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    Thread: How To Avoid Another PFGBest?

    1. #1
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      Default How To Avoid Another PFGBest?

      PFGBest is probably one of the most well known brokers for commodities before the twentieth century. however, due to poor accounting procedures and other activities, the company has to shut down. you can view more from reuters.

      my question is that this incident just so happened with pfgbest, but can really happen to any broker. PFGBest was regulated by the NFA, but that didn't make it any safer to trade with. don't you suspect that other brokers could also be on the verge of bankruptcy?

      no matter how large a broker is, they can still shut down. regulation isn't any much safer. one regulatory body can't do anything so we should rethink about choosing regulated brokers and broker size and reputation.


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      Quote Originally Posted by MisterTickle     
      PFGBest is probably one of the most well known brokers for commodities before the twentieth century. however, due to poor accounting procedures and other activities, the company has to shut down. you can view more from reuters.

      my question is that this incident just so happened with pfgbest, but can really happen to any broker. PFGBest was regulated by the NFA, but that didn't make it any safer to trade with. don't you suspect that other brokers could also be on the verge of bankruptcy?

      no matter how large a broker is, they can still shut down. regulation isn't any much safer. one regulatory body can't do anything so we should rethink about choosing regulated brokers and broker size and reputation.
      If we talking about derivate transaction there is nothing can be safe. remember lehmann brothers case ? ****die Mac ? Enron ? They are the giants company. before they go bankcrupty is any people forecast that they will bankkrupt ? NO, in the past media will tell you crazy.

      The safest thing only put your money that you ready to lose and diversify your portofolio into real market one, such opened a shop, buy gold, buy a farmville.
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      This is somehow scary. But on a serious note, one should not trust any brokerage company 100%. They have humans as their staff and at the accounting offices and not angels. The only thing we can keep doing is pray for your broker and wish the company well.


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      i think that there is no way to avoid it because you can tell something about any company what will happen to it .but you gather update news of that company finical activities so that you can take some steps about it.


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      If NFA can't protect the US clients of PFGBest, neither if they can't return their money back, then what is this regulator doing? They have the security deposit of PFGBest, at lest they can refund some people.

      Actually I have no trust on any US brokers. In fact US brokers are losing popularity around the world, even in US for which CFTC made strange rule that only US brokers are allowed to do business in USA.

      Its not a big deal to understand why US based brokers are failing. Simple reason, they failed to bring anything innovative and due to their high operation cost they are forced to charge comparatively high commission/wide spread. For a same employee, an US based broker need to spend around 4-5K USD per month at least while other brokers can get an employee who can do the same job with much cheaper price. This is making a huge problem for US based brokers. If they need 100 employees, their monthly spending after employees will be at least 0.5 million dollar. Its really difficult to earn that much profit from client's commission.

      So, they choose the easy way to gambling with clients trade and therefore you can see the final result.

      NFA, which should work for traders and not for brokers is actually working for brokers interest. Otherwise, a broker has no reason to get bankrupted. If a broker is STP/ECN, its impossible that the broker can go bankrupted unless there is any kind of cheating.

      Reputation still matters. I suggest to avoid US brokers, US regulation sucks.


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      Quote Originally Posted by Tarek     
      If NFA can't protect the US clients of PFGBest, neither if they can't return their money back, then what is this regulator doing? They have the security deposit of PFGBest, at lest they can refund some people.

      Actually I have no trust on any US brokers. In fact US brokers are losing popularity around the world, even in US for which CFTC made strange rule that only US brokers are allowed to do business in USA.

      Its not a big deal to understand why US based brokers are failing. Simple reason, they failed to bring anything innovative and due to their high operation cost they are forced to charge comparatively high commission/wide spread. For a same employee, an US based broker need to spend around 4-5K USD per month at least while other brokers can get an employee who can do the same job with much cheaper price. This is making a huge problem for US based brokers. If they need 100 employees, their monthly spending after employees will be at least 0.5 million dollar. Its really difficult to earn that much profit from client's commission.

      So, they choose the easy way to gambling with clients trade and therefore you can see the final result.

      NFA, which should work for traders and not for brokers is actually working for brokers interest. Otherwise, a broker has no reason to get bankrupted. If a broker is STP/ECN, its impossible that the broker can go bankrupted unless there is any kind of cheating.

      Reputation still matters. I suggest to avoid US brokers, US regulation sucks.
      i am talking as a retail traders with just small capital account. About regulation, i prefer offshore regulator than USA regulator.
      Just looking for a regulator than can trade with leverage as high as broker could offer,small minimum deposit, the ability to make every trading strategies such as hedging.
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    7. #7
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      Quote Originally Posted by Tarek     
      If NFA can't protect the US clients of PFGBest, neither if they can't return their money back, then what is this regulator doing? They have the security deposit of PFGBest, at lest they can refund some people.

      Actually I have no trust on any US brokers. In fact US brokers are losing popularity around the world, even in US for which CFTC made strange rule that only US brokers are allowed to do business in USA.

      Its not a big deal to understand why US based brokers are failing. Simple reason, they failed to bring anything innovative and due to their high operation cost they are forced to charge comparatively high commission/wide spread. For a same employee, an US based broker need to spend around 4-5K USD per month at least while other brokers can get an employee who can do the same job with much cheaper price. This is making a huge problem for US based brokers. If they need 100 employees, their monthly spending after employees will be at least 0.5 million dollar. Its really difficult to earn that much profit from client's commission.

      So, they choose the easy way to gambling with clients trade and therefore you can see the final result.

      NFA, which should work for traders and not for brokers is actually working for brokers interest. Otherwise, a broker has no reason to get bankrupted. If a broker is STP/ECN, its impossible that the broker can go bankrupted unless there is any kind of cheating.

      Reputation still matters. I suggest to avoid US brokers, US regulation sucks.
      I'm not too concerned about where the broker is operating from. i am just concerned how a regulated broker got away with accounting fraud and bankrupted. this can happen to any broker around the world in which ever country, but its the regulation that bothers me. clearly they aren't doing enough.


    8. #8
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      That is why I believe that you should spread out your investment money over several forex brokers, not just all in one. just like in trading and investments, you do not put all of your money on one egg. Should one of your brokers go bankrupt, although that may be unlikely, you still have your money from all of the other brokers, so your loss would not be as great and much.


    9. #9
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      Despite regulations, that broker has never seem real to me. I just hope that those who invested with them would be able to get back their money. As long as it is a regulated broker in the US, it is possible.


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      Since forex market is highly unregulated it is always better to have the risk or investment spread among multiple brokers. Also, it is always better to withdraw our initial capital and profits on a regular basis without accumulating for a longer period. This way when there is such an event we shall still remain largely affected and can recoup ourselves to quickly recover the loss from other means. There is no possibility of a permanent fixed solution for this issue unless and until the entire industry falls under strict regulations.


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