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Help To Stop 10:1 Leverage

  • #41
  • Jan 17, 2010 12:43pm Jan 17, 2010 12:43pm
I wish there was a license for having a child but alas that isn't the case and far far too often the consequences are truly tragic


whats the saying? an idiot and his money are soon parted?

Survival of the Fittest - Mother Nature.
Nihil inimicus quam sibi ipse Marcus Tullius Cicero
  • #42
  • Jan 17, 2010 12:44pm Jan 17, 2010 12:44pm
Quoting coscorp
I wish there was a license for having a child but alas that isn't the case and far far too often the consequences are truly tragic
....
Isn't that the truth!!!
  • #43
  • Jan 17, 2010 12:52pm Jan 17, 2010 12:52pm
I love how people get on this bandwagon about how this is designed to crush the small investor (including myself up to a few minutes ago). What other venue allows for 100:1 or greater leverage? None that I know of. So lets do some math under the 10:1 leverage rule.

Let's say Joe Schmoe has $1,000 to put into the Forex market. And let's say that he has done his homework and researched and tested and practiced and other than a few stumbles in the beginning gets to where he is making a reasonable 40 pips a day on average. Some days better than others. Based on a 30 pip stop and a 0.3% risk per trade (read that percentage again), that's right 0.3% risk per trade (1 micro lot per 1,000 in the account roughly). After 1 year he looks at his account and sees that he has growth in his account of over 100%. Yep, he doubled his account. After 5 years he has over 100k in the account.

Yes, I realize that most people won't be able to make 40 pips a day. And yes, I realize that there will be losing days. So what?!?!? So it takes 6 or 7 years to reach 100k. Big deal! I can almost guarantee that he would not be able to do that trading stocks. And let me clue you in on a little secret..... if after doing this for 2 years you can't make a consistent 40 pips a day.... quit, go do something else you are not cut out to be a trader.

The thing that is really giving Forex a bad name is this get rich overnight mentality that exists within both the brokers and the traders. I am sure that the CFTC, FINRA, NFA, etc have been inundated with stories of how someone came in with 1,000 bucks and lost it all in just a few minutes because they were buying standard lots with it because they could and how it was the brokers fault because they offered such a high leverage.

Now, with all that said, let me say that I am a big fan of high leverage because of what you can do with it IF you use it correctly. I just wanted to point out that the little guy really isn't being cut out if this passes.
  • #44
  • Edited 1:24pm Jan 17, 2010 12:57pm | Edited 1:24pm
Magnum,

For me it's about more government involvement in my life.

It shouldn't be any of their business what I want to risk. All that should matter to the gov is how much money I made so they can tax the heck out of it.

For the record, I never use more than 25-30:1 leverage. Most of the time it's much less. That's not the point though.

This is my point: It shouldn't be any of their business what I want to risk. All that should matter to the gov is how much money I made so they can tax the heck out of it.
  • #45
  • Jan 17, 2010 12:58pm Jan 17, 2010 12:58pm
Quoting magnumfreak
I love how people get on this bandwagon about how this is designed to crush the small investor (including myself up to a few minutes ago). What other venue allows for 100:1 or greater leverage? None that I know of. So lets do some math under the 10:1 leverage rule.

Let's say Joe Schmoe has $1,000 to put into the Forex market. And let's say that he has done his homework and researched and tested and practiced and other than a few stumbles in the beginning gets to where he is making a reasonable 40 pips a day on average. Some days better than others....
The herd will always be seperated from their money no matter the leverage... only slower...

Maybe crush is a harsh word.. but definitely it will substantially limit and inhibit the growth of the non lemmings among us.

And I would say when you first realized that you were profitable and had "gotten it" you would of been mad as hell if they wanted to gut your leverage by 90%.

So to sum it up... it won't protect the herd... and it definitely won't help the small profitable trader. So who does it help?

