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Proposal to phase out Hedging

  • #81
  • Apr 16, 2009 9:55am Apr 16, 2009 9:55am
Quoting shrike
No real market offers this. Not in stocks, futures or options or what have you. Its just a gimmick of some low profile fx shops. Every major exchange outlaws this explicitly, and for good reason (google for 'cross trade').

If you buy one and then sell one, you are flat. Its just how a market works.
That is exactly why forex is an extraordinary market. It is outlawed because you can make tons of money out of it. It explores volatility. Volatility moves 1000 points while a trend moves 1. What is the nightmare of all trend followers? Volatility. The monster that spreads blood around while pouring money into the pockets of those who trade it, disregarding the trend. Who cares about trends if you have the wild ups and downs to profit from?
  • #82
  • Apr 16, 2009 10:17am Apr 16, 2009 10:17am
Jairo, i have no idea how to put it more simple than i already have. If you really think these rules at all of the major exchanges exist only to prevent you from making money, this delusional accounting practice is the least of your problems. Good luck anyways.
  • #83
  • Apr 16, 2009 11:24am Apr 16, 2009 11:24am
Quoting shrike
Jairo, i have no idea how to put it more simple than i already have. If you really think these rules at all of the major exchanges exist only to prevent you from making money, this delusional accounting practice is the least of your problems. Good luck anyways.
This delusional accounting practice doubled my account in 4 months. After that I took a big hit (the system has a weak side, as all have). But I managed to save the account, using guess what? "Hedging". Taking more of my own poison. It is good that there are so many ways to trade. What is a bit disturbing is that some people think their way is the only one or the best. The best way is the one which best fits each person's preferences. You choose your poison. Mathematical optimization is not the only option. Trend following is fine. Volatility exploring is fine. Anything is fine if it fits you. If you know the risks you are taking, you are fine.
  • #84
  • Edited 11:57am Apr 16, 2009 11:46am | Edited 11:57am
Quoting birdt
I don't know what the advantages of 'hedging' are, not one hedging advocate I have spoken to has ever put forward a convincing argument, but I invite anyone who can. It really...

So my argument wasn't valid? While it's not what I would consider hedging, according to the rules that's exactly what it is. I am effectively out of the market on anything but my long term trade which is ridiculous.

Most traders have a long term view and a short term view. This rule keeps us from trading both at the same broker.

All those mentioning subaccounts as an alternative are wrong as well. This rule applies to the customer not the account. A sub account is still your account and therefore according to the rules cannot be used to place offsetting positions.

No matter how you slice it this does nothing for anyone.


EDIT sorry I thought this was the other thread. Here's my post from that thread. I made an additional 96 pips today alone shorting GU while still holding my long. I will not be able to do this once the rule goes into effect and that is as silly as my hair.

Quoting ShamusFamous
This is complete BS. I have a long position in GU to my target of 1.50.

It's currently at +700ish pips. I take quick short trades in GU all the while on the way up. I can't do this now? Why? It's a covered trade!
The trend always ends.
  • #85
  • Apr 16, 2009 12:32pm Apr 16, 2009 12:32pm
Quoting ShamusFamous
So my argument wasn't valid? While it's not what I would consider hedging, according to the rules that's exactly what it is. I am effectively out of the market on anything but my long term trade which is ridiculous.

Most traders have a long term view and a short term view. This rule keeps us from trading both at the same broker.

All those mentioning subaccounts as an alternative are wrong as well. This rule applies to the customer not the account. A sub account is still your account and therefore according to the rules cannot...

Shamus, I am not disagreeing with you but I dont see where the rule states that a customer cant have two accounts. One for long-term and one for short term or to do so called hedging. The rule states, "in a customer account" and it doesnt state per customer. So why do you think you couldnt have another account?

New Compliance Rule 2-43(b) requires an FDM to offset positions in a customer account on a first-in, first-out basis, thereby prohibiting a trading practice commonly referred to as "hedging." A customer may, however, direct the FDM to offset same-size transactions even if there are older transactions of a different size. Rule 2-43(b) is effective for any positions established after May 15, 2009. Offsetting positions that were established prior to the effective date do not have to be liquidated, but once either position is closed out after May 15, it may not be reestablished as a hedge.


