New First In First Out Rule From July 31st

I just called IBFX about this new rule......

They said that it applies to trades made on the same currency pair and same lot sizes .....The first trade has to be closed out before the last trade if the lot size is the same.

If the lot sizes are different then the rule does not apply.

Does any one have any thoughts on this new rule or how it will effect trading.


<quote>
To our valued clients,

As you may know, the National Futures Association (NFA), has implemented new First-in, First-out (FIFO) requirements that will be in effect as of July 31, 2009. We at Interbank FX have been working hard on a solution and are confident that our traders will be able to use our MetaTrader 4 platform with little or no interruption. They will also continue to be able to use their MT4 expert advisors.
The NFA is striving to ensure the highest levels of integrity from all market participants and their intermediaries. We want to assure you that Interbank FX strives to be 100% compliant with the NFA.
We are currently working on some informational and instructional videos regarding the FIFO requirements and our solution, however most of you will be able to continue trading without any impact to your platform or strategies. In our effort to provide the best solution for your trading, you will be fully advised prior to any proposed changes.
We thank you for your continued support and wish you the best of luck with your trading.

Best regards,
IBFX </quote>

Hi Bill,

My thoughts... obama + free market reform + NFA control - speculator = governmental ownership

....could effect the way we use limit order, take profit, and stop losses as well.

If the old saying hold true and S*** indeed rolls downhill then its a big hill with a lot of little stops along the way...

Hi Bill,

I was blown away about this when I first became aware of it. First I had to stop using my hedging strategy which I liked very well, and now that I've adjusted to no hedges by holding some positions longer and scalping additional positions afterward, I am left with more confusion. Now I will need to enter small so I can absorb the the whipsaws and add to my initial position.

Thanks for mentioning that you can get past the FIFO rule by using different lot sizes. Just another hoop to jump through now...if you are right about that.
I must wonder what's next? Every time I develop a winning strategy the rules change and it becomes a new game. I hope more people ring in on this issue. It will be intersting to see how others will approach the new game.

Well at least with Oanda as you add orders for the same pair and you use a percent of account balance for order size every order will be slightly different.

What possible use can this new rule serve? Anybody have an answer that makes any sense?

Maybe this new rule is designed to reduce volitility and huge daily swings that some of the pairs have.

Just a thought.

if you have two identical orders with the same lot size... according the the new rule you cant close, place a stop loss or take profit on the second order without closing the first order. One way to work around that is to close 0.01 of the first order .....and bingo the lot sizes have changed and are no longer the same, you can now modify your second order.

OR

Simply open each order with different lot sizes

Retail traders comprise such a small portion of the market (<1-2% I believe), and since institutional players aren't affected by this ruling (and since they don't trade this way), it wouldn't change much.

This is part of Obama's job creation plan. He can add a few thousand government positions to monitor, enforce, prosecute, and guard prisoners based on this new rule.

just kidding

But hey, Change we can believe in, right?