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

  • #741
  • Mar 6, 2010 8:49am Mar 6, 2010 8:49am
The 10:1 change is a fete de complete. It was the minute it was proposed by the CFTC. I recommend no more discussion on the topic, and instead, move your account to UK, Malta, or where ever you want. Several months ago, I moved my account to the UK and am very happy with the change.
  • #742
  • Mar 6, 2010 9:43am Mar 6, 2010 9:43am
What's with the negativity here? Encouraging news has recently come out showing that some of our elected representatives have taken notice of this 10:1 development and have shown resistance to it. Coming into this thread and telling people to give up is doing nothing to help...you are welcome to ignore this thread, but don't try to get everybody else to adopt your apathetic views.
  • #743
  • Mar 6, 2010 11:11am Mar 6, 2010 11:11am
I agree totally with 24Hour trader !

Email and call your US Senators and US congressman or woman

Tell them this will ship a billion dollar industry overseas - just what we need with 10% unemployment ???

Tell them newbies with lower margin calls will be losing even more dollars than before, so how is that protecting them?

Read the article from ForexCrunch posted on Forex Factory entitled "Fight Against 1:10 Leverage Limit Has Results – Keep it up!"
  • #744
  • Mar 6, 2010 11:12am Mar 6, 2010 11:12am
Quoting 24HourTrader
What's with the negativity here? Encouraging news has recently come out showing that some of our elected representatives have taken notice of this 10:1 development and have shown resistance to it. Coming into this thread and telling people to give up is doing nothing to help...you are welcome to ignore this thread, but don't try to get everybody else to adopt your apathetic views.
I'm worried that this is how the conversation went:

Congress: "So uh...we don't see the point. What you're trying to do with leverage won't protect the end consumer."
Gensler: "Yes it will."
Congress: "You sure?"
Gensler: "Yes."
Congress: "Oh OK carry on then."
Hindsight is 20/20
  • #745
  • Mar 6, 2010 11:26am Mar 6, 2010 11:26am
Quoting cosgrove
I'm worried that this is how the conversation went:

Congress: "So uh...we don't see the point. What you're trying to do with leverage won't protect the end consumer."
Gensler: "Yes it will."
Congress: "You sure?"
Gensler: "Yes."
Congress: "Oh OK carry on then."
Whoever has more political guns wins, and it looks that banks will benefit from this, so leverage will be cut, I have little doubt, to what extent is the question, maybe 50 to 1 or 30 to 1. I had hopes early on that it would not be cut, but after learning more about agenda driven Gensler and his cronies it does not look so good. You are already seeing FXCM trying to get clients to deposit more funds in their accounts, ie, if you have 10K on 3/18/10 we will not raise your spread, otherwise 1 pip raise across the board for micros....the master manipulators know what is coming
  • #746
  • Mar 6, 2010 12:22pm Mar 6, 2010 12:22pm
Quoting wwwin
Whoever has more political guns wins, and it looks that banks will benefit from this, so leverage will be cut, I have little doubt, to what extent is the question, maybe 50 to 1 or 30 to 1. I had hopes early on that it would not be cut, but after learning more about agenda driven Gensler and his cronies it does not look so good. You are already seeing FXCM trying to get clients to deposit more funds in their accounts, ie, if you have 10K on 3/18/10 we will not raise your spread, otherwise 1 pip raise across the board for micros....the master manipulators...
This was written in March 2005 before Genslers appointment to the CFTC:
(It's a bit sad when you see what we're up against)


Bernie Sanders, the senator from Vermont who is independent in spirit as well as party label, has placed a hold on President Obama's nomination of Gary Gensler to head the Commodity Futures Trading Commission. Sounds like a minor issue to get worked up about, but the senator is right. Like most Americans, I am eager for Barack Obama to succeed, but I see this appointment as further evidence that the president has entrusted his economic policy to the wrong people.

