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  1. #1
    Gold Member Array JimJamBonks's Avatar
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    CFTC Leverage Ruling.

    It seems the CFTC have finally decided upon 50:1 as the maximum leverage allowable on retail forex transactions. It's a long way short of the 10:1 many feared (though in my view even 10:1 is destined to part most retail traders from their money). The new rules become effective October 18, 2010

    http://www.cftc.gov/PressRoom/PressReleases/pr5883-10.html

    http://www.prnewswire.com/news-releases/at-oanda-its-business-as-usual-after-cftc-leverage-ruling-102034643.html
    Last edited by JimJamBonks; 09-02-2010 at 02:55 PM.

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  3. #2
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    I think it is fine with 50:1 leverage if you do not use EAs or some other crazy leveraging strategy. As with most brokers big leverage + bad execution = you lose all your money. Futures becoming more and more attractive for day trading these days.

  4. #3
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    Yep, and not just leverage but a whole host of very important factors for US traders.

    I was on a Rob Booker webinar on Thursday where he discussed everything - I believe it was recorded and will be made available free on his website (haven't checked yet).

    Apparently all US traders (dual citizenship exempt) are no longer allowed to trade with offshore brokers - very big implications!

    Will definitely have an effect on the nature of the forex market, liquidity, movements etc...

  5. #4
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    mlee,

    I don't think US citizens will be banned by using offshore brokers, but most likely all offshore brokers will have to register with USA government if they have USA clients. So most likely what will happen is that offshore brokers will no longer accept US citizens as clients as some brokers already do. Honestly, I've tried plenty offshore brokers demo and some live and I don't see any advantages if you trade manually with good MM. Eventually forex will become more regulated and I don't see it as a very bad thing, as all other instruments are regulated and it prevents brokers screwing you over like most do these days in forex.

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    LOL. OH yeah the SEC and FINRA did a great job with MAdoff. Lol they were warned 6 years before the collapse. Yeah the SEC does a great job with all the insider trading that takes place everyday. The biggest scam of everything is mutual funds. Look at how they operate. I don't even want to get into details because it makes my stomach churn. The biggest problem with the whole industry is the FDIC insurance. WE'd do a lot more due diligence if the gov't didn't back our deposits. WE do a lot of research before we buy a television or a car but we dont' do ANY research on bank balance sheets before we put our money ina bank? Why? Because they are all the same risk because of the FDIC insurance. If we didn't have it consumers were do due diligence and say "hey, I'm not putting my money in this bank, they are making loans that won't get paid back, I might not get my money back." We would all do more due diligence if we didn't think the government was doing it for us. The entire accounting system is one big fraud. We are about to take it on the chin once FASB changes the way companies list their operating leases.

    Look Martin Armstrong may be losing his mind a bit because of being institutionalized but he hit the nail on the head with his paper on The Paradox of Regulation --- http://www.martinarmstrong.org/files/The-Paradox-of-Regulation-God-vs-Man-6-3-10.pdf

    Every citizen of the world should read that and truly understand that that is the means to which the gov't takes our freedoms. Many of us have an urge to want to be saved from ourselves.

  7. #6
    Gold Member Array JimJamBonks's Avatar
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    I have a friend who 'lost' 35K after Refco went tits up. It was 35K he couldn't afford to lose. I don't know many/any people who could take that on the chin, but he wasn't one of them. It was near ruinous for him.

    The lesson I took from his experience was that he was using his Refco account as a repository for all his funds. His used margin from that amount was a small fraction and yet he let the whole lot sit there doing very little except unwittingly allow Refco's shysters to move it around. The sensible thing to do is to only have an operating minimum to service your regular trading margin in any trading account. All the rest of your money should be far away in an immediate access bank account. It's easy to move funds in and out these days.

    DON'T EVER LEAVE A SIZEABLE ACCOUNT SITTING WITH ANY FOREX BROKER. ONLY EVER FURNISH YOUR TRADING ACCOUNT WITH A REASONABLE TRADING MARGIN.

    This may seem like a pain in the arse but it's part of your risk management. Why go to all the lengths of using stop losses to minimize your risk and then let a shitheap look after all your money? Doesn't make sense does it. Had my friend done that he'd have lost about 3% of what he eventually did.... It's just sensible business practice.

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