What do you do when the broker fails? 2 creepy stories...

Hi, welcome to this new video. The topic today is when the broker fails. What do I mean by that? You know, when you are going to courses or studying trading and investing, you always assume that everything will go smoothly. Well, when you start to do it for real, especially with real money, you will realize that is not like that. So today I want to share with you something that can happen with the broker when they don't do what they are supposed to do. Something that often you don't find in the books how to react in this situation. And I will share with you two things that happened to me and especially the second one is pretty bad. So let's start. The first thing that happened to me was this. The broker didn't execute my stop loss. So for those of you who are not familiar with trading, you know that usually when you are looking at a stock and then you want to buy, maybe the price is moving and then you decide, okay, here, I want to buy. Okay? So you see your candle like that and then you say, good, I want to buy here and then I want to take profit here. Say target and then you put your stop loss here. So what is the meaning of this? If the price goes up, then the order is executed, you buy your shares and then after that, either the price goes to target so you sell for a profit, or it goes to the stop loss and then you sell for a loss. Now I had two position at that time and I remember the order was triggered. So the price went up. So I buy, right? And after that it was going down. And I say, well, too bad, let's see what happens. So buy, right? What should happen is that the moment the price cross the stop loss level, it will become a sell market. So it will automatically sell at the price at the market price to close your position and limit your loss. So imagine my surprise when the day after I opened my account and I saw that two of my positions, the price was basically below, let's say here, the stop loss and the stop loss was still there. So the order was not executed. I was supposed to sell here or around here and it didn't happen. So imagine you do this for your risk management. I made a video explaining how to do that. So you say, okay, okay, when I buy here, I sell here, I can risk $100. If I make money, I risk $200. That's great. And then you get a loss that is already more than $200, right? And this should not happen. So what I did, I called, I chat with the broker and then basically they didn't explain me what happened. My feeling is that they had technical issue. And by the way, this happened when I was trading CFDs contract for differences that are not stocks is a derivative. And this is one of the reasons why I stopped to use cft. Other reasons are that I was paying a lot of money for really no reason. But if you're interested, I can make a video about that. So in this case, what happened? I chat with the broker, I tried to understand what was going on. And because they didn't tell me then I say, okay, look, this is the situation. The stop loss should not, should have been triggered. It was not triggered. So what to do? And then they told me, well, manage your position. And I was what the hell does it mean manage your position? You don't even execute the order that you should. So I wait and when the market opened, eventually the order was triggered, but at the level that was way below. So then I raise a ticket. You can, if something happened, you are not happy, you can send them a message. And then basically they refounded me the difference between the stop loss price and what I really lost. So basically eventually I just lost my hundred dollars times two positions instead of the 400, whatever that was on my account. Now what is the point here? A few lessons to understand. Number one, always remember to check your account because this thing can happen if you don't check regularly. You may have surprises like that. Now imagine I didn't check and then I don't even realize. Then the broker may just, you know, pretend nothing happened and you get a loss that you should not have. The second one, as I say, I stopped to use CFDs. So this was a small, a small example of something that happened to me. But imagine you have a large account or maybe your risk per trade is very high. That could be enough for you not to sleep at night. So this is something that I wanted to share because you don't find in the book this thing, they always say that whenever the price is below stop loss it will basically trigger. And this was something with high liquidity. So I was not trading penny stock or shit like that. Now what is the second thing that happened? And this is the bad one? Well, one word, bankrupt. A broker that I was using went bankrupt. Now to give you some information about that, this was a broker that I will not mention that was based in Australia and it was a forex broker. Okay, I was using for some time, I was testing some forex strategies. And then imagine one day you wake up and you log in and then you say, well, the website cannot be reached. And when you log in you try it again. Then you find out that the website has been replaced by a notice of the court. They are doing an investigation because of fraud and things like that. So this happened last year and we are still waiting. Now there is all the legal things, the process. The scary thing is that this broker was regulated in Australia. So regulated means that technically your money is safe. Or that's what they tell you in the books. You say okay, choose a regulated broker because you are safe. Well, you are not, you're not. Because after this happened it was a regulated broker, but because the broker was doing some fraud. So he was using the money of the people, of the customers to cover some losses they had. What happened is that they, they decre. They basically they have to shut down everything and there was a liquidator and. And the thing is that they are already telling us that there are around 9% funds missing. Right? And imagine if it's 9% missing, then you have to deduct the legal fees because these guys that are doing investigation, they don't do it for free. And then whatever is remaining will be distributed to the customers. Now what is the problem here? First problem, the money that was with this broker is locked in for long time is more than one year. Second one, you don't get back the full amount. Okay, now what is the problem here? The problem is that many people, they were just using this broker for everything because they also allowed to trade stocks. So what is my suggestion here? My suggestion is diversification is good. Diversify also your brokers, not only your stocks. I suggest even the bank accounts, but diversify your brokers. So what do I do? Just to give you an example of my style, I have one broker for REITs in Singapore. So I have the broker A. Then I have the long term portfolio for the US that I do it ETFs and then I have a broker B. Then I have a trading in the US and I have a broker C. Okay, and this is the main, the main three brokers I use. So I divide long term portfolio, trading portfolio, REITS portfolio and then I also have something for crypto and. But it's minor. So these are the three main things. So what was the point here? If something happened to one of them? Okay, they are regulated. Yes, whatever. We have seen what happened. So at least if something happened, it's very unlikely that it will happen to all of them because they are different brokers regulated in different areas. One is in the US one is in Singapore. So it's less likely that something like that happened. But imagine that you are trading everything under one broker and something happened to that broker, then it can be a problem. So my suggestion is again, diversification is good for stocks if you're doing a long term strategy. But also remember, diversify your broker. Because the problem is that the risk is there. You may not think that it can happen, but anything can happen. Even during the crisis in 2007, 8, nobody thought that it was possible for a bank to fail. But it did happen. Lehman Brothers failed. This broker was regulated. Everyone was, yeah, he's safe, he's safe. And then it was not. And imagine your whole portfolio is blocked there. What do you do? So the last thing I want to share with you is when this happened or the case that I explained before. The stop loss not triggered. The first thing that you should not do is to react. Rushing and doing something stupid. Okay? So stay calm. If something like that happen, get informations, check with other people that you know that may have the same problem. Check online. But the first thing is never rush to do something that is stupid. Because when you act out of fear, you may do things that are not really smart. And then if you have some financial advisor, you can discuss with them what is the best way to proceed because probably they know better. But again, the best way to avoid this situation is to do something even before they happen. So if now you have all your money with one broker and you are using different strategies, my suggestion is diversify. Because everything is great until shit happens. But when it happens, I tell you there were guys using this broker and they were like, oh my God, I have all my money there. It's like 2,300k now what to do, you know, and this is more than one year. Imagine, you know, and maybe you need that money. You think, yeah, it's not all invested. So if I need, I can withdraw. Well, you cannot even withdraw now. Okay, so that's what I wanted to share with this video. Remember, the risk can come from everywhere, even from things that you don't really expect are risky, like regulated. You know, all these words, always investigate. What does it mean? What does it mean that is regulated? Because we may assume regulated means safe. And we don't even know what, what is the term, what it really legally mean. Okay, so that's all for this video. Thank you for watching as usual. If you like it, if you have question first, you can write a comment. If you want me to speak more about the CFD that I mentioned before. Why I think they are not the best way to proceed unless maybe you do day trading, but I don't suggest it. You can ask me and I will make a video. If you like this one, subscribe if you find it useful, share with others and see you next time.