Gensler helped create this financial crisis when he was in the Treasury Department back in the Clinton era, when bipartisan cooperation with Wall Street lobbyists was all the rage. Sanders gets right to the point: "Mr. Gensler worked with Senator Phil Gramm and Alan Greenspan to exempt credit default swaps from regulation, which led to the collapse of AIG and has resulted in the largest taxpayer bailout in US history."
Sanders' hold will not stop the Gensler nomination, because Congress and the president, recognizing the nation's mood, want to give Wall Street whatever it wants to make the stock market go up. And Gensler is a reassuring figure to the moguls of finance; he was a partner at Goldman Sachs before being brought by Goldman honcho Robert Rubin to the Clinton Treasury Department.
After Rubin left to take a $20-million-a-year job at Citigroup, which he helped run into the ground, Lawrence Summers, his protege and replacement at Treasury, elevated Gensler to be an undersecretary. Gensler then performed as Summers' point man in advocating for deregulation legislation that enabled the current debacle.
The explosion of toxic assets is a direct result of the laws pushed through by Rubin and his followers, and in the decade since, we have had a twenty-fold increase, to more than $530 trillion, in the value of those newfangled financial instruments, which Warren Buffett in February 2003 correctly termed "financial weapons of mass destruction."
Yet when one member of the Clinton administration, Brooksley Born, then head of the Commodity Futures Trading Commission, attempted to sound a warning, she was treated by the rest of Clinton's economic team as the enemy.
In response to Born's warning, they drove her from government and pushed through the Commodity Futures Modernization Act, which summarily exempted from regulation the derivatives that now haunt us. The claim at the time by Summers, now top economic adviser in the Obama White House, was that "This legislation promotes innovation and competition in the U.S. financial markets and may help to reduce systemic risk." Of course now we know, as Born predicted, that it did quite the opposite. What irony that Gensler is being rewarded with Born's old job for getting it wrong.
In congressional testimony supporting the radical deregulation of the financial derivatives market, Gensler had insisted with great enthusiasm that "OTC derivatives directly and indirectly support higher investment and growth in living standards in the United States and around the world." As to the many trillions of dollars in credit swaps that now afflict the world economy, Gensler specifically called for freeing swaps of this kind from existing government regulation in the Commodity Exchange Act, which regulated other futures such as wheat sales. He said, "...[s]wap transactions should not be regulated under the CEA. ..."
His key argument, and that of Summers as well, was that even raising the prospect of regulating what have proved to be toxic derivatives would deny these financial instruments the "legal certainty" they needed to thrive. What a loss that would be, warned Summers, who called the financial derivatives market "a powerful symbol of the kind of innovation and technology that has made the American financial system as strong as it is today."
So "they"--Summers, Gensler, Treasury Secretary Timothy Geithner and their ueber mentor, Rubin--were as wrong as anyone could be. Perhaps such error is human, but aren't there folks out there with a better prospect of getting it right that Obama can rely on?
A great deal is at stake, and we are being asked to support the president's plans as a matter of trust in a hopeful new leader. But the latest administration plan, announced by Geithner on Monday, seems to be more of the same. We taxpayers are being asked to buy back from the banks the very toxic assets that the members of Obama's economic team once celebrated as an unmitigated blessing. Only this time, instead of trusting the banks, we will turn over control, but little risk, to hedge funds that are totally unregulated. Here we go again.(The Nation-By Robert Scheer)

And don't forget, Gensler doesn't believe any of us should be trading in the first place:

Gensler is the co-author of a book (with Greg Baer), The Great Mutual Fund Trap. The thrust of the book is that active trading and investing is an inefficient strategy for individual investors, and that individuals should stick with index and exchange traded funds.(Wikipedia)
  • #747
  • Mar 6, 2010 12:31pm Mar 6, 2010 12:31pm
I believe that 10:1 will help refine the market from a mess created by Martingaling, hedging, random setups etc. The market will look more classic.
Also more successful traders will stay in the market, more losers will be blown away. This is my opinion.
But traders will move abroad from american brokers. So, the american brokers will suffer big loss. Not sure what is their plan.
  • #748
  • Mar 6, 2010 1:58pm Mar 6, 2010 1:58pm
Quoting angus

And don't forget, Gensler doesn't believe any of us should be trading in the first place:

Gensler is the co-author of a book (with Greg Baer), The Great Mutual Fund Trap. The thrust of the book is that active trading and investing is an inefficient strategy for individual investors, and that individuals should stick with index and exchange traded funds.(Wikipedia)
Gensler is rapidly becoming the man that main street loves to hate.

