Help To Stop 10:1 Leverage

Are you sure you are really talking about margin or are you confusing this with something else?

To clarify:

Let's say you wanted to open a notional $100,000 position...

So at 100:1 you would have to set aside $1000...the market goes against you $1 you're at $999 and you get a margin call....

For the same position at 5:1, you would have to set aside $20,000....remember you CANNOT touch this money for trades that go against you....in this case if the market goes against you $1 you're at $19,999 and you get a margin call...

ABSOLUTELY SAME RISK!!!!

Practically there is no difference in terms of pure risk management whatsoever...higher margin alone does not impact your risk in any way, shape, or form...all it does is for you to put up more money to be able to open a position!

even if you go at 1:1 i.e. no margin...still you have to take care of your risk management regardless...

So please, please would you care to enlighten how 5:1 margin alone would reduce your risk?

Remember we are solely talking about MARGIN Requirement here and NOT risk management!!!

Higher Initial Margin Requirement Is Not The Same Thing As Lower Overall "Effective Leverage" and Thus Not Lower Risk!!!


Regards

You would not get a margin call. I've been trading at 10:1 margin (Oanda platform lets you change the leverage which ALSO adjust your margin requirements) all morning and the margin call is at 50% NAV on the majors.


I doubt the international market will follow the US this far. For the most part i expect the international market to take advantage of this opportunity to gain more opportunity raping newbie traders.

my effective leverage is always less than 20:1 and sometimes less than 10:1 and still allows enough opportunity to make 1%+ a day

The problem will hit traders that trade multiple positions at a time (scaling) or hold multiple pairs at once. It won't stop those guys either.....only force them to adjust the depth of their scaling to a safer level.

if I want to make 1% for every 10 pip move I will need 100% of the available units/lots trading at 10:1. If i wanted to make 1% for every 20pip move I will need 50% of the available units/lots at 10:1. In either trade a margin call would not happen until at 50% NAV or less.

The prudent risk professional traders will have no problem with this new requirement.

Very little training is being done on the level of risk management. And brokers are making a killing in this situation. And they are making it fast because excessive leverage is available. The volatility is high enough in the majors to make good % returns every day even at 10:1 leverage.

It will reduce the rate of wealth for brokers from inexperienced traders and maybe keep them in the game long enough to 'wake up' before they have no more money.


Note: I changed my effective leverage to 10:1 at Oanda and traded the above examples before posting the above examples.

You can use oandas margin call rate calculator also to check rough estimates of margin calls at rates from 50:1 to 10:1
google it

Just because you have 100:1 leverage doesn't mean you need to make use of all of it. You can trade any lot size you want. If you want to trade 5:1, that's your choice...but don't tell me I shouldn't be able to use more, if I desire to.

How considerate of you to assume that what works or is desirable for you...should therefore be legislated upon everyone else.

Hmmmm.....you know....I don't partake of alcohol.....and I have never been involved in a drunken brawl, never got a DUI, never puked all over my friends or strangers at a party.....

OK then!

That works for me. Cool! Let's mandate for everyone else, despite their preference, cuz........

IT WORKS FOR ME!!!

10:1 leverage is far too much. If you use 10:1 with your risk capital, you will experience a psychologically damaging blow to your account on your first string of successive losses. The following pattern is to change ones trading methods, believing that method was the cause, then experience even greater draw down in attempt to make back the 50%+ loss and eventually burn up the margin. It is wise to begin your trading career with no leverage at all. We do not use leverage in our managed funds.

I strongly disagree with the CFTC proposal to restrict leverage across the board to 10 to 1 leverage. I am a retail trader and we are already suffering from previous leverage down, margin up and position clearing as FIFO. This might eliminate lot of players like us from market.

"Civilization is the progress toward a society of privacy. The savage's whole existence is public, ruled by the laws of his tribe. Civilization is the process of setting man free from men. "

Ayn Rand


"Individual rights are not subject to a public vote; a majority has no right to vote away the rights of a minority; the political function of rights is precisely to protect minorities from oppression by majorities (and the smallest minority on earth is the individual). "

Ayn Rand

my broker lets me set my leverage, and the trader can always adjust his/her position. I believe in freedom of choice. focus on better transparancy and honesty, but leave my leverage options alone!

Great post have you sent your thoughts to the cftc clowns yet?

I sent it yesterday.

I will be joining in to tell the regulators just what a bad idea the 10:1 Leverage is. Are they trying to KILL all of the entrepreneurial spirit? Are they trying to KILL the retail FOREX industry in America?? Are they trying to kill the American spirit, the land of opportunity where persons such as myself and many others here figure if they work hard enough to become great pro traders they can live the American dream of supporting themselves independently of dead end jobs and ridiculous bosses?? I think these are the plans of people who know NOTHING , but bigger government regulation. These people are going to force me and many others like me to transfer my account to foreign shores where foreign companies can make money off of me instead of American companies. To the regulators, GET OUT OF THE WAY BEFORE YOU DESTROY A WHOLE INDUSTRY and only the richest persons will have opportunity... SOMEHOW I THINK THE JERK, MISGUIDEDED REGULATORS LOVE GETTING OFF ON THEIR POWER... REGULATORS!!!... PROVE ME WRONG!!

Endroute, we need to be clear when we say CFTC clowns.

most will think Bozo

http://regulus2.azstarnet.com/blogs/images/6855.jpg

when we should be thinking Captain Spaulding!

http://www.smh.com.au/ffximage/2005/...b__300x328.jpg

What is the downside to opening trade accounts in UK? Are there any tax consiquenses, or legal restrictions? Seems like if they are looking to squeeze US retail forex trading, then we just move our accounts overseas.

Has anyone done this... and are there any pitfalls there to be aware of?

Folks,

There is a petition to sign to oust Gensler.

It just takes a minute:

http://www.petitiononline.com/gensler/petition.html