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Help To Stop 10:1 Leverage

  • #61
  • Jan 19, 2010 2:36pm Jan 19, 2010 2:36pm
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's funny, they sure didn't do it when they lowered it a few months back!
  • #62
  • Jan 19, 2010 2:46pm Jan 19, 2010 2:46pm
Quoting FXtraderMI
yeah right LOL They didn't do that when they lowered it to 100:1 Why would they start now? lol
I think the jump from 400:1 to 100:1 was not nearly as significant as the jump from 100:1 to 10:1. We shall see...
  • #63
  • Jan 20, 2010 1:16am Jan 20, 2010 1:16am
Quoting Miami_Trader
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. ...
This is exactly why leverage requirements are a bad idea. If it's true that the attrition rate in futures is the same as forex, then the only thing that'll change is the amount of money lost by the losing trader.
  • #64
  • Jan 20, 2010 11:38am Jan 20, 2010 11:38am
I have read over the proposal a few times, and I'm a bit puzzled by the language. I have just one question...In the following statement,

"and require RFEDs or FCMs engaging in retail forex transactions to collect security deposits in a minimum amount in order to prudentially limit the leverage available to their retail customers on such transactions at 10:1"

what is meant by the term "prudentially" and how are they using the term? and how does that affect any of this?

Im wondering if what they're saying is they want the account holder to manage his account size so that any single trade does not overleverage the account. For example, with 100:1, if your account size is $10,000, and you place a trade with one standard lot, then your margin is $1,000 and your trade is controlling $100,000. In that case, the leverage in "the transaction", is $100,000:$1,000 or 100:1. But it is only $100,000:$10,000 or 10:1 within the account. But if you place a second trade of 1 standard lot, then the leverage within "the transaction" is again 100:1, but within the account is now 20:1.

Perhaps in this way, they would be able to prevent the trader from placing any additional trades and overleveraging his account, where the current limit of 100:1 imposed by NFA does not do that.

I don't know if this would address fraud, but I think it might have some impact on money laundering

This is just a question about the intent of the cftc. I hope this or something like this is their intent. Does anyone know?


Thanks.
  • #65
  • Jan 20, 2010 11:45am Jan 20, 2010 11:45am
Big brother wants to protect the fx retail customer again. I'm so touched. In reality, 10:1 max leverage regulation would only benefit those who trade long term with low risk and are already wealthy, but a stick in the wheels for those day traders that are trying to grow a small account. It's the free market and unlimited opportunities for the little man that made America great, not the regulators and political elite.
  • #66
  • Jan 20, 2010 12:38pm Jan 20, 2010 12:38pm
Quoting pipnu2me
Im wondering if what they're saying is they want the account holder to manage his account size so that any single trade does not overleverage the account. For example, with 100:1, if your account size is $10,000, and you place a trade with one standard lot, then your margin is $1,000 and your trade is controlling $100,000. In that case, the leverage in "the transaction", is $100,000:$1,000 or 100:1. But it is only $100,000:$10,000 or 10:1 within the account. But if you place a second trade of 1 standard lot, then the leverage within "the transaction"...
The CFTC proposal clarifies this on page 35 (in the lengthy explanation part of the proposal):

Quote
8. Proposed Regulation 5.9 – Security Deposits for Retail Forex Transactions.
Proposed Regulation 5.9(a) would require each RFED and each FCM that engages in retail forex transactions, in advance of any such transaction, to collect from the retail forex customer a security deposit (in cash or in financial instruments that meet the requirements of Regulation 1.25) equal to ten percent of the notional value of the retail forex transaction, ten percent of the notional value of short retail forex options in addition to the premium received,...

The key to this paragraph is notional value of the retail forex position. So the rule is looking at 10% of notional position size rather than trying to infer anything to the effective account leverage.

Sorry to burst the bubble.
  • #67
  • Edited 11:08am Jan 21, 2010 10:44am | Edited 11:08am
Make sure they are posting your comments. Here is the link

http://www.cftc.gov/lawandregulation...10/10-001.html

They didnt post mine. Sending it in again. I did mine back on the 14th and they are already at the 15th with only a handful of comments from the 14th I'm sure there are many more than those that commented.
  • #68
  • Jan 21, 2010 10:53am Jan 21, 2010 10:53am
You messed up the link.
  • #69
  • Jan 21, 2010 11:08am Jan 21, 2010 11:08am
http://www.cftc.gov/lawandregulation...10/10-001.html

