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CFTC + NFA: End Of Hedging?

  • #21
  • Apr 28, 2009 9:20pm Apr 28, 2009 9:20pm
It's time to quit FX and trade derivatives. Futures and options. I've been quite profitable so I'm thinking of just trading the Micro and Standard FX options with CME. None of this stop hunting bucketshop broker garbage.
"Diversification is an excuse for a lack of talent" ~FXC
  • #22
  • Apr 28, 2009 10:28pm Apr 28, 2009 10:28pm
I read most of the post and find some replies pretty funny and stupid at the same time

1) This doesn't benefit US brokers, since companies outside USA can offer high leverage and hedging feature

2) Most of you dont realize that there is another part of the rule which will hurt most of USA brokers and their clients. The rule states that:A customer may, however, direct the FDM to offset same-size transactions even if there are older transactions of a different size.

Which means we no longer can cherry pick which postion to close, unless the position we are closing is a different size from prior open open positions.

3) Now regarding hedging, in the real world that is no such thing as hedging a position. I believe the NFA are trying to protect the client in this case, since clients although "hedged" will still get their postions swaped. Which means we are getting charged even if we are hedged.

4) Maybe i am missing something, but why not just close a position instead of placing a hedge. What is the benefit of doing this, I never could understand why would I ever want to do that. I can understand doing a 3 way hedge and try to do a swap arb, but why would you have a sell EURUSD and a BUY EURUSD open positions. Please somebody explain to me.

Anyways in my opinion, I think NFA wants to get rid of all forex brokers, and so far they have been doing a good job. I know that i am moving my account ofshore in a few weeks.
  • #23
  • Apr 28, 2009 11:50pm Apr 28, 2009 11:50pm
Quoting gspajon
I just became aware of this rule and for me it is very disturbing as my whole stragey depends on what would be considered "hedging". I open and trade on an intraday time frame and carry it out (assuming it survives) to a longer time frame.

While this longer trade is running, if in a couple of days a trade comes along in the opposite direction, I'll take that trade (assuming it meets the entry criteria) and hold it as long as it will go. I don't necessarily cancel the other open trade, as the more recent trade may just be a retracement.

So...

This new NFA rule which makes me lose money claiming it saves me from losing a spread but in facts it makes me lose a whole position.

And if I run 2 expert advisors which might open two opposite positions , they automatically close one position with this new rule , thus making me to lose big, screwing the whole strategy ...WHAT PROTECTION is this ?

Folks , let's make a list of metatrader-no NFA brokers please, i need a couple of them...thank you
  • #24
  • Apr 28, 2009 11:58pm Apr 28, 2009 11:58pm
Quote
Which means we no longer can cherry pick which postion to close, unless the position we are closing is a different size from prior open open positions

Maybe I need more coffee, could you help me follow you logic?

Thankyou, Sorry I don't get it.

Dale
  • #25
  • Apr 29, 2009 9:46am Apr 29, 2009 9:46am
Quoting Redox77
This new NFA rule which makes me lose money claiming it saves me from losing a spread but in facts it makes me lose a whole position.

And if I run 2 expert advisors which might open two opposite positions , they automatically close one position with this new rule , thus making me to lose big, screwing the whole strategy ...WHAT PROTECTION is this ?

[color=black][font=verdana]Folks , let's make a list of metatrader-no NFA brokers please, i need a couple of them...thank...
I have opened a classic account with Alpari-UK. Only problem is I am not sure yet if they allow 0.01 lots.
  • #26
  • Apr 29, 2009 9:53am Apr 29, 2009 9:53am
quote=neshuti;2701526
(...)

3) Now regarding hedging, in the real world that is no such thing as hedging a position. I believe the NFA are trying to protect the client in this case, since clients although "hedged" will still get their postions swaped. Which means we are getting charged even if we are hedged.

This is the only drawback I see in hedging. It is the price you pay for holding two open contracts.

4) Maybe i am missing something, but why not just close a position instead of placing a hedge. What is the benefit of doing this, I never could understand why would I ever want to do that. I can understand doing a 3 way hedge and try to do a swap arb, but why would you have a sell EURUSD and a BUY EURUSD open positions. Please somebody explain to me.

