New Leverage rule for FX COMING? | Page 3 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

High leverage vs Low leverage 74 replies

High Leverage vs Low Leverage 21 replies

High Leverage vs Low Leverage 20 replies

Leverage is coming down 11 replies

Proposed New Leverage Legislation 10 replies

Attachments: New Leverage rule for FX COMING?
Exit Attachments

New Leverage rule for FX COMING?

  • #41
  • Jan 18, 2010 10:18am Jan 18, 2010 10:18am
Quoting m78
this IS NOT true...

most people trade with a strategy that maximizes their account/risk with regards to being both profitable and taking measurable risk. So if someone needs say $10K right now to trade with confidence then with 10 times less leverage the trader will need $100K total or assume 10 less risk = 10 times less profit

of course if someone has $10K and trades nano lots ... using really 10:1 or less then of course such a trader is just having a hobby ... makes no money and will not be affected

but if you want to make any money out of...
u say u should to put all your money in work even u risk only 0.5% , ok lets give an example here , account with 10K$ he wants to use all-in with a 100:1 broker , which means 1 million USD/YEN for example and he want to risk 0.5% which equals to 50 $ from his account , now 1 million USD/YEN the 1 pip = 108 $ , then he should to put his stop half pip away ! what about the spread , All-IN with 100:1 u cant risk 0.5% only even 5% is difficult , where u will put your stop ?
  • #42
  • Jan 18, 2010 10:33am Jan 18, 2010 10:33am
If leverage is reduced to 10:1. Most will trade with less than 5:1 leverage. You still have to account for draw down or blow your account.

With leverage now at 100:1, most trade with a lot less than 50:1 (more like 20, 25, or 30) to allow for draw down.
  • #43
  • Jan 18, 2010 10:41am Jan 18, 2010 10:41am
Many (Michael Greenberg 4 e.g) believe the decission has already been taken...Thank goodness Europe is ready to take advantage and your money!

Will the last one to leave the US Forex industry, please switch off the lights!
  • #44
  • Jan 18, 2010 10:42am Jan 18, 2010 10:42am
Quoting GulfCoastPip
If leverage is reduced to 10:1. Most will trade with less than 5:1 leverage. You still have to account for draw down or blow your account.

With leverage now at 100:1, most trade with a lot less than 50:1 (more like 20, 25, or 30) to allow for draw down.
even if u trade all-in with a 10:1 u have 50% drawdown untill u get margin call ...
  • #45
  • Jan 18, 2010 10:53am Jan 18, 2010 10:53am
Quoting tar
even if u trade all-in with a 10:1 u have 50% drawdown untill u get margin call ...

Re-read my post!
  • #46
  • Jan 18, 2010 10:54am Jan 18, 2010 10:54am
Quoting tar
u say u should to put all your money in work even u risk only 0.5% , ok lets give an example here , account with 10K$ he wants to use all-in with a 100:1 broker , which means 1 million USD/YEN for example and he want to risk 0.5% which equals to 50 $ from his account , now 1 million USD/YEN the 1 pip = 108 $ , then he should to put his stop half pip away ! what about the spread , All-IN with 100:1 u cant risk 0.5% only even 5% is difficult , where u will put your stop ?
you didn't get it ... so I'll have to give you an example

1) you have 10,000 USD in your account
2) you risk 0.5% per trade max
3) your smallest stop loss is 30 pips (including spread)
4) 0.5% out of 10K is $50 which you risk
5) $50/30 pip = 1.66 $/pip which is a 1.66 minilots
6) assuming GBP/USD 1 minilot is around 160$ of margin at 100:1
so you have to have 1.66*160=~ $266 to cover 1 trade on 1 currency
7) with 10:1 you'll have to have $2666 to cover your 1 trade with 1 currency
8) suppose you spot another currency which you want to participate at the same time ... so you'll tie about $5000 for margin requirements with 2 trades ... that's half of your account

I guess that example is OK for some ... but suppose you risk 1% of the account which is still reasonable ... then you'll need $5000 for 1 trade ... and you can't place two trades since you would have to have $10K for margin only

If you're more aggressive and you risk 2% per trade you'd have to have 10K per that same trade. So no room for your trade ... since you need 10K for margin and $200 = 10200 (since you're risking 2% of 10K).

