How do brokerages deal with selloffs?

[novice41]

All traders here trade Forex through brokerages some big some small. When you sell USD to buy for example EUR or CHF they are formally supposed to sell your dollars times margin coefficient (e.g. 20 or 50 or 100 or even 200 in some brokerages) buy corresponding amounts of other currencies. In practice they are taking the opposite side of each trade thus neutralize long short positions in each currency p within the brokerage. What they have to do then is to sell only the difference between long short positions times margin coefficient. When the market is steady short long positions are roughly equal the size of their outside transactions is relatively small their cash reserves can accomodate this. But what if the market plunges? For example the following article forecasts that Snow is likely to tell at Congressional hearings next week that Treasury will take neutral position on dollar valuation essentially allowing USD to do whatever it pleases:

http://www.observer.co.uk/business/story/0690388209200.html

Combined with the already existing trend to sell dollars current political situation if this non-intervention policy is announced the dollar may potentially plunge many hundred pips in a few days. All I mean all traders associated with a brokerage will short USD. Where will your brokerage especially if it is a small one get all the dollars to sell on the market buy the other currencies? Does anyone know what happens in these situations? How do brokerages solve this problem do they really solve it or maybe some of them go bust?

[currencia]

try learning the difference between a broker a marketmaker. You are not dealing with brokers here so call them by what they are-marketmakers. By market definition someone is willing to take the otherside of a trade they certainly are willing to take them all day long a participatory share called the lunch bucket retail spot that loses 90% of their trades 100% of the time. If you are concerned about your funds join the EBS System with an appropriate amount of capital.

In the interim read your account opening docs. Most say that the maker can take the funds out of your account do as they please with it. That is presently called "the retail forex market".

Base upon your long term trade strategy that works only with fundamentals why dont you try converting your currency for euro dollars or whatever else put it in a gov guaranteed passbook savings or guaranteed money market account leave it there.?
That way the long term fundamentals will work out just fine for you.

[novice41]

Currencia

Three things:

Are you saying that the trades that retail traders are making are not actually replicated in the big outside FX even after being averaged among all the positions of the clients at the end of the day that no margin financing currency buying is actually ever done that broker (marketmaker) essentially plays a computer game with its clients in which the house generally wins? This is a possibility of course there is actually not much wrong with it but is this the case?

I was not worrying about my funds. I was just curious. If you thought about it a little you might have understood that buying safe currency making LT trades in which you for example buy safe currency with dollars use 50x leverage are two very different things.

the third one: drop the attitude.