Can a broker take personal assets?

#2
Does the broker have the right to take personal assets if the losses exceed the amount in the trading account?
No. He has to file Arbitration proceedings against a defaulting client in Stock Exchange and later proceed in Civil Courts for recovery of dues.

Smart_trade
 

arcus

Well-Known Member
#3
No. He has to file Arbitration proceedings against a defaulting client in Stock Exchange and later proceed in Civil Courts for recovery of dues.

Smart_trade
I see. So, the court can order the liquidation of personal assets in case of a defaulting client?

Hmm, I guess we need to create an LLC or something in order to protect personal assets.
 
#4
I see. So, the court can order the liquidation of personal assets in case of a defaulting client?

Hmm, I guess we need to create an LLC or something in order to protect personal assets.
Best is to avoid getting into anywhere near default situation...

ST
 

arcus

Well-Known Member
#5
Best is to avoid getting into anywhere near default situation...

ST
I agree.

All I have traded, since I started trading has been options spreads & naked long options.

I can't get myself to trade futures. The idea of losing more than what is there in my account scares me.

Forget stock/index futures, I cant get myself to trade currency futures (which are known to be extremely low volatile compared to equity) even on 2:1 leverage. Just a few days back, the Argentina Peso fell 11% in one day.

Not sure if it is some sort of a phobia I have.
 
#6
I agree.

All I have traded, since I started trading has been options spreads & naked long options.

I can't get myself to trade futures. The idea of losing more than what is there in my account scares me.

Forget stock/index futures, I cant get myself to trade currency futures (which are known to be extremely low volatile compared to equity) even on 2:1 leverage. Just a few days back, the Argentina Peso fell 11% in one day.

Not sure if it is some sort of a phobia I have.
Such price "shocks" do take place once in 2-3 years. So it is always better to have a position which will not give more than 25 % loss of capital if the market opens 8-10 % down. Also when major news/data /announcement is expected, we must hedge our futures positions particularly long positions as they are more prone to such price shocks.

One has to decide whether to trade futures positions and be exposed to 10 % price shock once in 2-3 years but make good returns per month or fergo the returns and avoid the price shock. If the 25-30 % loss of capital ( it is a big loss, no denying that) is going to put a trader in financial difficulties, then it is better to either daytrade so that he has a control on losses or take spread positions.Keeping futures positions without sound finances, is highly dangerous.

Smart_trade
 
#7
I see. So, the court can order the liquidation of personal assets in case of a defaulting client?

Hmm, I guess we need to create an LLC or something in order to protect personal assets.
Brokers ( not all ) resort to unlawful means of recovery which I have seen threatening, taking help of recovery goons , even kidnapping etc...so things can become pretty messy , so dont even think of any such possibility.We are law abiding people ,aren't we ?.

ST
 
#8
Brokers ( not all ) resort to unlawful means of recovery which I have seen threatening, taking help of recovery goons , even kidnapping etc...so things can become pretty messy , so dont even think of any such possibility.We are law abiding people ,aren't we ?.

ST
Well said Sir, It's better to be white collar & have peaceful life.
 
#9
I see. So, the court can order the liquidation of personal assets in case of a defaulting client?

Hmm, I guess we need to create an LLC or something in order to protect personal assets.

In my opinion you need to rework your strategy in a way that such a situation never occurs instead of running away from liabilities. If you know that the way you are trading could result in a loss that is greater then what you have in your account then you are not doing it the right way and the right way I understand is different for every trader so you would need to work on your way to make it right.

I personally do not carry anything overnight and I am very new to trading but I know for a fact that I would not erode more then 4-5% of my account even if worse comes to worse but then I dont carry anything over night so you might wanna have a look at hedging your positions and make do with lower returns and restrict your downside.

I also feel that using leverage is not a good idea especially when you do not hedge your positions.
 

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