The seriously offensive sleight of hand in the CFTC proposal is the alleged need for detection of fraud among Mom n Pop investors. What a joke. Mom n Pop investor didn't give us the meltdown. Gensler did. What arrogance from Gensler.

How dare Gensler seek to create an illusionary problem that doesn't exist, that never existed, all the while exempting the real criminals (his financial institution mates) from the reg's - they are the very ones who need to be watched like hawks.

The threat to public safety here is not from the ordinary people on main street.

Gensler's head should be served up on a plate, post-haste. A resounding vote of NO CONFIDENCE in this man. Congress should do it quietly, do it quickly. Put someone in the job who will genuinely protect the public interest.
  • #749
  • Mar 7, 2010 8:24am Mar 7, 2010 8:24am
Quoting wwwin
Whoever has more political guns wins, and it looks that banks will benefit from this, so leverage will be cut, I have little doubt, to what extent is the question, maybe 50 to 1 or 30 to 1. I had hopes early on that it would not be cut, but after learning more about agenda driven Gensler and his cronies it does not look so good. You are already seeing FXCM trying to get clients to deposit more funds in their accounts, ie, if you have 10K on 3/18/10 we will not raise your spread, otherwise 1 pip raise across the board for micros....the master manipulators...
... and that's what I've been saying since the beginning. If Gesnler wants this to happen then it's going to happen.

You can't look at the entire situation with beer goggles on, most of you are looking at this from a forex only situation when you need to only look towards Goldman Sachs. Do proper research and due diligence on Goldman Sachs and hopefully it will all come to you. Heres a tip: the majority of US financial officials has or have associates with Goldman Sachs. The majority has some ties to Goldman. Look it up!

In the middle of what could be seen as the "demise of US fx brokers, most are looking increase fees and run contests. Most of this has happened after the announcement of this regulation. Am I the only one that sees this? I hope not. GFT, my broker, is "all of a sudden" running a trading contest, at a time when their future is unknown. FXCM is increasing the spread on it's users. Hmmm, I don't have to be a rocket scientist to understand that if "the sky is falling it will be the end of the world". And traders, the sky is falling. In the mist of all of this, only a hand full of brokers sought to speak with the CTFC about said regulation, while there are over 30 major brokers in fx land. Not much of a fight is being put up, hmmm.

You guys need to "open the door and look around in the room". You would be surprised by what you'll see. Fact is, once you get a look into that room then it would be wise for you to prepare options for forex now, as opposed to being a "deer caught in headlights" after March 22. Plan your escape from fx now and don't wait for the outcome, by doing so you'll have a plan when this thing passes.

Too many factor are against fx at the moment to not understand that this free ride may just be over. The only way this will not pass is if Congress/Senate opposed said matter, but that unlikely. Now, I'm sure there are many congress people that are totally against this and will try hard to look out for the traders, but I know they're the minority. When the financial wheel of the political machine starts begin to turn then all that matters to government is money. For those who think moving their business over seas, good luck. There is an rule that prohibits traders from trading overseas and I'm positive more regulations will be attached to that rule. Though I admire the "fight" coming from retail traders, I personally believe the US fx market is over, unless some goverment official passes up a "hail-marry" in stopping this regulation to be.
  • #750
  • Mar 7, 2010 9:19am Mar 7, 2010 9:19am
Quoting wwwin
Whoever has more political guns wins, and it looks that banks will benefit from this, so leverage will be cut, I have little doubt, to what extent is the question, maybe 50 to 1 or 30 to 1. I had hopes early on that it would not be cut, but after learning more about agenda driven Gensler and his cronies it does not look so good. You are already seeing FXCM trying to get clients to deposit more funds in their accounts, ie, if you have 10K on 3/18/10 we will not raise your spread, otherwise 1 pip raise across the board for micros....the master manipulators...
Thanks for this,wwwn....