EDIT sorry I thought this was the other thread. Here's my post from that thread. I made an additional 96 pips today alone shorting GU while still holding my long. I will not be able to do this once the rule goes into effect and that is as silly as my hair.[/quote]
  • #86
  • Apr 16, 2009 12:56pm Apr 16, 2009 12:56pm
Quoting Jairo
This delusional accounting practice doubled my account in 4 months. After that I took a big hit (the system has a weak side, as all have). But I managed to save the account, using guess what? "Hedging". Taking more of my own poison. It is good that there are so many ways to trade. What is a bit disturbing is that some people think their way is the only one or the best. The best way is the one which best fits each person's preferences. You choose your poison. Mathematical optimization is not the only option. Trend following is fine. Volatility...
I'm with you here Jairo. I went through a similar move some time ago. Account was tanking on me and I was to tired to see through the movement.

Solution? Quickly imposing a hedge. This put the brakes on a move that otherwise would have wiped me out while buying time for me to resharpen my attack.

Result? A decent night's sleep and the time bring my account back.

Certainly there's risk, but there IS a very practical benefit. Now, in classic regulatory form, someone else is deciding how we can / can not trade.
  • #87
  • Apr 16, 2009 5:31pm Apr 16, 2009 5:31pm
As the United States moves further and further into socialism you will see more and more regulation (and erosion of your freedom).

This NFA ruling is one such move.

The short term answer is to use a non-NFA broker. The long term answer is to move out of the United States... find a country that is not out to destroy you.
In the days of old when sailors were bold, and seldom if ever contented.
  • #88
  • Apr 16, 2009 7:33pm Apr 16, 2009 7:33pm
Quoting pt49
As the United States moves further and further into socialism you will see more and more regulation (and erosion of your freedom).

This NFA ruling is one such move.

The short term answer is to use a non-NFA broker. The long term answer is to move out of the United States... find a country that is not out to destroy you.
Hi pt49,

Now that CFTC has approved the wile, aren't all US based brokers (including non-NFA ones) forced to comply?
  • #89
  • Apr 16, 2009 7:50pm Apr 16, 2009 7:50pm
Quoting pt49
As the United States moves further and further into socialism you will see more and more regulation (and erosion of your freedom).

This NFA ruling is one such move.

The short term answer is to use a non-NFA broker. The long term answer is to move out of the United States... find a country that is not out to destroy you.
so pt where you going to move?
  • #90
  • Apr 16, 2009 8:07pm Apr 16, 2009 8:07pm
I am moving to Alpari-UK. They have 0.01 standard lots now..
  • #91
  • Apr 17, 2009 1:21am Apr 17, 2009 1:21am
Quoting fxtrader42
so pt where you going to move?
I don't live in the U.S. and don't use U.S. brokers. Alpari UK sounds a good option for you guys. I'm currently with Varengold myself.
In the days of old when sailors were bold, and seldom if ever contented.
  • #92
  • Apr 17, 2009 2:05am Apr 17, 2009 2:05am
Heard Matatrader is having trouble configuring MT4 system to comply to new US no hedging and reporting rules.
  • #93
  • Apr 17, 2009 3:53am Apr 17, 2009 3:53am
Quoting Jairo
I am moving to Alpari-UK. They have 0.01 standard lots now..
They will do the same.
  • #94
  • Apr 17, 2009 4:22am Apr 17, 2009 4:22am
Quoting Delta5
Heard Matatrader is having trouble configuring MT4 system to comply to new US no hedging and reporting rules.
where did u get the information ? Hopefully they cannot come up with the patch anytime soon and those trader who is doing buy/sell on same currency pair will have more time to find another broker.
  • #95
  • Apr 17, 2009 9:03am Apr 17, 2009 9:03am
Just got the email from IBFX.

Thanks for the whole 3 weeks of notice!

Time to start re-writing expert advisor code....
  • #96
  • Apr 17, 2009 9:57am Apr 17, 2009 9:57am
U might wanna have this EA to simulate "No Hedge" environment

http://www.forexfactory.com/showthread.php?t=164120
  • #97
  • Apr 18, 2009 3:24am Apr 18, 2009 3:24am
For those who are crying over this, post once, save time you would otherwise spend on other posts, and take a few minutes to send the NFA your thoughts.

Some of my additional thoughts:

http://www.tradingmetro.com/blog/arc...dging-Ban.html
----- I live in the land of Trading Metro.
  • #98
  • Edited 6:22am Apr 18, 2009 6:11am | Edited 6:22am
Quoting socialtrader
For those who are crying over this, post once, save time you would otherwise spend on other posts, and take a few minutes to send the NFA your thoughts.

Some of my additional thoughts:

http://www.tradingmetro.com/blog/arc...dging-Ban.html
OK, I followed your link and then the email address below.

