Before we move on to account statements I just want to touch on segregation of funds. In times past there was a danger that traders who deposited money with their broker who did not segregate their clients money from their own companies money were at some risk.
The problem arose if the broker misused the deposited funds to either reinvest or otherwise manipulated these deposits to enhance their own standing. There were also instances were the broker became insolvent and many complications ensued as to what was the clients money and what was the broker's money.
With the advent of regulation most broker now segregate their clients funds from the brokerage funds. Deposits are normally held with banks or other large financial institution that are also regulated and bonded or insured. This protects you money should anything happen to your broker.
The deposit taking institution is normally aware that these deposits are client's funds. Depending on regulation in the particular country you live, each client may have their own segregated account or for smaller depositors they may be pooled. The point is that segregation of funds is a safeguard. Ask your broker if your funds are segregated and who actually has your money.
Just as with a bank you are entitled to interest on the money you have on deposit. Some broker may stipulate that interest is only payable on accounts over a certain amount but the trend today is that you will earn interest on any amount you have that is not being used to cover your margin.
Your broker is probably not the most competitive place to earn interest but that should not be the point of having your money with him in the first place. Payment on your account that is not being used and segregation of funds all go to show the reputability of the company you are dealing with.
In this section I will discuss briefly the basic account statement. I have to keep this basic, as there are as many flavors of account statements as you can imagine.
Just about every broker has their own way of presenting this. The most important thing is to know where you stand at the end of each day or week. Just because your broker is Internet based and has all the bells and whistles does not mean they are infallible.
Many of the actions taken before information is imputed are still done by hand and if humans are involved there will be a mistake at some point. The responsibility lies with you. It is your money so make sure that all the transactions are correct.
FX Some Company
New York
Statement for: Mr. Joe BloggsStatement Date: 16th July 2002
Account No: 123456
Summary Of All Trades From: 15/07/02-17/07/02
| Ticket No |
Time |
Trade Date |
Value Date |
B/S |
Symbol |
Quantity |
Rate |
Debit |
Credit |
Balance |
| 123458 |
09:05 |
15/07/2002 |
17/07/02 |
B |
EUR/USD |
100,000 |
0.9850 |
|
|
$10,000 |
| 123459 |
13:01 |
15/07/2002 |
17/07/02 |
S |
EUR/USD |
100,000 |
0.9870 |
|
$200.00 |
$10,200 |
| 123460 |
14:05 |
16/07/2002 |
18/07/02 |
S |
USD/JPY |
100,000 |
116.85 |
|
|
$10,200 |
| Total Equity |
$10,200 |
| Margin Available |
$9,200 |
| Margin Requirements |
$1,000 |
| Current Position |
Short USD/JPY |
Normally there is a ticket or docket number to help identify the trade. You will nearly always find the time and date of the trade. The value date if the currency were to be delivered. You should always see the direction of the trade, buy or sell (Long or Short). The amount and rate you bought or sold. Balance to let you know if you made a profit or a loss.
You should also see any open positions you may have and the margin requirements for that position. A lot of the more modern systems will show your open position as though it has been closed just to give you an up to the minute balance.