Strange as it may seem, I do it for simplicity. The strategy I use does not account for individual trades but for a sequence of trades that should have a positive global outcome. Hedging saves me from keeping track of dead trades.

Anyways in my opinion, I think NFA wants to get rid of all forex brokers, and so far they have been doing a good job. I know that i am moving my account ofshore in a few weeks.

I am moving away, too. But I will keep some funds to trade the style they are trying to impose.
  • #27
  • Apr 29, 2009 9:11pm Apr 29, 2009 9:11pm
Quoting Dale
Maybe I need more coffee, could you help me follow you logic?

Thankyou, Sorry I don't get it.

Dale


Here is an example:

you have the following position:
1) 2 lots
2) 2 lots
3) 7 lots

If you want put a conditional order on the 2nd 2 lot position, you will no longer be able to do so because your first positon is the same size as the one you are trying to close

now if your order goes like this
1) 2 lots
2) 7 lots
3) 2 lots

If you want to close 7 lots, you will be able to do so beacuse the previous position is a different size

That is the stupid rule that NFA came up with.

hope that helps
  • #28
  • Apr 30, 2009 7:04am Apr 30, 2009 7:04am
Quoting neshuti
Here is an example:

you have the following position:
1) 2 lots
2) 2 lots
3) 7 lots

If you want put a conditional order on the 2nd 2 lot position, you will no longer be able to do so because your first positon is the same size as the one you are trying to close

now if your order goes like this
1) 2 lots
2) 7 lots
3) 2 lots

If you want to close 7 lots, you will be able to do so beacuse the previous position is a different size

That is the stupid rule that NFA came up with.

hope that helps
I agree.
Brokers , though , are still allowed to hedge all clients positions, so NFA is protecting brokers not traders.
  • #29
  • Apr 30, 2009 7:57am Apr 30, 2009 7:57am
Quoting Redox77
I agree.
Brokers , though , are still allowed to hedge all clients positions, so NFA is protecting brokers not traders.

i would have to disagree with you, NFA are trying to protect the clients or so they think they are protecting clients. Especially clients who invest in a money manager, they are trying to avoid fraud and ponzi type of schemes.

In any case US brokers and their clients are getting hurt by all these changes.
  • #30
  • Apr 30, 2009 3:47pm Apr 30, 2009 3:47pm
I found this:

For Those of You Who Supported The NFA On The New NO-HEDGING Rule...You Otta LOVE This Little Extra.... Now they are taking away STOPS and LIMITS Also...

I just learned today that the NFA is also imposing additional changes as part of their new rule on hedging that we did not previously know about. The early information that I have about this new part of the rule is going to be very disruptive to trading through any US entity regulated by the NFA.

The basic information that I have at this point is that ALL trades will be required to be executed on a "first-in, first-out" basis. Meaning clients can not manage positions on a per ticket basis. Example: client buys 1 lot EUR/USD, then buys a second lot of EUR/USD. If the client for whatever reason wishes to close out second lot (it's profitable while the first one is not), it will NOT be possible. First lot must be closed out first.

This also means that traders will not be able to place stops and limits on individual tickets and will not be able to close positions from the open positions window. To close a trade, the trader must place a new market order in the opposite direction. Stops and limits will no longer exist, the trader needs to place an entry order to close the trade at a specified price.
From the information we have at this point, the NFA wants these changes to go into effect on May 15th.

I sure hope you idiots who were in support of Rule 2-43(b) are happy now! But I think we can effectively say GOOOOD-BYE to Spot Forex in the United States.
Boycott GFT for NFA hedge rule
  • #31
  • Apr 30, 2009 4:52pm Apr 30, 2009 4:52pm
Quote
The basic information that I have at this point is that ALL trades will be required to be executed on a "first-in, first-out" basis. Meaning clients can not manage positions on a per ticket basis. Example: client buys 1 lot EUR/USD, then buys a second lot of EUR/USD. If the client for whatever reason wishes to close out second lot (it's profitable while the first one is not), it will NOT be possible. First lot must be closed out first.

If you have two open positions on the same currency (say, one lot EURUSD at 1.3000 and two lots EURUSD at 1.3200), it does not matter when you close either trade. The net position is always the same.

