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10 to 1 You're done...

  • #101
  • Jan 26, 2010 3:50am Jan 26, 2010 3:50am
Quoting pipmutt
Education is freely available right now yet still the majority are in the dark, it's a pointless task trying to educate the uneducatable, or those not receptive to being educated.

Is consumer protection really the prime motive behind these new regulations?

Interesting posts by the way, please follow up with the CFTC reply to your paper.
I suspect that CFTC simply has a very huge headache on their hands since this market is off-exchange - it's a headache they would like to go away.

Doubtless there are other agendas running in the background from other industry players, however we can only second-guess the extent of that and what weight if any, the CFTC will place on those claims.
  • #102
  • Jan 27, 2010 7:11am Jan 27, 2010 7:11am
Quoting Turveyd
The 10:1 leverage rule working it out, is basically only going to knock the scalpers out of the market, this is a anti scalper thing as we are the only ones which really trade at a leverage level which this is likely to affect.

Our 20 - 30SL's , fall into the 1.2-1.8% risk group, a 200SL falls into a 12% loss group based on a $1700 account which no 200SL user would trade at anyway.


* 200SL just used as a common reference point!!
I'm afraid that's not true, Turveyd. I'm a long term trader and regularly get up to 25:1. I've been 50:1 a few times when I've caught some good trends. Reduction to 10:1 leverage would kill my trades and ruin my trading plan to pyramid my profits.

Think about it: if I'm making 10% per month at 25:1 leverage, and increasing my lot size as my account increases, then in two years I could make 9.85x my money. If I'm limited to 10:1, then my monthly return will probably be only 3%. This means a 2.03x return over two years. So I'll make 1/5 as much, and the compound return difference gets worse from there.

Not to mention that this assumes I would be able to use all of the 10:1 without getting a margin call. Most likely my monthly catch would drop to 1% - 1.5% to avoid a MC. Might as well put my money in an ETF and save myself the hassle.
  • #103
  • Last Post: Feb 1, 2010 12:27pm Feb 1, 2010 12:27pm
I think there are very interesting arguments for both sides but as someone pointed out earlier, I think a lot of this is politics. Changing the leverage to 10:1 may steer many traders back to the exchanges, since there is greater leverage offered there. Since 2001, a lot of business was lost by the exchanges to the off-exchange firms because the exchanges couldn't compete with the leverage and other lax requirements of retail FX brokers. Now, after years of fighting back for business, the time has come.
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