FBS Closed my Position while the Market Closed

[FBS Official Rep]

In my opinion, the optimal decision in such case would be setting the result from the deal to zero.
In addition to this, brokers must pay attention that leverage requirements must be changed several days before such major events and traders must be informed 1 week ( or more ) in advance!

I believe that the broker has acted incorrectly here! No matter what was the leverage at that moment, the deal had been in profit in that past moment when the market had been in a pre-market session, thus adding to account's margin. There were no reason to execute it in the session's friday closing price.

However, in case the broker proves that the trader had acted completely unreasonably by taking too much risk, I would definitely vote for the broker in case this turns into a public voting. There is no place for betting before such major events!

Thank you for your reply and support.

We definitely understand the necessity of timely notification and exactly for this purpose, we have created a Customer Agreement, that covers such situation. Market opening is already the time, when clients’ orders are especially exposed to risks, but in this specific situation the risks were doubled by the upcoming referendum in Greece. And in all bespoken cases our clients are already informed about the possible leverage change by the 3.7.4. paragraph of the Customer Agreement:

3.7.4. In order to minimize Client's risks at the time of market opening on Monday, in case a Client kept open orders during the weekend, the Company reserves the right to lower the leverage and change margin requirements severalfold.

We do understand your point about changing leverage several days before such major events, but as we explained in the previous reply, at that moment such method had been considered as not advantageous for our clients:

“Some of the brokers lower the leverage several hours before Market closure, but this method is quite risky for those clients, who want to close their orders right before Market closure, because they wait for the suitable price, since abrupt leverage decrease can cause unexpected Stop Outs. The other method is lowering the leverage before Market opening. This way, those clients, who want to close orders before Market closure can do it without any difficulties, and those clients, who want to leave their orders for a weekend may foresee the leverage decrease and calculate the needed order volume and margin or even deposit on their account in order to avoid orders closure. FBS company always tries to look into clients’ needs, so in this abnormal situation the second variant has been considered as the most preferable.”

Regarding your comment about profitability of the order, we would like to state that at the moment of the Market Closure the order was with loss even with the leverage 1:2000. Also, we would like to explain why the order was closed not by the current Pre-Market price, but by the price of the Market Closure: the order was just executed during the Pre-Market session, but as a result of the clearing operations, in other words, there was not open Pre-Market trading on the platform.

We would like to provide you with the screenshot of the client’s Trading History: https://image.prntscr.com/image/Jh6cGgZQSz6ys7F2POrBVg.png

As you may see from the screenshot, at the moment of the order opening the client’s balance was 828.02$. The client opened an order with 1.5 lot volume several hours before Market Closure, using news trading strategy, and left it for the weekend. FBS company allows news trading, but since this is very risky strategy, by using it a client accepts the risks of irregular market conditions and supposedly fully understands potential impact of them. More than that, the clients are notified about the probable risk reducing measures (such as leverage decrease) by Customer Agreement in advance.

At the moment of Market Closure the order profit was -495$ (less than the half of the account balance). And after the leverage was lowered, the order margin was 1670.6, which exceeds the account balance twofold. In fact, the time of leverage decrease doesn’t matter (right at the Market Closure or in any other moment).

We would like to state, that the prices of other sources were not analyzed, our actions were just a result of inner operation, which could have been performed any moment earlier or even before Market Closure, on Friday. Yet, we are trying to execute such operations as late as possible in order to give client an opportunity to either close the order or deposit for the order maintenance.

Therefore, the client had a possibility to prevent his balance from going negative, but preferred to take risk, unfortunately.

 

[FBS Official Rep]

may be If Fbs closed my order before Market closure i would not say any think because my order is closed at real price when market is still opened ... but you closed my order at Sunday evening when you knew that eurusd will open at GAP 165 on my side ..

That's the fact of your behavior

and Again :
FBS Official Rep haven't replied to my points :

1. Did FBS announce that they will lower the leverage before the referendum in Greece.?
( on FBS.com site or even via emails to their customers .? )
if yes ... you have to proof that
if no ... you are guilty

2. The real price when FBS closed my orders was 1.1006 on ( other big broker companies like saxo bank..FXCM ..)
so what fbs did exactly ... they saw the real price opened GAP 165 on my side then they decided to close my order on Friday price at 1.1170 to prevent me gain the profits
i lose - 495 usd instead of win 2000 usd by this behavior !

my question to all FPA experts and Traders : is it fair ?!
FBS decreased the leverage from 1:2000 to 1:50 !! without any prior notification ?!

Dear Samer!

Let us kindly remind you once again why your order had not been closed before Market closure: first, you could have wanted to close your order before Market Closure yourself and just waited for the appropriate price, second, your could take preventive measures and deposit on your account.

Unfortunately, the broker cannot know it in advance. As well as the broker cannot know the future price or exact direction of the price. We couldn’t foresee if the price that comes is profitable for your order or not, since we didn’t analyzed the prices of other sources. Your order was executed during the Pre-Market session just as a result of the clearing operations.