FXCM UK slips your account like crazy if you have a mini or micro.

I had my account there and the slippage was frequently 5pips or more in a SLOW market.... I'd watch it go past my TP orders and wonder what the heck was going on!

I just moved my account out of there last week.
Scarlett
  • #751
  • Mar 7, 2010 9:21am Mar 7, 2010 9:21am
BTW, I forgot to mention,

E-micro (CFTC retail fx replacement) will be up and running on March 22-23.

If that doesn't help you wrap your head around the notion that retail fx is over, then I don't know what will. CTFC will not use this new futures market to "compete" with retail fx. As I said before, if you want to get rid of the competition, regulate it and start something new on your own terms (enter E-Micros) ... just as CFTC is doing.

Estimated commission rate for E-micros futures will be between $2.25 up to $5.00 or greater (Round Lot. Commission will vary from broker to broker) and the spread has not been announced as of yet.

So, if your broker lets your set up shop in another country they service, there no better time than the present to do so. If you're broker will not move your account overseas (even though they have a physical presence there) then you could wait and trade E-Micros, give it a test run .... as it may not be so bad or look into trading other markets, such as equities, options, futures, etc.
  • #752
  • Mar 7, 2010 9:38am Mar 7, 2010 9:38am
Quoting MarketPips
I believe that 10:1 will help refine the market from a mess created by Martingaling, hedging, random setups etc. The market will look more classic.
Also more successful traders will stay in the market, more losers will be blown away. This is my opinion.
But traders will move abroad from american brokers. So, the american brokers will suffer big loss. Not sure what is their plan.
Really....

Why don't you post your account confirmation sheets and show us how profitable you are and what size you are trading....

Trading is NOT an overnight success story for most traders but a craft which takes alot of screen time, mistakes and patience to finally become profitable.
Those who perservere will eventually become successful. So what you are saying is that they should be punished with large losses and account evaporation while they are on their learning curve, however long that may take.

And, no, don't tell me that they should be on a demo. Demos are a waste of time for the most part because the demo doesn't address the main problem...the emotions and attitudes about money that are unconscious and destructive for most of us.

What you are saying is it is like giving your teenager a sports car while he/she is getting driving experience and maturity. Hey, if he crashes, wrecks the car and dies, well, c'est la vie.

There is no mess from Martingaling, etc except for the one the individual may create and that is the just and efficient cause and effect that is the very thing that is needed to create a profitable trader over the long run. Hopefully, the losses from those mistakes will be small enough to live another day.

And btw, not to go into it here but I know people who hedge and do very well. Just because it is not within the realm of your experience doesn't mean that it is not possible. So quit knowing what's best for the rest of us, ok, MP?
Scarlett
  • #753
  • Edited 9:53am Mar 7, 2010 9:47am | Edited 9:53am
Quoting Jhig
BTW, I forgot to mention,

E-micro (CFTC retail fx replacement) will be up and running on March 22-23.

If that doesn't help you wrap your head around the notion that retail fx is over, then I don't know what will. CTFC will not use this new futures market to "compete" with retail fx. As I said before, if you want to get rid of the competition, regulate it and start something new on your own terms (enter E-Micros) ... just as CFTC is doing.

Estimated commission rate for E-micros futures will be between $2.25 up to $5.00 or greater (Round Lot....
You may be right in everything that you say but I doubt that Asian and Middle Eastern concerns will simply let retail FX trading disappear. They will not stand for the bullying tactics. Some western countries will side with them.

I am prepared to relinquish my US citizenship over this. To me, it is the very last straw in a country that is rapidly being turned into the largest police state on earth. My prediction is that, in 5 years, you will not be able to leave the US without having all or most of your assets seized by the US. Look up "exit tax" proposals.
Scarlett
  • #754
  • Mar 7, 2010 9:51am Mar 7, 2010 9:51am
Quoting Jade Gate
Gensler is rapidly becoming the man that main street loves to hate.

