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Could 10:1 be the new leverage in US Forex?

  • #721
  • Edited 3:07am Mar 4, 2010 2:39am | Edited 3:07am
Quoting cosgrove
While the article is comforting, it doesn't sound like it detailed anything after the first five minutes of the meeting. Is there a full text available anywhere? I haven't found one so far.

It's coming. They're not very prompt alas... several months behind the event in fact.

http://agriculture.house.gov/list/pr...0310GFCRM.html

"The 2008 Farm Bill reauthorized the Commodity Futures Trading Commission (CFTC), the agency responsible for federal regulation of commodity futures trading, through 2013. The 2008 Farm Bill strengthened the CFTC’s authority over retail foreign currency (FOREX) transactions, extended the CFTC’s principles-based oversight to exempt commercial markets that trade significant price contracts, and increased criminal and civil penalties for market manipulation.

Written testimony provided by the witnesses is available on the Committee website: http://agriculture.house.gov/hearings/index.html. A full transcript of the hearing will be posted on the Committee website at a later date.

Panel I

Gary Gensler, Commissioner of the Commodity Futures Trading Commission, Washington , DC"
  • #722
  • Mar 4, 2010 5:18am Mar 4, 2010 5:18am
Forex, The "In" Crowd.

http://www.businessweek.com/news/201...thew-lynn.html
  • #723
  • Mar 4, 2010 7:44am Mar 4, 2010 7:44am
Yes, it seems so.
Now, how do I convince Deutsche Bank that they "need" me?
  • #724
  • Mar 4, 2010 7:54am Mar 4, 2010 7:54am
Quoting Jason Rogers
Micro spreads are going to match standard account spreads because FXCM Micro is preparing to use No Dealing Desk execution for all micro transactions. This decision was made independent of the CFTC proposal.

-Jason
Seeing as they're upping the spreads are they now going to offer live support? I was told, by them(FXCM) that one of the main reasons they could provide such tight spreads was because of the cost saved by having no live support.
  • #725
  • Edited 9:00am Mar 4, 2010 8:40am | Edited 9:00am
Quoting angus
Seeing as they're upping the spreads are they now going to offer live support? I was told, by them(FXCM) that one of the main reasons they could provide such tight spreads was because of the cost saved by having no live support.
The only reason I was with them was b/c of the tight spread...now they will have one of the largest spreads around...higher than all MT brokers, higher than CMS, GFT, IB, so even if they offer live support, it is not worth paying the inflated spread. They will get you in, then try to squeeze from you as much as they think you will allow...Their straight pass thru claims are a bunch of baloney marketing hype. There is no way to check what they claim, and from experience they are not to be trusted.
  • #726
  • Mar 4, 2010 9:12am Mar 4, 2010 9:12am
Quoting GoodBoy
A slightly positive news on 10:1 leverage being challenged by House Law makers...Looks like our comments/petitions are being heard.

House Lawmakers Concerned On CFTC Retail Forex Leverage Proposal

By Sarah N. Lynch Of DOW JONES NEWSWIRES WASHINGTON -(Dow Jones)- U.S. House lawmakers Wednesday raised concerns a proposal by the Commodity Futures Trading Commission could have negative consequences for the U.S. retail foreign exchange market.
[i]Several lawmakers at a House Agriculture farm commodities subcommittee hearing Wednesday...
It seems that the CFTC may be catering to the US banks. The US banks may be trying to manipulate reatail FX traders to go to them.
  • #727
  • Mar 4, 2010 9:27am Mar 4, 2010 9:27am
Quoting wwwin
There is no way to check what they claim, and from experience they are not to be trusted.
As a regulated firm, FXCM is regularly audited to confirm this. Forex brokers are also required to detail off-setting procedures whether market maker or straight through processing in the trading agreement per NFA regulations so you can also confirm. The trading agreement is available on our website for you to review. It clearly outlines FXCM Micro is currently through the dealing desk and non-micro accounts are NDD.

Yesterday, I made a reply that the decision was not made in reply to the CFTC proposal. I need to clarify this. While it may not have been directly in response to the levergage proposal, regulations as a whole changing worldwide were taken into account.

All of our forex execution needs to be No Dealing Desk. We understand this does not suit everyone and we apologize for this due to the change in spreads. However, the new regulatory environment necessitates it because the new operating environment will raise business costs. Capital requirements are going up in most Asian and European jurisdictions, and margin requirements are going up in Asia and possibly in the United States if the proposal passes. If we are to keep doing business from well regulated jurisdictions and not offshore islands, we have no choice.

Spreads on micro accounts are going to be matching standard 10k accounts because of this, but the execution method will eliminate a conflict of interest for micro traders. Traders with an account balance of $10,000 or greater at the close of trading on March 18 will automatically have a 1 pip reduction from FXCM's standard spreads, and traders also have the option to deposit additional funds to take advantage of the offer.

Our intention from the start of launching FXCM Micro was to have No Dealing Desk execution, but the banks were not willing to accept it at the time. FXCM Micro will continue as an entry option for traders to start with as little as $25 and move on to a standard account with additional services and the possibility for reduced spreads as trading volume increases. I would be happy to continue the discussion on the FXCM Discussion thread if you have more questions so as not to hijack the leverage discussion thread.

