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NFA New Rule Not allowing stop and limit orders

  • #1
  • First Post: Apr 30, 2009 5:09am Apr 30, 2009 5:09am
NFA will not be allowing stop and limit orders on open positions either, as this conflicts with their FIFO - first-in, first-out - new policy. This goes into effect may 17th.

Go NFA, Go NFA.

? ? ? ?

Any thoughts ?
  • #2
  • Apr 30, 2009 5:37am Apr 30, 2009 5:37am
How'd you figure that out? I think you're way off base with that assumption, but provide an example anyway.
  • #3
  • Edited 7:53am Apr 30, 2009 6:44am | Edited 7:53am
Quoting forexisfx
NFA will not be allowing stop and limit orders on open positions either, as this conflicts with their FIFO - first-in, first-out - new policy. This goes into effect may 17th.

Go NFA, Go NFA.

? ? ? ?

Any thoughts ?
Rumor has it, they are Outlawing Santa Claus also, as he brings unrealistic false hopes.
  • #4
  • Apr 30, 2009 6:48am Apr 30, 2009 6:48am
Quoting smjones
..
  • #5
  • Apr 30, 2009 8:29am Apr 30, 2009 8:29am
Quoting forexisfx
NFA will not be allowing stop and limit orders on open positions either, as this conflicts with their FIFO - first-in, first-out - new policy. This goes into effect may 17th.

Go NFA, Go NFA.

? ? ? ?

Any thoughts ?
After reading this thread I did some research and found this post at FXAW by Paul Towne of BackBayFX.com

NEW Proposed Amendment to NFA RULE (2.43b)!


Hi All,

As part of our due diligence on the NFA's "anti-hedging" rule from April 13 (NFA rule 2.43(b)), we have been informed of a follow up or clarification from the NFA. We have not been able to get the NFA to confirm or deny, but we have heard from multiple independent sources.

The NFA has informed the clearing firms that they will need to use First In-First Out (FIFO) accounting for retail traders. This has an important effect on all traders, but specifically MetaTrader4 users!!

FIFO accounting means that if a trader has a position in a currency pair that was formed by the combination of two orders, when the trader goes to close out a portion of that position, the first order in will have to be the first order closed. HUH? Here is an example of the new ruling:

Trader bought 100,000 EUR/USD this morning (call it the morning trade), and bought another 100,000 this afternoon (call it the afternoon trade). So the total position is 200,000 EUR/USD. When the trader chooses to close part of his position by selling 100,000 EUR/USD......the trader must close the morning trade. He/She can not close the afternoon trade before the morning trade. Sooooooo.....

This ruling will significantly affect the use of Stop Loss and Limit Orders on open positions. Think of it....in the above example, you would not be able to put a Take Profit order on your afternoon trade until/unless you had closed the morning trade; the closing order of the open trades must be FIFO! Without some complicated changes being made to the coding of the retail FX platforms, the clearing firms will have to eliminate the use of Stops and Limits.

This clarification (once confirmed) will effect almost all trading styles, but specifically effect the following strategies:

- Martingale
- Grid Trading
- One Cancels Other (OCO) orders

Please note that the above is in addition to the main part of rule 2.43(b) which eliminates hedging for retail traders.

Please don't hesitate to contact me with any additional questions (contact info below).


(I removed his details because I wasn't sure if forum rules would allow, but PM me if you want the forum details)


  • #6
  • Apr 30, 2009 9:45am Apr 30, 2009 9:45am
Quoting BostonForex
After reading this thread I did some research and found this post at FXAW by Paul Towne of BackBayFX.com...
Thank you
  • #7
  • Apr 30, 2009 9:49am Apr 30, 2009 9:49am
  • #8
  • Jul 1, 2009 5:48pm Jul 1, 2009 5:48pm
Anyone else get the email today from FXCM regarding the removal of Stop-loss and limit features?
The road to pipland is arduous and fraught with challenge.
  • #9
  • Jul 1, 2009 5:57pm Jul 1, 2009 5:57pm
Yes, me. I am now looking for a good broker overseas.
  • #10
  • Jul 1, 2009 6:11pm Jul 1, 2009 6:11pm
Quoting traider
Anyone else get the email today from FXCM regarding the removal of Stop-loss and limit features?
Yes I did and I am transferring to fxcm uk
  • #11
  • Jul 1, 2009 7:09pm Jul 1, 2009 7:09pm
http://www.fxcm.com/lp3-nfa-fifo.jsp

ouch, interesting to see if all the mt4 platform brokers end up having to do this. I would think 99% of the clients would never think of trading in such a horrible trading environment where you can't place a stop order...
  • #12
  • Jul 1, 2009 7:28pm Jul 1, 2009 7:28pm
Quoting Verto
http://www.fxcm.com/lp3-nfa-fifo.jsp
If you read the whole post it says:

"FXCM has introduced a new feature called OCO (One Cancels the Other) entry orders, which will provide traders with the same functionality as stop and limit orders except that they are not linked to any position. For additional information, please visit the "NFA FIFO (First in, First Out) Rules"

MB Trading has something similar that does the same thing as a stop and limit order. It seems that it just can't be linked to an open order. No big deal, it has the same function and result.
  • #13
  • Jul 1, 2009 7:54pm Jul 1, 2009 7:54pm
The thing I'm asking is WHY ?? who does this help... the banks and brokers. what real purpose does this serve ???
  • #14
  • Jul 1, 2009 8:03pm Jul 1, 2009 8:03pm
Quoting steve930
If you read the whole post it says:

"FXCM has introduced a new feature called OCO (One Cancels the Other) entry orders, which will provide traders with the same functionality as stop and limit orders except that they are not linked to any position. For additional information, please visit the "NFA FIFO (First in, First Out) Rules"

MB Trading has something similar that does the same thing as a stop and limit order. It seems that it just can't be linked to an open order. No big deal, it has the same function and result.
True, but I dont know how that works in metatrader.
  • #15
  • Jul 1, 2009 8:50pm Jul 1, 2009 8:50pm
Quoting Verto
True, but I dont know how that works in metatrader.
I'm with MB Trading, who are an ECN and about to launch live MT4. They already have it in demo and said they will have a fix to the FIFO rule. They already have it in their live platform where two trades are averaged and made one trade, so there is no problem. We'll see how it goes with MT4. I suspect that the reason these bucket shops can't handle it is that they want to keep an advantage.
  • #16
  • Jul 1, 2009 8:53pm Jul 1, 2009 8:53pm
Steve,

Does that mean, i have to watch my order all day live without stop loss and when the trade goes against me, i have to move it into OCO to close the order ????
  • #17
  • Jul 1, 2009 9:48pm Jul 1, 2009 9:48pm
Quoting sofia101
Yes I did and I am transferring to fxcm uk
sofia101,

I'm thinking of transferring my account to FXCM UK as well but will the money in our accounts be safe or be put into segregated accounts since we will have to follow the rules of a foreign country and maybe put ourselves at their mercy?
  • #18
  • Jul 1, 2009 9:51pm Jul 1, 2009 9:51pm
Dump spot forex and trade futures contracts longer term and none of this is an issue.
  • #19
  • Jul 1, 2009 11:19pm Jul 1, 2009 11:19pm
This sucks big time. I get the impression that there are too many traders out there making a living using EAs and not sitting in front of the computer all day - possibly making the professionals look bad.

The playing field can't be level for too long.
  • #20
  • Jul 1, 2009 11:50pm Jul 1, 2009 11:50pm
New NFA rule may be.
You are not allowed to withdraw profit more than your initial investment.
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