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When we were children, we used to think if our parents could live with us forever. We grow old and our thinking has changed. Now we think of having our own house where only we will be living with all our friends. When you trade in Forex, the opposite happens. You do not wish that your account will be managed by your broker but you wish that it is segregated. The segregated account in Forex is such an account that is not managed by your broker or any third-party for their own uses. The property and the rights of the deposit exclusive belong to only you and you are in control of your investment.
It is a blessing that Forex allows the traders to demo trade their strategy. With demo trading, you will have lost all of your investment in second. If the chance of segregated account were not given to traders, imagine what would have happened to their money. Brokers and the third party would make a picnic out of their investment and you cannot use it when you need the capital. This article will tell you why you should always check if the broker offers you segregated account with your deposit.
Different techniques of the traders
The idea of using different trading accounts comes from different trading strategies. There are many traders in the United Kingdom trading the lower higher and higher time frame. But they use two different accounts of the scalp and long trade the market. If you use two unique system in same account things might get really messy. In order to avoid such situations, most of the brokers will allow you to open more than one sub-accounts under the main account. You might not have a clear idea of this system but if you start using the demo trading account offered by Saxo, you will slowly begin to understand how you can minimize the risk factors by splitting your investment into two different accounts. But at the end of the day, your prime goal is to make money. Always give equal priority to sub-accounts to become a successful trader.
The deposit can be used only and exclusive by you
This is the first and the most important advantage of a segregated account. As many people open account every day, the brokers can easily misuse their deposit at use at their own trading. People do not have much idea about this market which gives the broker an advantage to misuse their deposit. What prevents them from doing it is the segregated account that is monitored by the Forex authority. Most brokers proudly announce in their homepage that the account of their clients is segregated. It gives you the right for using your deposit exclusively for your own trading purposes and no other third party including the broker has access to your deposit.
If the account is shared by your broker, you may find that the money is gone when there is a good trend in the industry. This trading market is based on trust and confidence. If you are not confident that your broker will not run away with your deposit or use your money at their own benefit, you will not deposit more money. It will also take away your peace of mind when you know this money can be managed by other people than you. To avoid all of these, we suggest that you always open a segregated account in Forex.
They prevent scams and frauds
Even the brokers cannot be trusted at this time. They are also trying to scam their clients and one of the popular ways is through the shared account. They will take a small part of your capital to place their own trades and you will not understand it. A segregated account can save yourself from the scams and frauds that may happen with deposit.