Buy 1 lot at 1.3000, buy 1 lot at 1.3100. Average position is 2 lots at 1.3050. Set up any scenario you want, no matter what order you close the trades in, your final profit will remain the same. I encourage you to work the math our yourself to see why FIFO is only an accounting change, it won't change any of your actual profits.

I don't use an MT4 platform (except for charting), so I'm not sure how the ticket system for orders works, there's plenty of platforms that don't use this system to begin with though and aren't affected by any of these new changes. It would seem for those who use these platforms that they will have issues, I'm sure the brokers will work them out though.

I use MBtrading, you can not different positions in one currency in one account. You can only have one position in any currency, any further moves are put in place against this position (FIFO). If I buy 1 lot EURUSD at 1.3000, and another at 1.3100, I don't have two open positions, I have one 2 lot position averaged at 1.3050. If I sell one lot, it will sell against the averaged position. I assure you I and many other traders can still use stops and limits
  • #32
  • May 1, 2009 1:27pm May 1, 2009 1:27pm
Love fxdd

To our valued clients.

FXDD encourages you to continue to trade as you always have. We have always had solutions to the new NFA hedging rule that will not cause you to change your trading strategies. We will keep you advised.

The FXDD team.
Boycott GFT for NFA hedge rule
  • #33
  • May 1, 2009 4:57pm May 1, 2009 4:57pm
That is great news from FXDD. But I doubt they can hold it. They aren't NFA members but CFTC is authority, isn't it? Unfortunately, I believe if anybody sticks to not accepting regulators' nonsense, the only solution will be to trade elsewhere out of USA.
  • #34
  • Edited 5:37pm May 1, 2009 5:27pm | Edited 5:37pm
Quoting neshuti
i would have to disagree with you, NFA are trying to protect the clients or so they think they are protecting clients. Especially clients who invest in a money manager, they are trying to avoid fraud and ponzi type of schemes.

In any case US brokers and their clients are getting hurt by all these changes.
Till now NFA regulation was a must for me when i was looking for a broker...like you said for protection against those brokers who intended to spent clients money and dissapear...but now i'm not so sure:

What protection is this : for a lousy 3 pip spread protection , they make me a lose an entire position now..

Besides what help is that when someone restricts someone-elses options it has ???

This rule makes all forex a mess : now you will have to think :

oH boy , I am allowed to close this position ??
oh no , I am not allowed , I have to close the other one first ...
  • #35
  • Edited 5:04pm May 2, 2009 2:38pm | Edited 5:04pm
RE: NFA Compliance Rule 2-43 regarding forex orders.

Let me first apologize to any and all who feel this post does not belong here. It is just the loss of freedom is something I feel very strong about.

So what was the NFA actually telling us as retail currency traders when they took away Hedging?

“Since many of you are too incompetent to use Hedging intelligently, we’ll just have to protect you from yourselves.”


At first I felt we were being punished as a group because of the ineptitude of a few.

Well I don’t know about the rest of you but now I feel a lot insulted and a bit nervous.

If the NFA gets enough complaints about retail 4x as a whole, will this be a signal to the NFA to protect us again.

To protect us by not allowing us to trade retail 4x at all?

And if retail 4x goes down the tubes, how long before all retail trading is outlawed under the guise of protecting them from themselves?

I get angrier every time I think about it, and it’s raising a bunch of other specters in my mind.

Like who stands to gain by eliminating the retail traders?

Who’s afraid enough of the concept of retail traders, to feel the need to oppress us and why?

Well our independent, freedom-loving ranks do cut into the mindless slave labor force.

Is it something even more malevolent?
Is something even more insidious on the horizon?
The possibility has been brought to mind.


If at this point I sound a bit paranoid like a conspiracy nut,
it doesn’t mean there is no reason to be paranoid or there is no conspiracy.

Are we, under the guise of being helped, actually being Protected Into Oblivion?

Who asked for their help anyway?
How many complaints from a bunch of disgruntled losers does it take for the NFA to get tired of hearing about it and to decide to act against the betterment of the whole?
(This is actually how the rule came about by the way. The NFA just got tired of listening to the complaints and decided to eliminate the cause of the complaints. How do I know? I asked.)

And what's really scary is, that's all it took - the squeaky wheel gets the oil.