There's another argument that with higher leverage (100:1 or more) you can deposit little with the broker and still trade as though you'd have more deposited. That's probably why they're limiting it ... since some people borrow $10K or more from high interest credit card and trade as though they'd have $1MIL loosing $10K in a few trades
  • #47
  • Jan 18, 2010 10:59am Jan 18, 2010 10:59am
Quoting m78
you didn't get it ... so I'll have to give you an example

1) you have 10,000 USD in your account
2) you risk 0.5% per trade max
3) your smallest stop loss is 30 pips (including spread)
4) 0.5% out of 10K is $50 which you risk
5) $50/30 pip = 1.66 $/pip which is a 1.66 minilots
6) assuming GBP/USD 1 minilot is around 160$ of margin at 100:1
so you have to have 1.66*160=~ $266 to cover 1 trade on 1 currency
7) with 10:1 you'll have to have $2666 to cover your 1 trade with 1 currency
8) suppose you spot another currency which you want to participate...
When i said b4 all-in with a 100:1 leverage is a losing game i mean all-in in one trade in one pair i dont mean in diffrent instruments diffrent pairs this is not what i mean ....
  • #48
  • Jan 18, 2010 2:37pm Jan 18, 2010 2:37pm
Ok gize and galz,

This should give everyone the "miracle grow" they need to grow some balls and take a stand.

Draft a letter to the CFTC. Everyone stand together. Will it really hurt you if you stand against the rule change of 10:1 even if you trade at 10:1 now? You might lose 30 min of your time to draft a letter. 30 min less time for you to waste in here?

The market is a huge place where many strategies are born. Does this make it wrong if someone needs 100:1 or more to make their strategy work? So stop trying to use fuzzy math to spread a bunch of non-sense.

This market isn't a one size fits all, just like the jeans you wear don't fit your neighbor. If the lawmakers fracture us we amount to nothing. Standing together we are the 1 ton elephant in the room.

Below is a snapshot of IBFX responce I received today. Get active and get the word out, stop arguing over stupid math you can't comprehend. I can tell you without question you are wrong. I was trading at 400:1 what feels like last week and I had to adjust significantly to maintain the same risk levels of my current strategies.

It's not anyone's fault but your own that you didn't stay awake in math class. Now is not the time for an algebra lesson. Stop making excuses and draft a letter to the CFTC against 10:1 or anything less than 100:1 for that matter. It will not hurt you in any way to join with the elephants in the room. You can continue to trade with your 10:1 if you so choose once the dust settles.
Attached Image (click to enlarge)
Click to Enlarge Name: ibfx_response.jpg Size: 64 KB
  • #49
  • Jan 18, 2010 2:50pm Jan 18, 2010 2:50pm
I also wrote a letter yesterday even though leverage is not a big deal for me.
It's the loss of jobs that concerns me.
  • #50
  • Jan 18, 2010 3:00pm Jan 18, 2010 3:00pm
Quoting pip_seeker
Ok gize and galz,

This should give everyone the "miracle grow" they need to grow some balls and take a stand.

Draft a letter to the CFTC. Everyone stand together. Will it really hurt you if you stand against the rule change of 10:1 even if you trade at 10:1 now? You might lose 30 min of your time to draft a letter. 30 min less time for you to waste in here?

The market is a huge place where many strategies are born. Does this make it wrong if someone needs 100:1 or more to make their strategy work?...
lol , good luck
  • #51
  • Jan 18, 2010 3:08pm Jan 18, 2010 3:08pm
Oanda

http://www2.oanda.com/cgi-bin/msgboa...;f=16;t=012016
  • #52
  • Jan 18, 2010 3:27pm Jan 18, 2010 3:27pm
Quoting tar
Oanda

http://www2.oanda.com/cgi-bin/msgboa...;f=16;t=012016
Hey everyone...you may already noticed, but according to that Oanda statement, we need to include our address and contact info in the emails we send to the CFTC in order for them to be considered:

"The easiest way to give feedback is to send an email to [email protected] with “Regulation of Retail Forex” in the subject line. However, you must provide your address and contact information in the email in order for it to be considered by the CFTC."

