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  1. #1
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    The End of Retail Forex in USA?

    Here is an article I just saw at Forex Peace Army that is VERY disturbing! EVERY Forex Trader should read this!!! I posted the most important part and a link to the whole article.

    Code:
    http://www*forexpeacearmy.com/forex-forum/forex-articles/8342-if-cftc-does-say-goodbye-retail-forex-usa.html
    Title:
    If the CFTC does this, Say goodbye to retail forex in the USA

    Important Paragraph:
    Hidden away amongst some wonderful regulations to help protect people against many of the more common scams is a little surprise that could spell the end of much retail forex trading at US brokerages.

    The plan is to set the maximum leverage for US retail forex to 10:1. Just so that we are clear that this is not me slipping a digit, that's Ten to One.

    I love risk management. I can take make the worst trading decisions in the world and only lose money at an incredibly slow pace. Risk management is a good thing, but this is ridiculous.

    Just like NFA's anti-hedging and FIFO rules that interfere with stops, this is stripping away the right to make one's own informed (or uninformed) decisions. Some brokers who know that their customers will take all their money out of the USA have found limited ways around the Hedging and FIFO restrictions, but there won't be a way around this. Once again, in order to protect us, the government is taking away all the sharp tools in the shop so that children can play safely around the power equipment.

    This will provide some limited protection foolish newbies who have been known to instantly wipe out their life savings with a mouseclick, but the world can't be designed to protect every person from every possible mistake. The government's regulatory role in the forex market should be to protect us from fiscal fraud, not from being able to click buy or sell with some leverage.

    Let's do some math. Suppose you have just over $10,000 in your account. Let's ignore spread for a moment to simplify the math. Under 10:1, you can open only 1 lot. That's $100,000 of an xxxUSD pair. If it goes a few pips against you, then there's not enough money in your account and your broker could give you a margin call. If it goes 50 pips in your favor and you move your SL to breakeven (thus, your current risk is only your profit and nothing else assuming your broker is good at honoring stops) or even to +10 pips (thus locking in $100 profit and having your only risk be $400 of your profit), you won't have enough money to open a second lot (or even a single minilot) if you want to scale into a good position.

    Using tight risk management as I've described elsewhere (1% of account balance) and a 20 pip stop, you should be able to place a single trade for 5 minilots in a $10,000 account. Under 10:1, you would be able to open (at most) a second position. Even if you have profit locked in, you wouldn't be able to open a third position for this amount.

    In my opinion, this restriction is both ****** and insane. I wonder what those big brokers that will have less local competition due to the capital requirements will think when even more forex traders move their money offshore. How many US jobs will this cost if it is implemented?

    What's next? 10:1 leverage on all other commodities?


    What to do

    It's not a law yet. There's still time to complaint and try to stop this.

    Before I tell you where to complain, be aware: All comments sent to the CFTC on this topic will be very public. Ranting about government conspiracies won't help. Typing profanity IN ALL CAPS is very tempting in this case, but it won't help. Ten well worded individual letters will carry more weight than 100 copied and pasted letters or even a single petition with hundreds of signatures. I would be honored if you do quote some of this article and/or include a link to it in your complaint, but please also express your feelings in your own words too.

    According to the rather lengthy (193 pages) document detailing these proposed rules, this is how to complain:


    You may submit comments, identified by RIN 3038-AC61, by any of the following methods:
    • Federal eRulemaking Portal: [url]http://www*regulations*gov/search/index.jsp[/url]. Follow the instructions for submitting comments.
    • E-mail: [email protected]*gov. Include “Regulation of Retail Forex” in the subject line of the message.
    • Fax: (202) 418-5521.
    • Mail: Send to David Stawick, Secretary, Commodity Futures Trading Commission, 1155 21st Street, N.W., Washington, DC 20581.
    • Courier: Same as Mail above.
    All comments received will be posted without change to U.S. Commodity Futures Trading Commission, including any personal information provided.

    Please, write something and submit it. Even a few sentences. Focus on what that 10:1 rule will do to your trading. Tell them how much money you may move to an offshore broker. Tell them they are costing jobs. Tell them the really good rules closing registration loopholes won't matter so much if there aren't any US forex businesses left to register.

    If you come up with any additional arguments against this rule, please share them in this thread.