$1,000 dollar account with 5% risk. Hypo: 20 sl and 40 tp.

100:1-Yeah we can do that!

10:1-Nope sorry we must protect the lemmings!

The reduction will only protect old money and inhibit new money.
  • #46
  • Edited 1:15pm Jan 17, 2010 1:00pm | Edited 1:15pm
$500 day trading margins are very common (almost a standard) in US futures market 9regulated by CFTC) where most contracts traded on CME are valued $50,000 to $100,000. Why should Spot Forex be any different?

[quote=magnumfreak;3373121]I love how people get on this bandwagon about how this is designed to crush the small investor (including myself up to a few minutes ago). What other venue allows for 100:1 or greater leverage? None that I know of. So lets do some math under the 10:1 leverage rule.
  • #47
  • Jan 17, 2010 1:00pm Jan 17, 2010 1:00pm
Quoting GulfCoastPip
Magnum,

For me it's about more government involvement in my life.

It shouldn't be any of their business what I want to risk. All that should matter to the gov is how much money I made so they can tax the heck out of it.

For the record, I never use more than 25-30:1 leverage. Most of the time it's much less. That's not the point though.

This is my point: It shouldn't be any of their business what I want to risk. All that should matter to the gov is how much money I made so they can tax the heck out of it.
I agree 100%. They should keep their noses out of most of what they have it in already. I just wanted to make the point that if this does go through it really isn't the end of the retail trader. Just means it will take longer.
  • #48
  • Jan 17, 2010 1:02pm Jan 17, 2010 1:02pm
Quoting yesbee1
$500 day trading margins are very common (almost a standard) in US futures market where most contracts are values $50,000 to $100,000.

.
And you can lose much more than you have in your account.
  • #49
  • Jan 17, 2010 1:08pm Jan 17, 2010 1:08pm
Rule won't pass, don't worry. If they do this, ALL THE AMERICAN BROKERS will just have to outsource because no one will open an account of 10:1 leverage when you can open an account 200:1 in Asia. Making a lot of missed profit for the country and people angry.
  • #50
  • Jan 17, 2010 1:16pm Jan 17, 2010 1:16pm
Margin calls are present to prevent losing more than what you have in account. In any way, it should be up to the trader. The Gvt should not have a say. BTW most day traders I know use 25:1 OR 30:1 leverage.
Quoting magnumfreak
And you can lose much more than you have in your account.
  • #51
  • Jan 17, 2010 6:28pm Jan 17, 2010 6:28pm
Quoting Deusomega
Protect the people with no responsibility for themselves to the detriment of the little guys who actually think before they do.

Sure lower leverage won't hurt vets like yourself who already have a nice bit of capital built up... but the lower leverage sure sucks for those who are learning how to DO, but still have low capital. I've never got the big deal with leverage.. it doesn't matter what leverage is... just calculate your risk that you are willing to take and that's all that one should be worried about. Leverage only puts a limit on profit...
Agreed... You mean to tell me I spent the last 5 years learning these forex markets, taking my lumps along the way, now when i get to the point where I'm actually MAKING money, say OK now you cant trade??
B.S.

I wish this country would stop making excuses for idiots who cant control themselves or their actions. What happen to being responsible for YOURSELF.

People just have this "I wanna be rich NOW" mentallity and if they want to die by the sword..let them.

The Dumbing down of this nation continues.....

Ben
Voodoo
  • #52
  • Jan 17, 2010 7:30pm Jan 17, 2010 7:30pm
Quoting shyvoodoo
Agreed... You mean to tell me I spent the last 5 years learning these forex markets, taking my lumps along the way, now when i get to the point where I'm actually MAKING money, say OK now you cant trade??
B.S.

I wish this country would stop making excuses for idiots who cant control themselves or their actions. What happen to being responsible for YOURSELF.

People just have this "I wanna be rich NOW" mentallity and if they want to die by the sword..let them.

The Dumbing down of this nation continues.....

