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US citizens won't be able to have forex accounts overseas

  • #41
  • Aug 24, 2010 4:05am Aug 24, 2010 4:05am
Quoting pipmutt
You go for it dude, kick some Washington butt!!
  • #42
  • Aug 24, 2010 4:09am Aug 24, 2010 4:09am
Quoting pipmutt
You go for it dude, kick some Washington butt!!
  • #43
  • Aug 24, 2010 4:13am Aug 24, 2010 4:13am
100:1 leverage is just fine for forex they did a good job with that no need to lower it any more, me my self didn't come in with a lot of money but i was able to start small and now this is how i make my living, so im fighting for the small guys here the ones that don't have 10k to start but started like me with very small account and grew it day by day, so i know for a fact you don't need 10k to start to end up making a living from this business
  • #44
  • Aug 24, 2010 4:23am Aug 24, 2010 4:23am
Quoting fxoxford

...im fighting for the small guys here the ones that don't have 10k to start but started like me with very small account and grew it day by day...
They'll still be able to do that, just not with crazy leverage. It may take a bit longer to build up equity but the risk of blowing up will be less, it's a trade off.

To be honest the ones calling for 100:1 leverage are the ones who will probably benefit the most from any reduction! (I'm excluding the protection of funds reasons here).
  • #45
  • Aug 24, 2010 7:45am Aug 24, 2010 7:45am
I don't think any of this is going to stop anyone in the US hiding something in a offshore account.
  • #46
  • Aug 24, 2010 8:14am Aug 24, 2010 8:14am
Quoting oakmonster
I don't think any of this is going to stop anyone in the US hiding something in a offshore account.
Maybe not, but it will be difficult for us citizens to get an account with a reputable european firm, for example.

Its the same situation like with index, commodity and stock CFDs right now. All the bigger firms like CMC Markets or IG Markets just wont accept US customers. US retail people, who want to trade these markets, have to use exchange traded products like futures or ETFs. For the better or the worse.

My guess is that the same regulation will include retail FX in the future too, which was the only market segment not covered by this up to now. But nothing definite has been decided yet.

Still i dont think, even if this will come true, it wont be the end of retail fx in the usa. There have been much tigher regulations for stocks since 10+ years, and there are still plenty of retail traders in this market. For example some former ecns (i.e. BATS) have been granted exchange status. Maybe this would be a way forward for some fx firms. It will go on in one way or another.
  • #47
  • Aug 24, 2010 9:03am Aug 24, 2010 9:03am
protectionism = bull
  • #48
  • Aug 24, 2010 10:00am Aug 24, 2010 10:00am
Quoting qwertymyfx

protectionism = bull
So is hegemony but since when did that stop anyone!

Anyway, too political.........
  • #49
  • Edited 6:18pm Aug 24, 2010 11:59am | Edited 6:18pm
US needing to keep their sheeple penned to make their fleecing easier .
  • #50
  • Aug 24, 2010 12:02pm Aug 24, 2010 12:02pm
Quoting pipmutt
Do you think the numbers are really that great to warrant US brokers going into battle with US regulators?

I mean what percentage of US traders trade in an OTC market like retail forex anyway, and what percentage of those are bothered about FIFO and the possibility of a 10:1 leverage limit? I can't really see there being a mass exodus of retail forex traders out of the US, maybe ~10% if that, and the majority of those I expect are micro traders. Are US brokers really going to go out of their way to cater for a minority who produce minimal...
This is not a battle between US brokers and the US regulators. This piece of s*** proposal is aimed at us individual traders, make no mistake about it, taking away our ability, once again to manage our own wealth the way we want. They did it to the Retail daytrading stock market by increasing the initial deposit and as a result killing the industry. I knew something would be coming to the Retail Forex industry to curtail it when finally it is thriving a little bit. Today, it's limiting our leverage, tomorrow, what's next? You watch. They won't rest until the Retail Forex industry is dead like the Retail daytrading Stock market. Very soon, we will have no choice but to go back to the old ways, handing our money obediently to the "Big Boys" in Wall Street for them to manage.

