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How do sketchy offshore shops collect on negative cash balances? 500:1 leverage sounds so crazy I wouldn't be surprised if it's used as a money laundering vect

• nicholas73 10y ago
  They don't, or shouldn't have to. Brokers that offer generous margins do something typical brokers do not - they auto-liquidate when you fall below minimum maintenance margin. Most retail brokers would give you a friendly phone call and let you liquidate the next day or so. Next, forex markets are so heavily traded they have a virtual guaranteed stop. That is, if you set the order you will get it filled no worse than that price. The only way a broker gets hit is a sudden currency drop, like the Swiss franc did a few years back.
  • csomar 10y ago
    I think most of these x500 Forex shops are bucket shops. They are not even derivatives. More known as CDF which means you are buying/selling against them.