We definitely gave notice about leverage change in advance in the Customer Agreement (p. 3.7.4.).

This paragraph is especially essential for the clients who use news trading strategy, which suggests trading during irregular Market conditions. This is exactly the strategy which you have used, by opening the order with 1.5 lot volume, very big leverage and just several hour before Market closure.

By registering an account with FBS you have agreed with leverage change condition of Customer Agreement (p.1.2.2.).

As we may see from your answers, you were aware of the upcoming news piece, which means that you have taken deliberately risky actions, but, unfortunately, for some unknown reason didn’t take any preventive measures, like increasing your balance or lowering the leverage yourself.

Considering your comment about the price, please, let us repeat once again, that there were no open Pre-Market trading in the platform, the prices were not analyzed, there was only clearing operation execution, which is needed for adequate work of the company (i.e review calculation of the margin and deposit).

Thank you, please let us know if there is anything else we may assist you with.

 

[samer1112]

Again and Again :
FBS REP avoid to give a clear answer :

1. Did FBS announce that they will lower the leverage before the referendum in Greece.?
( on FBS.com site or even via emails to their customers .? )

surly , if i knew that you will play with leverage .. i would not open that order

does any person want lose his money ! ?

 

[ruseneca]

surly , if i knew that you will play with leverage .. i would not open that order

does any person want lose his money ! ?

@samer1112, this is not an excuse! Every single broker reduces the leverage before such major events. Some may want to deposit funds to keep your order until a certain margin level.

FBS representative stated that you'd had around $800 in your account and you'd opened an order with extremely high volume! This is a suicide! It is enough to prove that you had expected to lose all funds by playing all-in instead of trading.
The risk management is essential part of trading.

On the other hand, we do agree that the case had not been resolved in client's favour. If clearing operations are automatic, then the broker might consider several actions to indemnify the client as it is clear that his / her trading style is similar to news trading which was allowed.

The problem is that most traders want fast money and bet on markets. It is brokers' responsibility to reduce their exposures and limit the risk.
Do you remember what happened when the SNB removed the peg without any notice?!

 

[samer1112]

@samer1112,
FBS representative stated that you'd had around $800 in your account and you'd opened an order with extremely high volume! This is a suicide! It is enough to prove that you had expected to lose all funds by playing all-in instead of trading.
The risk management is essential part of trading.

Hi ruseneca

i opened only 1.5 lot .. is that extremely high volume ! ... with leverage 1:2000
The balance was $ 828 and the Margin Requirement was $ 83
free margin was 721 $ ... so it's clear that my account is not at risk !

i opened this order before 6 of market closure .. and it's also long time

please see the attachment photo

and by the way ... i have same order with different broker called Activtrades (authorised and regulated by FCA Authority)
... with only leverage 1:400 and i had closed it manually when market opened at price 1.09870 ... they didn't play with leverage or close it within market weekend like FBS had done !

FBS is guilty because :
1. FBS didn't announce that they will lower the leverage before the referendum in Greece.?
( neither on FBS.com site nor even via emails to their customers )
2. FBS closed my orders within the weekend .. I've not heard any honest broker did it ever before !!

Best Regards

 

[ruseneca]

i opened only 1.5 lot .. is that extremely high volume ! ... with leverage 1:2000

NO! That's a suicide!!!
The practice is as follows:
For every $1,000 in your account, you trade with 0.01 lots!

You'd had only around $800 which means that even the minimum trading volume of 0.01 lots is high.
If you want to be a successful trader, leave this leverage aside and start using a proper risk management in your strategy.
If your trading style involves news trading, simply open 1 order with the minimum volume! You never know what will happen and in its core, news trading equals to betting. If you enter a trade with very huge volume, there is very high probability of losing all your funds, your balance may even fall in the negative territory.
Believe me, for 9 years in every day trading, I haven't seen successful trader who takes such a high risk!

i have same order with different broker called Activtrades (authorised and regulated by FCA Authority)
... with only leverage 1:400 and i had closed it manually when market opened at price 1.09870 ... they didn't play with leverage or close it within market weekend like FBS had done !

The broker you've stated has its own negative side. It is a market maker as well! The slippage there is big so be careful with that leverage!
And please, be adviced that the leverage is what we call a credit on very high interest rate! Banks provide credit to the broker and brokers sell this credit to traders at a higher rate! This is a fact which most traders ( especially the ones with little or no experience ) do not know. The higher the leverage is, the better for the broker. It's opposite for traders!
Higher volume of your trades means that your risk is higher and you pay higher interest rate for the credit your broker provides to you "for free". Tricky, hah?!

Just a little advice - stay away from brokers which are regulated by FCA or CySEC. The majority of brokers are registered in the UK and Cyprus because of the poor or no regulation. I take each sentence like "Regulated by FCA" or "Regulated by CySEC" as an anti-advertisement.
If FBS was regulated in the UK by FCA and you complain to the regulator, guess what...the Ombudsman would take broker's side of the story, no doubt! It had been in their terms, you'd agreed with them...blah-blah-blah.
In the High Court, the decision would be the same!