This is a battle once again about the individual's freedom of choice, choice to look after our own wealth as we please, choice to create a lifestyle as we want, and the choice to own investment as we see fit. I want to be able to invest in Retail Forex however I want, I don't need some pee-brained, pencil-pushing bureaucrats who hasn't traded one minute in their life to tell me what to do. I want to invest it with 500:1 leverage and I want to invest in Retail Forex, NOT E-Mini Futures. Spare me the BS "Oh this proposal is to protect you, individual investors". I know how to manage my money; I know how to manage my risk. If some stupid idiots have lost all their money because of over-leveraging because they didn't bother to do their homework to learn how to trade prudently, then tough!! Trading is a cut-throat business and it is survivor-of-the-fittest. If somone doesn't even have the tenacity to do research before they begin, then they don't belong here and I don't see why any of us prudent and competent traders have to be dragged down by them by having our leverage capacity forcibly cut. So that's why I say, they want to limit our choices, then we will go abroad, and do our business there.
Make your losses in demo. Earn your profits live.
  • #51
  • Aug 24, 2010 12:16pm Aug 24, 2010 12:16pm
Quoting pipmutt
I mean what percentage of US traders trade in an OTC market like retail forex anyway, and what percentage of those are bothered about FIFO and the possibility of a 10:1 leverage limit? I can't really see there being a mass exodus of retail forex traders out of the US, maybe ~10% if that, and the majority of those I expect are micro traders. Are US brokers really going to go out of their way to cater for a minority who produce minimal revenue?
In reality, Retail Forex business IS big business. This is not just a political issue. This proposal has enormous economic impact. The daily trading volume of Forex around the world is what? $ 5 Trillion? Assuming Retail Forex is 5% of that volume, 5% X 5 trillion = 250,000,000,000.00, that's $250 Billion. Even assuming Retail Forex is 1% of $5 trillion, that's $5 Billion each day! How much do you think is the % of US Retail Forex considering US is still one of the strongest economy of the world and US$ is the most frequently traded currency in the world? Just to give you an example, according to Oanda's website, over 20% of world online Spot Forex transactions take place on Oanda's servers. Assuming that 20% number is exaggerated, that's already exceeding the estimate that I just gave above and that's just ONE broker. And think of the rippling effect of this on the US economy and in turn world economy in general.

You think those bureaucrats would waste their time and efforts to put in a law about something that is not big? One thing though, I just hope those bureaucrats realize that what they are doing is shooting themselves in the foot and is destroying something that works.
Make your losses in demo. Earn your profits live.
  • #52
  • Aug 24, 2010 1:10pm Aug 24, 2010 1:10pm
Quoting Forexia
In reality, Retail Forex business IS big business....
I don't buy those numbers at all. The industry tried to float a year ago that average volume was around $3.2 trillion a day. I know for a fact that volume is down considerably this year across all brokers, as much as 33%. You're talking about $2 trillion a day in volume IF you believe the unprovable top-line number from a year ago. Then you say that "what if the retail traders are 5%?" OK, let's consider that. $100 billion. Then realize that that's at 100 to 1, so what are the deposits for it? A billion? Stock market still dwarfs retail FX.

Sorry, but this is a tiny little market and will stay that way as long as all of the games that are played continue. The only way to make it legit is to go the way of stocks and futures and options and bonds and mutual funds and put down the road rules for the market. As long as they do that without going too low on the leverage, people will come.
  • #53
  • Edited 1:58pm Aug 24, 2010 1:23pm | Edited 1:58pm
Quoting wannatradefx
I don't buy those numbers at all. The industry tried to float a year ago that average volume was around $3.2 trillion a day. I know for a fact that volume is down considerably this year across all brokers, as much as 33%. You're talking about $2 trillion a day in volume IF you believe the unprovable top-line number from a year ago. Then you say that "what if the retail traders are 5%?" OK, let's consider that. $100 billion. Then realize that that's at 100 to 1, so what are the deposits for it? A billion? Stock market still dwarfs retail FX....
So? What does daily average volume have anything to do with leverage? Just because Joe Schmo was only able to put down $1,000 to trade, he is still trading $100,000 standar lot at a time thanks to leverage and he is still making up the daily average volume of still $3 trillion for Forex and that is still 30 times more than NASDAQ. It's the result that counts. So decreasing the leverage from 100:1 to 10:1 to is going to make Retail Forex bigger?