Ps: I remember Kent State for those who don't.
(Think Tiananmen Square - yes it can and did happen here.)
fxScavenger Arrogance is just Ignorance misspelled. abso-PIPn-lutely
  • #36
  • May 2, 2009 5:04pm May 2, 2009 5:04pm
Quoting fxScavenger
RE: NFA Compliance Rule 2-43 regarding forex orders.

Let me first apologize to any and all who feel this post does not belong here. It is just the loss of freedom is something I feel very strong about.

So what was the NFA actually telling us as retail currency traders when they took away Hedging?

[center][font=Times New Roman][size=3]“Since many of you...

BEAUTIFUL. I know it is off topic, but I will comment as way anyway.

I used to question why so many of the EXTREME wealthy would support liberal economic policies in our land of prosperity. Why so much support for Obama and his cronies, who might very well bankrupt this once great society with their $5 trillion of debt.

But it all makes sense. The EXTREMELY wealthy fear the working class. Because if the working class wakes up in a land of free economic prosperity, then the extremely wealthy will watch their wealth disappear.

What we are starting to witness is the EXTREMELY wealthly trying, IMO, to set themselves up as a "royal" class. Wealth and power that cannot be challenged. And one very important move would be to shut down all opportunities for the working class to advance their lives.

I don't know if there is a solution, other than for everyone to keep their eyes open, and make sure we don't let the govt. take away our freedom to advance ourselves economically.

Yes, this is a HUGE red flag and ALL traders should take note.
  • #37
  • May 2, 2009 6:07pm May 2, 2009 6:07pm
Quoting unlv_tj
BEAUTIFUL. I know it is off topic, but I will comment as way anyway.

I used to question why so many of the EXTREME wealthy would support liberal economic policies in our land of prosperity. Why so much support for Obama and his cronies, who might very well bankrupt this once great society with their $5 trillion of debt.

But it all makes sense. The EXTREMELY wealthy fear the working class. Because if the working class wakes up in a land of free economic prosperity, then the extremely wealthy will watch their wealth disappear.

What we are starting...
Thank you for responding,

Sometimes I feel I'm the only one that see's the bigger picture.
What people don't realize is governments work in much bigger time frames.
They're agenda's span decades, the cold war with the USSR was a war of financial attrition that lasted what almost 50 years. The public school system has been being dummmed down since 50's maybe even earlier.
Keep them too stoopid to question, and when that doesn't work keep them too busy to notice or if they do, to have time to react or do anything about it. It's become a game of mis-direction.

So guy,

What do you trade, currencies, stocks ......?
fxScavenger Arrogance is just Ignorance misspelled. abso-PIPn-lutely
  • #38
  • May 3, 2009 4:11pm May 3, 2009 4:11pm
I just developed and am testing an EA that is doing very well in the live market... however, it does use a semi-hedging strategy... hundreds of hours of development out the window and for no good reason other than the greed of brokers. Will be moving my account (substantial) offshore... bye bye us brokers...
mdc
www.forexsignalsguide.com
  • #39
  • May 3, 2009 7:55pm May 3, 2009 7:55pm
FXDD send this e-mail 2 days ago:
To our valued clients.

FXDD encourages you to continue to trade as you always have. We have always had solutions to the new NFA hedging rule that will not cause you to change your trading strategies. We will keep you advised.
The FXDD team.
Trading for living & living for trading.
  • #40
  • Edited 8:50am May 4, 2009 8:33am | Edited 8:50am
Quoting fxScavenger
RE: NFA Compliance Rule 2-43 regarding forex orders.


So what was the NFA actually telling us as retail currency traders when they took away Hedging?

“Since many of you are too incompetent to use Hedging intelligently, we’ll just have to protect you from yourselves.”

Yes , true,..

And after all is MY money , I should be able to lose them how I want ( I'm not joking here ) , I mean If I want to lose those 3 pips spread on GBP / USD by hedging ( NFA, huge loss , by the way : 3 pips !!!!! ) , that's my choice..


NFA doesn't hear those a lot of traders complaints about that overdose of REQUOTES , OFF QUOTEs, against stop hunting ,artificial spikes comparing with an ECN broker, over-slippage ?

NFA please don't protect me against a lousy 3 pips spread, it's RIDICULOUS.
What kind of help is that help , having as a result ,a shrink in the options you might have ?
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