far have not had the result of that.
Unfortunately on Friday I did not do what I usually do, take a screen shot before closing for the day to show all the trades done and the closing equity and margin at that time. If I had done that little housekeeping thing I would have all the proof I needed to dispute the trade but now, on the one occasion that I need it, I do not have it.
Below I have reproduced a sample screen shot I would normally have done (I have one for the day before Friday of course) and I would suggest that no matter who your dealer is that it is wise to do this. For those who have not had experience in doing it, I will tell you how it is done.
Set up the screen to show the things you want to record and then, while the cursor is active on the screen you want to record, press the PrtSc button. If you don’t want all that is on the desktop but only the screen showing what you want, then press Alt and PrtSc at the same time. After doing that, open a new Word document and press Ctrl and V simultaneously. You will now have an image of the screen as a Word document which you can save for future reference if required. If you don’t have Word, use the free OpenOffice program which will also do word processing and spreadsheets whithout enriching Microsoft.
The lesson to learn is, document everything you do. And if you then have any unpleasant surprises, you will have all the evidence you need to prove any disputed trades. Isn’t it amazing that this happened to me just when there was such a huge move in the Euro? Of course I should have been more diligent in my recording which would have put the whole thing beyond doubt. The loss of $1000 has impressed this lesson on me – please learn from my mistake. You will rarely need this evidence but believe me, when you do need it you will be very pleased that you took the trouble.
More articles from this edition of CompareShares:
Investing: How investors will be impacted by a Rudd Government
Stock picks: Fund manager stock picks: WPL, CCP & WWA
Stocks: Stocks and sectors set to beat the market in 2008
Book Review: Trade Your Way to Financial Freedom
Resident Trader: Handling a trade dispute with your broker
Markets: US breaks from booming global economy
Expert Panel: Why it may pay to buy shares before the ex-dividend date
Debt: Super won’t help mortgage woes
Rates: Rising costs add to rate risk
Whatever your views, you can discuss this article - or any of Will's articles - on our message board Your 2 Cents.
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