If the intention is to really make Retail Forex flourish, having some regulations to curtail its means of doing business is not the right "road rules". Retail Forex survived if not thrived today because leverage levelled the playing field between the "Joe Schmos" and the Big Boys in Wall Street. Leverage allowed us to a foot in the door to the Forex market. With Leverage, it's giving the average people a chance, a chance to make it. With Leverage, it's saying "We don't care howh much money you have. As long as you've got what it takes, you can beat the Big Guys because we will provide you the means by lending you the money." Before leverage, the only way for us to trade Forex is through bank deposits with a spread of several dollars. Is that what all of us want? Because that's very low leverage and of course very safe.
Make your losses in demo. Earn your profits live.
  • #54
  • Aug 24, 2010 2:14pm Aug 24, 2010 2:14pm
Quoting Forexia
So? What does daily average volume have anything to do with leverage? Just because Joe Schmo was only able to put down $1,000 to trade, he is still trading $100,000 standar lot at a time thanks to leverage and he is still making up the daily average volume of still $3 trillion for Forex and that is still 30 times more than NASDAQ. It's the result that counts. So decreasing the leverage from 100:1 to 10:1 to is going to make Retail Forex bigger?

If the intention is to really make Retail Forex flourish, having some regulations to curtail its means...
Wow, it scares me that you think that's how it works. You just tried to explain to me that the market is SOOOO big, but you accept the fact that 99% of the trading is borrowed money that makes it possible. You don't measure the size of the assets that make the market move by the total leveraged buying power. You can open a stock account and trade 4 times your account value every day. If we can all do that, that doesn't the stock market worth four times as much.

So which is it? You think this is some huge market that the big players now all trade in and the government is really trying to make smaller, or do you think this is some tiny market that maybe some bigger players out there would actually get involved in if they weren't afraid of the unregulated nature of it. Trust me, no one puts a million dollars in an account and trades with a broker that can steal their money at any time with a bad fill, and they don't just throw those funds into a broker overseas where the broker can close up shop tomorrow and they'd have no recourse.

If FX is going to be a big marketplace that is taken seriously and not just an on-line gambling zone and home of the $1000 account, it needs significant rules so that the big players feel safe putting their money in. They feel safe with the CME and futures exchange. They feel safe with US Brokers regulated by the SEC and FINRA. Why is that? Because there are rules about use of funds, margin, execution, time and sales, centralized trading, etc. And if an exchange or broker violates one of those rules, then the customer has a place to go to fight it.

I'm not saying that they need to go to 10:1. In fact, I would rather they did not. Big players are not going to use 100:1 anyway, they know better. I would happy leaving it at 100:1, but based on what we're seeing in Japan and now early word out of UK, it looks like 50:1 to start, and maybe 25:1 in a year or so. That still won't kill my trading, but if it comes globally and includes steps toward a few brokers becoming qualified "exchanges" or whatever term we end up with (as Shrike discussed correctly) and it legitimizes the market globally, then I'm all in favor.
  • #55
  • Edited 5:37pm Aug 24, 2010 4:07pm | Edited 5:37pm
Quoting wannatradefx
If FX is going to be a big marketplace that is taken seriously and not just an on-line gambling zone and home of the $1000 account, it needs significant rules so that the big players feel safe putting their money in. They feel safe with the CME and futures exchange. They feel safe with US Brokers regulated by the SEC and FINRA. Why is that? Because there are rules about use of funds, margin, execution, time and sales, centralized trading, etc. And if an exchange or broker violates one of those rules, then the customer has a place to go to fight...
First of all, I am not trying to define or gauge the size of the Retail Forex market. All I am trying to illustrate is that a market's size shouldn't be judged by how much people put in to trade but rather its actual trading volume and the fact that this proposal is going to have economic impact far larger than what people think.