 

[FBS Official Rep]

Hi ruseneca

i opened only 1.5 lot .. is that extremely high volume ! ... with leverage 1:2000
The balance was $ 828 and the Margin Requirement was $ 83
free margin was 721 $ ... so it's clear that my account is not at risk !

i opened this order before 6 of market closure .. and it's also long time

please see the attachment photo

and by the way ... i have same order with different broker called Activtrades (authorised and regulated by FCA Authority)
... with only leverage 1:400 and i had closed it manually when market opened at price 1.09870 ... they didn't play with leverage or close it within market weekend like FBS had done !

FBS is guilty because :
1. FBS didn't announce that they will lower the leverage before the referendum in Greece.?
( neither on FBS.com site nor even via emails to their customers )
2. FBS closed my orders within the weekend .. I've not heard any honest broker did it ever before !!

Best Regards

Dear Samer

Kindly let us repeat once again, that since you have read Customer Agreement, you were notified about possible leverage change before Market Opening. You may find our Customer Agreement on fbs.com site. FBS company acted strictly according to the Customer Agreement.

Also, please, kindly be reminded that the Company has a right to change leverage in order to reduce clients’ risks. For example, in your case, if price went in unfavourable direction, your balance could become negative. And as you know for sure, the bigger leverage is, the bigger risk a trader is likely to encounter. But, of course, this is the company’s right, not a duty. And regarding your comparison of FBS with another broker, we would like to add that different brokers have different liquidity providers, which in their turn may dictate trading terms, which include leverage change. This means that at the same period one broker changes the leverage and the other doesn’t.

As for your second claim, we also have already explained you that your order was closed right at the Pre-Market session, not at any moment on the weekend. As it has been told repeatedly, the clearing operations executions are crucial for adequate work of any big broker company. In most cases the results of clearing operations are not evident for a regular client, but, unfortunately, this was an outstanding case owing to irregular Market conditions.

Nevertheless, this situation could have been avoided if you followed the recommendations given in our Customer Agreement:

9.1.1. While performing trade on the conditions of “Margin trading” a relatively small change of rate may strongly influence the Client trading account balance due to the leverage effect. In the event of a market movement against the Client position, he/she can bear loss in the amount of the initial deposit and any other additional funds deposited to support open orders. The Client is fully liable for consideration of all risks, use of financial tools and a choice of the relevant trading strategy.

9.1.2. It is recommended to maintain Margin level at 100% and higher, as well as always submit Stop Loss orders to eliminate possible losses.
Given the fact, that you were using news trading strategy, it is just obvious that you should have secure your order from loss, by setting Stop Loss level.

Unfortunately, in this case opening an order right before news release and Market Closure and with extremely high leverage is very risky strategy.

 

[A.Barq]

NO! That's a suicide!!!
The practice is as follows:
For every $1,000 in your account, you trade with 0.01 lots!

you can use your own strategy yourself and let others use their own strategy. I used to use full margin strategy and it was perfect to me ruseneca, and if the broker change the leverage a little bit without prior notification I'll state that the broker did this only to lose my money for the broker pocket.

Please be honest to yourself. I dealt with tens of broker no one of them close a single transaction while the market was closed or change the leverage without a prior notification.

Judge the broker unlikely surprising action instead of judge a common used strategy ruseneca.

 

[ruseneca]

I used to use full margin strategy and it was perfect to me

Why your statement is in past tense?
I don't say that it is not possible to succeed when you put your account at extremely high risk. I am saying that it is impossible to be successful in a long term if you constantly bet on markets and on the outcome of events such as referendums, elections, monetary policy meetings etc.
Risk management is essential tool, the core of a strategy!

Please be honest to yourself. I dealt with tens of broker no one of them close a single transaction while the market was closed or change the leverage without a prior notification.

I am honest! I rarely leave open orders for the weekend and if I do, the risk is lower than 0,2% while I operate with 2% risk as a maximum. Now, I completely understand that not each account is so big, but at least a trader must understand that Forex trading is very risky for both parties - brokers and traders. Thus, proper risk management tools are a must!!!
However, I cannot deny that broker's actions are somewhat illogical and we may even take broker's actions as a conflict of interest as the broker had already known the premarket price and based on this information, it may act in its own favour.

 

[samer1112]

Again and Again :
FBS REP avoid to give a clear answer :

1. Did FBS announce that they will lower the leverage before the referendum in Greece.?
( on FBS.com site or even via emails to their customers .? )

Dear Traders, FPA experts, @FxMaster

once again FBS REP avoid to give a clear answer

1. Did FBS announce that they will lower the leverage before the referendum in Greece.?
( on FBS.com site or even via emails to their customers .? )

Yes or No ?

as i said before ... i had same order with different broker called Activtrades (authorised and regulated by FCA Authority)
... with only leverage 1:400 and i had closed it manually when market opened at price 1.09870 ...
they didn't play with leverage or close order within market weekend like FBS had done !