Just in case, I resent my earlier email to them with this info; FYI...
  • #53
  • Jan 18, 2010 3:43pm Jan 18, 2010 3:43pm
Quoting TC East
Just in case, I resent my earlier email to them with this info; FYI...

Me too.
  • #54
  • Jan 18, 2010 6:00pm Jan 18, 2010 6:00pm
Quoting pip_seeker
Below is a snapshot of IBFX responce I received today.
Thanks for posting this image.

It's good to know that those CFTC bastards have a fight on their hands to deal with. That'll keep them from sleeping well at night.
  • #55
  • Jan 18, 2010 6:36pm Jan 18, 2010 6:36pm
Quoting kibescorp
Thanks for posting this image.

It's good to know that those CFTC bastards have a fight on their hands to deal with. That'll keep them from sleeping well at night.

yeah I heard FXCM quote that the FX business in the U.S. is a billion dollar a year industry.

Them boys at the CFTC better lawyer up! If it goes lower than 100:1 my money is leaving U.S. jurisdiction. Like hell if I am going to rework my strategies all over again after all this FIFO and no hedge BS plus dropping from 400:1 to 100:1 on top of all that.

Enough is enough. The bad part in all this is there have been a good number of rules here passed to protect the trader better. So I really hope it doesn't become nothing more than a waste.

In a perfect world morons would not be in charge of drafting laws and legislation on something they don't comprehend let alone understand. It's clear they don't get FX.

I know I harp on this alot, but please send in the letters to the CFTC folks. It also can't hurt to send in letters to your congress reps as well. It's not over till it's over. Keep spreading the word.
  • #56
  • Jan 18, 2010 6:54pm Jan 18, 2010 6:54pm
10:1 won't change anything it'll just restict to $1 per pip for longer and make the Min balance before getting Margined £500 ( Currently £50 ) or maybe £1000, I'll still keep adding £100 to play with as and when required over that.


So it'll just mean £950 more of mine goes into FXCM's hands.


Thankfully should effect UK Dealers I HOPE!!


The world is turning into a nanny state, how long before you aren't allowed to crosss the road because it's too dangerous!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #57
  • Jan 18, 2010 7:35pm Jan 18, 2010 7:35pm
"Nanny" is just the excuse. It's about the power to control your life and a way to ensure their corporate owners get their due.

This is corruption, pure and simple.
  • #58
  • Jan 18, 2010 7:43pm Jan 18, 2010 7:43pm
Could it be that CFTC/NFA would like us traders to PUT MORE MONEY and therefore provide these brokers more money in hand?

ie,
Are they (brokers) suffering from LOW LIQUIDITY?
Are they (brokers) needing money to give themselves fat bonuses?
  • #59
  • Jan 18, 2010 7:44pm Jan 18, 2010 7:44pm
Quoting Rabid
"Nanny" is just the excuse. It's about the power to control your life and a way to ensure their corporate owners get their due.

This is corruption, pure and simple.

The only reason to do it is to stop the small investors who's combined losses don't add upto 1 fat bonus check for a Pro trader the problem is we keep plugging for years and even at 5% cracking it make enough to hurt them big time, so they want rid of us pure and simple.

Where as the Big money traders don't think too much about sinking in $200K for a play in the evening cause there bored, lose it quite rapidly and never try again and there is enough of these people to pay for every fat bonus and every other expense they occur in the entire world for serious, how else do ALL big trading companies make a profit the money has to come from somewhere.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #60
  • Jan 18, 2010 7:54pm Jan 18, 2010 7:54pm
Quoting pip_seeker
..................
The market is a huge place where many strategies are born. Does this make it wrong if someone needs 100:1 or more to make their strategy work? So stop trying to use fuzzy math to spread a bunch of non-sense.

This market isn't a one size fits all, just like the jeans you wear don't fit your neighbor..................
You are right and it could not have been put any better.

The discussion about high leverage has been going on for as long as there have been forex discussion boards.

This is where we stand:

Traders who use HIGH leverage understand why some traders use LOW leverage.

Traders who use LOW leverage DONT undertsand why some traders use HIGH leverage.

My strategy works with HIGH leverage and 400-1 the better and lucky I don't live in the U.S.
0 traders viewing now