Segregated account, what is it and how necessary is it, brokers with similar accounts

A segregated account is a bank account that differs from a regular account in that it holds funds allocated for specific purposes.

This may be an account where money is held for specific purposes or obligations, such as an account for paying taxes, an account for holding customer funds at a financial institution, or an account for stock trading.

Often, when describing the benefits of a Forex broker, you'll find a note that the company also offers a service called "Segregated Accounts." What is this service and what advantages does it offer traders over regular accounts?

A segregated account in stock trading is a type of trader's deposit where a portion of the funds is held outside the brokerage company, significantly reducing the client's operational risks.

For example, if you plan to trade $200,000, you open a segregated account, sign an agreement with the company, and deposit only half of the $100,000.

At the same time, the entire amount of $200,000 is available for trading, the rest of the funds remain in your bank account.

In essence, you receive funds for trading using your bank deposit as collateral; the amount of funds received will be equal to the amount in your bank account.

With a segregated account, you can also use full leverage without any restrictions, receive available bonuses, and participate in various broker promotions.

It's true that there are some nuances when working under this scheme, firstly, this concerns the limitation of the amount of losses on the brokerage account.

Many companies require that clients add money to their deposit when significant losses occur.

For example, you have $100,000 in your trader's deposit, a similar amount in a segregated bank account, and losses have reached $15,000. You need to top up your account with the same amount within a certain period of time.

As a rule, the replenishment terms are agreed upon when concluding a service agreement.

What does a Segregated Account provide to a trader?

In the event of a broker's bankruptcy (and this does happen), you won't lose the funds in your bank account, so to speak, additional insurance against unforeseen circumstances:

If necessary, you can access your funds almost instantly, rather than waiting for the broker to process your withdrawal request.

By depositing money in a bank, you receive additional income in the form of interest every month.

Many companies also allow their clients to manage their money freely, as long as the required amount is available in the bank account by a certain date.

Segregated accounts are primarily intended for large clients, as they are used for deposits of $50,000 or more.

Is it worth opening this type of account? Definitely, but you need to have sufficient funds to do so.

These accounts are common in the West, but they're just starting to gain traction in our country.

 InstaForex offers a similar service .