Brokerage Houses – Deep Pockets Are Mandatory

MM-Trading

QUESTION:

Dear Marty!

Hats off on the call about the Franc. It’s amazing what Socrates and the work of all you at Princeton Economics is doing, to all of you my deep respect. And I thank God that knowledge is in good hands!

Now here’s the thing, as I read about the crash of the Forex retailers I just can’t believe how stupid those people can be, they lost millions, a few are about to shut down and others are being bailed out with loans. if they’d really care about their customers they should have prevented them about the imminent possibility of move by the Swiss as you did for several days and they could have avoided the losses. It’s like they are always looking for someone to take the punch by hiding facts to the common audience. I’m about to get into the Forex,  I like how the market works and I have been preparing for it now for a while, so I recently opened an account with one of the brokers that just got bailed with a few million $ loan, however I have not deposit funds yet into the account, and Marty honestly now I believe I’ll think twice what platform to use since this pile is obviously very full of crocodiles, as usual.

Any recommendation for when it comes to identify the virtues of a good brokerage firm suitable for the individual investor??  Is there even such a thing like that nowadays??

Thanks Marty, Blessings and Happiness.

J

ANSWER: I owned two brokerages houses in my life. Sold one to the Australians and was preparing to take the second one public since I had to buy it after the Japanese government called and asked me bailout a French bank’s brokerage in Tokyo. I never liked the business for risk was undefinable. We had a client blow up in Japan and I had to write a check for $10 million. So it is not that the brokerage houses are dishonest, it s that they wear their own risks as well as those of their clients on big moves like this. A 30% move wiped out every account trading Swiss on the wrong side. If the client does have that kind of cash, the brokerage house wears the loss. So you can have a honest firm that still goes belly-up if they do not have the capital to write that check to cover client losses.

shotgun_wedding

You need a broker with deep pockets. I never liked the business. It was a shotgun wedding to me without the plus-side. The dramatic move overnight in the Euro/Swiss was simply catch-up. This was enabled by the press being politically-correct and not calling the politicians to blame for the mess they have made out of creating the Euro. Brussels will hold on to this currency until they have bankrupted everyone else because if they let the Euro go, there goes their jobs. The press is protecting government and has reversed its entire focus of securing our liberty as the check and balance against government.