Ben
Voodoo
And the worst part the whole thing is a total farce... the sheeple will just move onto another get rich scheme and lose their money that way.
  • #53
  • Jan 17, 2010 10:45pm Jan 17, 2010 10:45pm
those people will just go to a casino every friday after they get paid ..... there are just too many idiots in this world..


Quoting Deusomega
And the worst part the whole thing is a total farce... the sheeple will just move onto another get rich scheme and lose their money that way.
  • #54
  • Jan 18, 2010 2:03am Jan 18, 2010 2:03am
Quoting magnumfreak
I love how people get on this bandwagon about how this is designed to crush the small investor (including myself up to a few minutes ago). What other venue allows for 100:1 or greater leverage? None that I know of. So lets do some math under the 10:1 leverage rule.

Let's say Joe Schmoe has $1,000 to put into the Forex market. And let's say that he has done his homework and researched and tested and practiced and other than a few stumbles in the beginning gets to where he is making a reasonable 40 pips a day on average. Some days better than others....
I agree with u , u can make money with 10:1 , i bet if there is anyone constantly profitable with a 100:1 leverage , ie : if u use leverage 50:1 on USD/YEN not 100:1 50:1 only and u r a profitable daytrader u make lets say 10 pips only , this is a gain of 5% which means you double your accont after 1 month which means after 10 month u have 10 doubles = 1000 times your starting balance , where is this guy ?!
  • #55
  • Jan 19, 2010 5:39am Jan 19, 2010 5:39am
I believe in regulation to the degree futures and commodities are regulated. I just took (and passed) my series 3 exam. I learned a lot from that. While commodities and futures have harsher regulation it is still extremely easy to lose all your money. For example every move of a dollar in a standard oil contract is equal to $1,000. CTA'a and CPO's have to post their profits and loses, look at their sites, many have lost thousands of dollars. Would regulation change forex? No! as many have said a fool and his money are soon parted. A few things that would help are regulations to stop people from advertising forex as "get rich quick". And not allowing FCMs to offset trades. There also seems to be a problem with churning(advising a client to make lots of trades to profit more from the commissions of each trade).There are severe penalties for these practices in commodities and futures and regulations as such should be implemented on the forex market. This would also stop the slick used car salesmen from opening an IB and sucking idiots in who will lose thousands of dollars so the IB can make a few hundred off the spread.
  • #56
  • Jan 19, 2010 7:42am Jan 19, 2010 7:42am
Quoting TJPLD
In my opinion they should rather make it harder for complete newbs to get an account in the first place. Everyone can get an account no matter how little money they have. No one really checks if Currency Trading is really suited for those people.
That's like saying the government should outlaw dating before you can prove that you won't strike out.

You can not demand certainty w/ the point of a gun (which is what all regulation use).

When you give up freedom for security, you end up with less security and less freedom.
  • #57
  • Jan 19, 2010 9:21am Jan 19, 2010 9:21am
http://view.exacttarget.com/?j=fe831...64057c7315&r=0
  • #58
  • Jan 19, 2010 9:56am Jan 19, 2010 9:56am
If they do implement 10:1 leverage, I bet they will add a "grandfather" clause to allow existing accounts to maintain 100:1 leverage.
  • #59
  • Jan 19, 2010 10:23am Jan 19, 2010 10:23am
Quoting zznbrm
If they do implement 10:1 leverage, I bet they will add a "grandfather" clause to allow existing accounts to maintain 100:1 leverage.
That would be nice, I haven't heard anyone else bring this possibility up ...
  • #60
  • Jan 19, 2010 12:27pm Jan 19, 2010 12:27pm
Quoting zznbrm
If they do implement 10:1 leverage, I bet they will add a "grandfather" clause to allow existing accounts to maintain 100:1 leverage.
yeah right LOL They didn't do that when they lowered it to 100:1 Why would they start now? lol
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