-Jason
  • #728
  • Edited 10:28am Mar 4, 2010 10:13am | Edited 10:28am
Quoting Jason Rogers
As a regulated firm, FXCM is regularly audited to confirm this....
Thanks for the response Jason, but there is no need to discuss further in the other thread....as I said, the only reason for the micro was the spread, so if FXCM is going to be costlier to trade with as compared to all the other brokers, there is no point in discussing it, I am not willing to fork over an extra $20 round trip for every trade I make and close, when there are much cheaper and better alternatives. An extra $20 a round trade adds up to quite a bit at the end of the month. I make about 30 trades a month, so you get an extra $600 and I make $600 less just because you have a foreign office? You had the foreign office before all this happened.

"the new operating environment will raise business costs"
Well I don't know if this is true or not...but nonetheless, as I said earlier, thanks Gensler and the CFTC for once again screwing the retail investor for the benefit of the brokers. You just gave the bucket shops an excuse to raise trading costs. That is just what Congress intended. LOL
  • #729
  • Mar 4, 2010 11:18am Mar 4, 2010 11:18am
Quoting wwwin
CFTC for once again screwing the retail investor for the benefit of the brokers
Hummm....lets see didn't I tell you few weeks ago that the brokers where in bed with the errrr.... "regulators" in all this?!?

If my memory still serves me well, you and smarty pants mocked tha heck out of my statement.

Bunch of naive retail traders I was always a little cynic about 95% loosing, but after some months among retailers I would say 99.9% loose.

You guys are dealing with stuff that you guys have no idea!!! Unreal !!!
  • #730
  • Mar 4, 2010 11:32am Mar 4, 2010 11:32am
Quoting Platypus
Hummm....lets see didn't I tell you few weeks ago that the brokers where in bed with the errrr.... "regulators" in all this?!?

If my memory still serves me well, you and smarty pants mocked tha heck out of my statement.

Bunch of naive retail traders I was always a little cynic about 95% loosing, but after some months among retailers I would say 99.9% loose.

You guys are dealing with stuff that you guys have no idea!!! Unreal !!!
Yes master, you are the greatest trader that ever lived!!!
  • #731
  • Mar 4, 2010 11:44am Mar 4, 2010 11:44am
Quoting wwwin
Yes master, you are the greatest trader that ever lived!!!

No I ain't...!! But I do know one thing or two about Forex
  • #732
  • Mar 4, 2010 11:55am Mar 4, 2010 11:55am
Quoting Platypus
No I ain't...!! But I do know one thing or two about Forex
You are a total bore.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #733
  • Mar 4, 2010 12:02pm Mar 4, 2010 12:02pm
Quoting The Fool
You are a total bore.
And let me repeat Malcomb words...your nick name really describes you
  • #734
  • Mar 4, 2010 1:47pm Mar 4, 2010 1:47pm
Guys, don't fret about the fee increase, after all of this every broker/bank will increase their fees.

http://s.vostde.com/ceydq
  • #735
  • Mar 4, 2010 3:01pm Mar 4, 2010 3:01pm
Quoting Jhig
Guys, don't fret about the fee increase, after all of this every broker/bank will increase their fees.

http://s.vostde.com/ceydq
More ECNs will pop up...where there is demand...a market will follow...there is no need to get gouged. Vote with your wallet
  • #736
  • Mar 4, 2010 10:53pm Mar 4, 2010 10:53pm
Quoting dgreenf152
It seems that the CFTC may be catering to the US banks. The US banks may be trying to manipulate reatail FX traders to go to them.
I would be more inclined to believe this, as CitiFX Pro says they will not be affected by the leverage change if it goes live.
Hindsight is 20/20
  • #737
  • Mar 5, 2010 10:43pm Mar 5, 2010 10:43pm
Who even uses more then 10X leverage, unless you day trade? It isn't that big of a concern is it.
  • #738
  • Mar 5, 2010 11:08pm Mar 5, 2010 11:08pm
Quoting Zeroh
Who even uses more then 10X leverage, unless you day trade? It isn't that big of a concern is it.
Duh. The vast majority of fx trading IS daytrading.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #739
  • Mar 6, 2010 8:33am Mar 6, 2010 8:33am
Quoting Zeroh
Who even uses more then 10X leverage, unless you day trade? It isn't that big of a concern is it.
I don't think many people involved in this discussion really understand the impact of 10:1 on the typical trader. I've seen so many comments from traders saying that they don't use more than 10:1 so who cares? But you should be VERY concerned about this even if you don't personally strive to use massive leverage in your accounts.

It's not about the leverage - it's about the STOPS. There's nothing more deadly to an account than seeing ALL of your open positions closed - even though you still had plenty of money in your account - just because you had fallen below a predetermined margin level. If you are forced to have a maximum leverage of 10:1, those stops will happen with much greater frequency.

The only way to avoid this is to trade with such low leverage (2:1? 1:1?) that you are never in danger of getting stopped out by the next news release. Of course, if you're using 2:1 or 1:1 you're basically saying that you're content to make/lose pennies per day on a $10,000 account. And if you're trying to make pennies per day, why in the heck would you be in forex in the first place???
  • #740
  • Mar 6, 2010 8:37am Mar 6, 2010 8:37am
I was at a conference last week and I had a chance to chat with some of the guys from FXDD. Although I don't trade with FXDD, I still wanted to get some viewpoints from guys who are actually working in the industry.

I asked them what they thought about the proposed 10:1 leverage. They basically laughed and said that it's a foregone conclusion. They definitely felt that it was only a matter of time before it's implemented and they were very clear that it was a politically-motivated process.
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