    Don't wait. Get started writing now.

  2. " "
  3. #2
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    Re: The End of Retail Forex in USA???

    I read that article over there too. I live in the US but am trading with a Gain Capital UK account. Looks like I will certainly stay where I am. I hear great things about Dukascopy, and will probably open an account with them for the lower spreads once my capital is larger. Good information to share here on this forum...

  4. #3
    Gold Member Array Cyrillic's Avatar
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    Re: The End of Retail Forex in USA?

    Somebody send this to me on friday. The lobbiests won't let it happen. Some of the biggest currency traders and brokerages reside in the USA, im sure they won't let it happen. I could be wrong but chances are this bill will get modified and turn into shreads and once passed there will be enough loop holes in it to bypass it.

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    Re: The End of Retail Forex in USA?

    I wonder whether the UK spread betters and European and Asian brokerages are rubbing their hands in glee. Surely all the business will just move offshore.

    Can't see it happening myself; too many vested interests.

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    Re: The End of Retail Forex in USA?

    .[/quote]

    I have Dukascopy as a broker. Glad I'm retiring before any of this mess would take effect, if it does.[/quote]

    Yarman, when you say you're retiring - do you mean retiring from FX trading? If so, why?

    Also, do you envision a time when FX minimum requirements will be like those of stock futures?

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    Re: The End of Retail Forex in USA?

    Hmm, I wonder if I should move my Oanda US to Oanda Sing now.

    Just chatted with an Oanda rep, they can't say wether or not it will effect their operations outside of the US.

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    Re: The End of Retail Forex in USA?

    Quote Originally Posted by Yarman

    I wouldn't move it now. It will be a while before this would be approved and enacted. Just have a backup plan handy just in case.
    Already looking, but it's hard to find a company that's not an ECN that is as good as Oanda. Hopefully there is a compromise and the leverage is at 50:1.

  9. #8
    PLON-MANIA MODS... Array Kardel Sharpeye's Avatar
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    Re: The End of Retail Forex in USA?

    ALL the FX forum even a broker like IBFX encourage their reader, client etc to Stand force to pulling these rules down ... LOL ... dude those NFA-PLON just PLON the game off ... LOL

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    Re: The End of Retail Forex in USA?

    10:1 leverage, what a joke.

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    PLON-MANIA MODS... Array Kardel Sharpeye's Avatar
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    Re: The End of Retail Forex in USA?

    Quote Originally Posted by Ross Ditlove-CEO-MB Trading
    Dear MB Trading FX Client,
    On January 13, 2010, the CFTC announced proposed new regulations concerning retail foreign currency transactions. Many of the proposed changes would implement important consumer protection regulations, which MB Trading firmly favors. However, one of the proposed changes would radically lower Forex leverage from 100:1 to 10:1 for all NFA and CFTC regulated Forex firms.
    Under the proposed rule, here are some examples based on trading 10,000 USD:
    Currency Pair Current Margin Requirements* Proposed Margin Requirements
    EUR/USD $142 $1,420
    GBP/USD $163 $1,630
    USD/JPY $100 $1,000
    *Current margin requirements based on rates as of January 19th, 2010
    The impact of these new requirements for a FOREX trader could be significant. Under existing rules and based on present day exchange rates, a $10,000 account could buy or short just over 700,000 EURUSD. With the new proposed rule, the same account would only be able to buy or short 70,000 EURUSD, significantly impacting the results of the trade.
    MB Trading recognizes the importance of regulation that strengthens industry oversight. We agree with policing and regulating the industry, as was Congress' intent when empowering the CFTC to create additional rules. However, we don't agree with policies that might clearly disadvantage firms in the United States which in turn disadvantage you, the client. We encourage you to voice your individual opinion directly to the CFTC. The Public Comment Period is open for 60 days from the date of publication, which was January 13, 2010. You may find the entire draft proposal here: CFTC.Gov

    and you may contact the CFTC directly by sending an email to [email protected] with "Regulation of Retail Forex" in the subject line.
    Thank you for your support.
    Ross Ditlove
    CEO
    MB Trading
    ...woooo ... DUDE ... PAL!! .. EVERYBODY ... !!! lets send these NFA-PLON WITH some AUTOPLON EA ...

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