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#1 21-03-2020 14:17:37

johnedward
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Forex brokers issuing warnings regarding financial market volatility

Forex brokers are issuing warnings regarding financial market volatility


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Forex brokers are warning their clients about the volatility of the financial markets, pointing out the risk of gaps, widening spreads, increasing margins and interrupted or suddenly closed transactions. These difficult conditions could become increasingly common as traders fear the impact of the virus epidemic and an oil price war between Russians and Saudis.

The outcome of the current geopolitical turmoil, energy wars and the coronavirus pandemic is considered increasingly difficult to predict. This is why some brokers have sent emails to their clients informing them that there is a significant risk of the markets collapsing when they reopen after each weekend's closure. They also added that traders should be wary of system-wide "circuit breakers" in the centrally regulated exchanges, as trading platforms would follow suit whenever a trading disruption occurred.

Brokers have reported that they would take special measures in anticipation of greater volatility and higher trading volumes. These would include widening or suspending price limits as liquidity in the market is depleted and spreads widen accordingly. It could also have a ripple effect on open trades, thereby triggering margin calls and liquidating accounts as markets turn.

These warnings follow the massive blackouts that many US brokers have experienced over the past few weeks, which have resulted in traders being shut out of the market during sensitive periods. Robinhood, Fidelity, TD Ameritrade and Charles Schwab experienced a disruption in their trading activities in the context of high trading volumes before they were able to successfully restore their systems.

Some traders who reported technical problems or difficulties accessing their trading accounts shared their fury on social networks. Online brokers questioned the unprecedented load on their servers caused by volatile market conditions, record trading volumes and the huge flows of new traders.

That being said, such warnings have become more common, as the memory of the SNB's price floor drop is still fresh in the minds of many brokers. At the beginning of 2015, many banks and brokers recorded millions of dollars in losses within minutes following the Swiss national bank's announced decision to no longer peg its currency to the euro.

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