The seriously offensive sleight of hand in the CFTC proposal is the alleged need for detection of fraud among Mom n Pop investors. What a joke. Mom n Pop investor didn't give us the meltdown. Gensler did. What arrogance from Gensler.

How dare Gensler seek to create an illusionary problem that doesn't exist, that never existed, all the while exempting the real criminals (his financial institution mates) from the reg's - they are the very ones who need to be watched like hawks....
If Congress or the Senate would ever dare to oppose Goldman, they would be delivered to the Gulag post haste or worse. Goldman installs these people along with the President of the US and other "elected" officials. Public office is a gravy train as long as you keep your mouth shut and go along.
Scarlett
  • #755
  • Mar 7, 2010 9:59am Mar 7, 2010 9:59am
Quoting Scarlett
If Congress or the Senate would ever dare to oppose Goldman, they would be delivered to the Gulag post haste or worse. Goldman installs these people along with the President of the US and other "elected" officials. Public office is a gravy train as long as you keep your mouth shut and go along.
Which is what I've been saying! Finally someone gets it ... thank you Scarlett.
  • #756
  • Mar 7, 2010 10:02am Mar 7, 2010 10:02am
If the CFTC had any reservations about passing this reg. they probably would have already come out with a statement to address the outpouring of concern. They must realize that many have flown the coupe already - just on the threat of leverage decrease - but that's just my 2 pips.
  • #757
  • Mar 7, 2010 10:28am Mar 7, 2010 10:28am
Quoting Scarlett
You may be right in everything that you say but I doubt that Asian and Middle Eastern concerns will simply let retail FX trading disappear....
well it seems exit tax is already a law ....

http://www.nypost.com/p/news/busines...669694F249B694

it says "In fact, anyone who has $600,000 in assets and a lust for becoming a citizen of France, Italy or maybe an island in the Pacific should take note of this one. Thanks can be given to a bill that passed Congress recently and was quietly signed by President Bush two weeks ago. (~2008)"
  • #758
  • Mar 7, 2010 10:54am Mar 7, 2010 10:54am
Quoting Jhig
Which is what I've been saying! Finally someone gets it ... thank you Scarlett.
I've gotten it for a while, Jhig....

It just takes a little research to see what's behind the curtain. Any fool can see it...if they can handle the truth.
Scarlett
  • #759
  • Mar 7, 2010 1:06pm Mar 7, 2010 1:06pm
  •  onu
  • | Joined Feb 2006 | Status: superior senior member | 746 Posts
Quoting MarketPips
I believe that 10:1 will help refine the market from a mess created by Martingaling, hedging, random setups etc. The market will look more classic.
Also more successful traders will stay in the market, more losers will be blown away. This is my opinion.
But traders will move abroad from american brokers. So, the american brokers will suffer big loss. Not sure what is their plan.
LOL for guys like you, obviously without a clue about FOREX trading, the leverage issue really doesn't matter....

---------------------------------------------
http://www.myfxbook.com/members/pc8multifx
  • #760
  • Mar 7, 2010 2:28pm Mar 7, 2010 2:28pm
Quoting Bytebodger
I don't think many people involved in this discussion really understand the impact of 10:1 on the typical trader....

Is this your opinion or you are trying sell it as true ?
Either way you got it wrong !! 10 to 1 is still a lot of leverage and anybody that have a clue on how to trade can still make decent money out of a 10K account. Just keep your tolerance for mistakes low and you will never have a margin call.

Apart from VERY RARE exceptions anyone that let their losses run more than 50 pips is already a looser and 500:1 or 1:1 will not help the person. Let me repeat that.......if you need more than 50 pips to know that you are wrong you better go do something else.

I'm against going for big percentage gains because the probabilities are against you.

BUT...........if you are trading a small account and have no other choice to increase it other than trading, than I guess one can justify a little more risk exposure.


I do understand people getting frustrated with the "regulators" out there but the ones that really know the game will get rewarded with a cleaner market and after all the ridiculous noise is flushed out of the charts the ones left standing will have the opportunity of their lives.

Than the whole cycle re-starts.
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