I think people who have not sent it yet would have to in order to avoid the leverage changes.
You make money by waiting, not by trading.
  • #70
  • Jan 21, 2010 11:09am Jan 21, 2010 11:09am
Quoting TJPLD
You messed up the link.
thanks link fixed
  • #71
  • Jan 21, 2010 11:17am Jan 21, 2010 11:17am
Wow they print out every email, stamp it two times, write the date on it by hand and scann it. Lol someones is going to have a busy day at the office...
  • #72
  • Jan 21, 2010 11:18am Jan 21, 2010 11:18am
Quoting TJPLD
Wow they print out every email, stamp it two times, write the date on it by hand and scann it. Lol someones is going to have a busy day at the office...
I hope so because it means people are taking this into account as we really have to take it.
You make money by waiting, not by trading.
  • #73
  • Jan 21, 2010 11:24am Jan 21, 2010 11:24am
Quoting fxspain
I hope so because it means people are taking this into account as we really have to take it.
"Honey how was your day?"
"Oh nothing special I stamped around 70.000 comments from pissed of Retail Traders"

At least the ink industry will be happy.
  • #74
  • Jan 21, 2010 11:34am Jan 21, 2010 11:34am
I attach here my broker request to act IMMEDIATELY against new rule that will definitely kill the Forex as we know, limiting leverage to 1:10


ACT NOW BEFORE ITS TOO LATE, SPREAD THE VOICE AS MUCH AS POSSIBLE



================

Dear Valued Customer,
As many of you are aware, the U.S. Commodity Futures Trading Commission (CFTC) announced on January 13, 2010 that it is seeking public comment on proposed regulations concerning retail Forex trading.
As part of the proposed regulations, it is stated: "leverage in retail forex customer accounts would be subject to a 10-to-1 limitation," which means 10:1 leverage would be the maximum amount allowed for all Forex traders in the U.S.
An example of how the proposed regulatory restrictions would affect a major currency pair appears below:
Maximum Leverage under Current Regulations Maximum Leverage under Proposed CFTC Changes USD/CHF USD/CHF 100:1 leverage (one percent) 10:1 leverage (10 percent) 1 lot (100,000) 1 lot (100,000) Margin requirement: $1,000 Margin requirement: $10,0 We stand behind the belief that you should be given the freedom and right to choose the amount of leverage that is appropriate for your individual desired risk, and that this basic principle of 'choice' is in jeopardy by the proposed CFTC regulations.
If you feel strongly about the proposal, we encourage you to help determine the outcome of these proposed regulations. You can help make an impact by sending comments directly to the CFTC at: [email protected].
Please include 'Regulation of Retail Forex' in the subject line of your message and the identification number RIN 3038-AC61 in the body of the message.
  • #75
  • Jan 21, 2010 11:47am Jan 21, 2010 11:47am
Quoting maxMida
I attach here my broker request to act IMMEDIATELY against new rule that will definitely kill the Forex as we know, limiting leverage to 1:10


ACT NOW BEFORE ITS TOO LATE, SPREAD THE VOICE AS MUCH AS POSSIBLE



================

Dear Valued Customer,
[color=#000000]As many of you are aware, the U.S. Commodity Futures Trading Commission (CFTC) announced on January 13, 2010 that it is seeking public...
I am from Serbia
"Buy on fear, sell on greed !!!
  • #76
  • Jan 21, 2010 12:00pm Jan 21, 2010 12:00pm
hows that hope and change working out for those that voted him in office?

lets see:
HOPE= i hope that the govenment will lend a hand to help me get out of this crisis that I got myself into.
CHANGE=by changing the laws the government will make sure that whatever I do whether good or bad I'm not respondsible because the I'm not at fault here. It was just the wrong decision that I made and the government will get me out of this mess.

I ask u all this, is this the hope and change that the obama supporters wanted? I for one dont need the government to decided whats best for me. I will make that decision. So he did promise hope and change. Now just think about it. my 2 cents.
  • #77
  • Jan 21, 2010 12:43pm Jan 21, 2010 12:43pm
This is just for traders from America ?
"Buy on fear, sell on greed !!!
  • #78
  • Jan 21, 2010 1:21pm Jan 21, 2010 1:21pm
Quoting TJPLD
"Honey how was your day?"
"Oh nothing special I stamped around 70.000 comments from pissed of Retail Traders"

At least the ink industry will be happy.
Going long ink and rubber stamp things now.
  • #79
  • Jan 21, 2010 1:22pm Jan 21, 2010 1:22pm
Sorry chaps, I used to be against the new leverage regulation, but now I'm in full support of it. I would never have been able to get where I am now without limiting myself to less than 5:1 leverage (2 to 1 most often).
  • #80
  • Jan 21, 2010 2:03pm Jan 21, 2010 2:03pm
Quoting Moody
Sorry chaps, I used to be against the new leverage regulation, but now I'm in full support of it. I would never have been able to get where I am now without limiting myself to less than 5:1 leverage (2 to 1 most often).
And I wouldn't have been able to add two zeroes to my initial $100 deposit in just 8 months, if it wasn't for my aggressive lot size compounding strategy, combined with 1:2-6 RRR and tiny stop losses. So why don't we stop being opinionated about other people's trading styles and focus on our own trading.
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