To contact the NFA with your comments and thoughts on these new rulings:
Edward Dasso, Managing Director, Compliance
([color=#800080][email protected][/color] or 312-781-1551)

Then I clicked Mr. Dasso's link and emailed him the following:

Subject: you are the thieves

The wile of the hedge ban leads me to make only one decision: MOVE FUNDS AWAY FROM USA AND FROM NFA/CFTC REGULATED BROKERS.

Instead of protecting our funds against the thieves (what you should have been doing), you will force us to liquidate our positions with losses. You are doing this because you know that we can make TONS OF MONEY using this strategy. You are robbing our money, you know it. You are playing the game of the freeloader market makers. You are thieves. Go home. Close your doors. Lets us trade as we want.

Why do you let market makers not honour prices? Your new compliance rule (part a) charges the client for this. Why don't you impose the loss on them? Have they put money into YOUR POCKETS?

You are a bunch of swindlers.

Edit: I used the two other provided links to send them the required feedback (the same copy/pasted message)
  • #99
  • Apr 18, 2009 12:00pm Apr 18, 2009 12:00pm
why would you call them thieves

dont send negative emails, especially if you want them to read the whole msg, and take it seriously

he probly deleted that msg just cause the subject

heres the msg i sent

Inserted Code
i just want to give my opinion on this new hedging rule

i do not hedge, but i do enter the market in both directions sometimes

from what i see, your out to help traders, and regulate the brokers

but, you are hurting me instead

my strategy is like this, i will open 5 trades max, in the direction i think the market is heading, these trades are entered not at once, but at mini trendline breakouts

when the trade goes bad, i do not take that current loss, instead i wait for some kind of pullback, such as a 50% fibonnacci retracement, which could be days

in the mean time i trade in the new direction, i do not open trades based on the losers, but based on correct entries for my system

with these new rules, now i cannot do that, so i must either take a loss thats alot bigger
just so i can trade again, or wait it out without trading, either way its adding to my loss

i feel handicapped

i suppose i could open 2 accounts, but them i cannot use the thousands of ea's out there

the result is im moving my funds to a uk based broker, not nfa regulated

ppl read the disclaimers, its there money
your not helping us by doing this, if anything your helping the brokers

ppl have worked yrs, including myself, creating trading robots and variouse programms

your making all of them programms useless

alot of the developers arent around or involved anymore, theres no one to fix these older programms

you have a good day, and i hope youl concider researching the decisions youv made

after all, its realy noithing more than a numbers game, the numbers can be manipulated trading any where

when i do trade both ways, it does off set my risk greatly, making the wait alot safer

therefore making my trading alot safer

i think every1 concerned should send something simular

try to explain to them how it effects you, theres a good chance the person doesnt even know how to trade, there basing there decisions from statistics

probably dumb ppl emailing them saying they lost there life savings

there job is to regulate brokers into treating the trader more fair
to protect traders

i dont know if they realy do this, maybe its all a plot to hurt us, but we shouldnt assume or accuse them of a conspiracy

you should come over as a professional trader, not some x-files guy
without proof

one thing you could say, is instead of controlling our trading, make the brokers give you more warning, such as a disclaimer warning you about the martingale systems, which are suicide
  • #100
  • Apr 18, 2009 1:55pm Apr 18, 2009 1:55pm
Hedging is for the futures market, and offsetting risk. Not offsetting your position so that you can walk away, or scalp the market.

If you are going for a few pips here and there (scalping), you are gambling and not trading. How many professional traders do you know that scalp (this is a rhetorical question, and the answer is, none, or VERY few).

The market maker and "bucketshop" garbage, is just whining and complaining, by a group of uneducated people, that are looking for a reason to blame someone else other than themselves for there lack of ability to trade. A well capitalized firm, that is able to get you the price that you want, and exit you at the price that you want is all you need.

If your taking your money oversee's (and you are a US resident) then good luck. CMS is the latest example, raided by the Geneva police (I dont care what the excuse is, it happened), if they close up shop, how you gonna get your money back?

An example of US firm, most recent, FXLQ. 99% of people got all of their money back, but we dont talk about that, we focus on Refco, and other stupid things, because the people losing are looking to point the finger at someone, or something else, and not paying attention to the three fingers pointing back at them.

Plan your trades, go for real gaines, be realistic in your returns (8-10% is a great return monthly) and the rest of the problems strangely seem to disapear.

So go ahead, tell me how wrong I am, go on with your examples, and blaming, and "bucketshop" talk. I will just keep planning my trades and trading my plan with my market maker, and be happy with my returns.

Shouldnt you be working on a plan, or researching, rather than reading a Forum board about complaining anyway?
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