But more importantly, this proposal is not about "protecting the individual traders", it's really about choice. Maybe I won't use the full 100:1 leverage today, but maybe tomorrow I discovered that my trading strategy will be more effective with 100:1 leverage and I want to use it. And just because I happen to be a "Big Player", that doesn't mean that I will never want to use high leverage in some point in my trading career; it all depends on the individual and their trading strategy. If high leverage can be used effectively and safely, why be afraid to use it? But all in all, I don't want some pencil-pushing bureaucrats who are totally out of touch of reality and has no idea how the Retail Forex works to tell me what I can do and cannot do or how I should trade or how much to trade. I want to be the one who decides that. I want to trade Spot Forex, NOT E-Mini Futures and I want the choice to use 100:1 leverage available to me!!

If they want to help the Retail Forex market, which btw, is NOT a online gambling zone. Majority of us traders here do do the research, trade prudently and work very hard to make profits. There are people who have dedicated years to their trading career. It takes a lot to be a successful traders, hard work, patience and perseverance. I think it's an insult to our hard work and efforts to dismiss us traders as "online gamblers". We are no George Soros but our work is just as valuable. People don't take us seriously that's their problem.

If you really want to "do something" for the traders, small or big, draw up some regulations that make sense like requiring firms to have Indemnity Insurance so clients can be reimbursed if something happens or requiring firms to have complete seperation of client funds from their operation funds like the UK FSA does Or like the Canadian Investment Association does, set up a fund to reimburse clients in the case of failure of firms. Or better yet, sponsor the establishment of ECN's like Island Orderbook for Daytrading stocks for Spot Forex. That way, all traders enjoy the transperancy of the market and the "Big Players" can still maintain their anonymity. So that way, those unscrupulous trading practices like SL Hunting, Requoting and Dishonouring clients' SL and Limit orders can be reduced.

You know, if we really do get the genuine protectioins we need, we might one day become "Big Players" and Retail Forex market will flourish. But regardless, just don't draw up some regulations under the pretence of one thing while the real intention is another.
Make your losses in demo. Earn your profits live.
  • #56
  • Aug 24, 2010 6:20pm Aug 24, 2010 6:20pm
Quoting Forexia
Gosh there's just so much to reply to and to be honest I don't have the time, energy, interest, or inclination, sorry. But here's a bit to be getting on with.....

Quoting Forexia

This is not a battle between US brokers and the US regulators.
It will be if you expect brokers to go out of their way to fight in the corner of the minority who produce minimal revenue for them. They did it once with 2-43, expressed their opinion, made a very weak argument in my opinion, and lost. Ok so they opened offices offshore to offer what some of their clients wanted, that was a viable business decision rather than an attempt to support the underdog but at the end of the day there's a limit to what they can do, are willing to do, or that is viable for them to do.

The point I was trying to make in an earlier post was that the vast majority of successful traders rarely have a need to use leverage in excess of 10:1. They probably wouldn't ever have a need to be equally long and short on the same pair (appropriately called 'nedging'!), and they do appreciate the importance of not having their broker bust profitable trades seemingly on a whim. So where's the problem? So what if brokers lose a percentage of micro accounts, it's wastage, novices are transient anyway as they frequently blame the broker for their losses. To the majority of traders this new and proposed legislation will make little difference so they'll stay where they are, and let's face it they're the ones producing steady revenue for brokers.

Bottom line is the impact of this legislation may ruffle a few feathers but tomorrow it will be business as usual, minus a few micro accounts. Big deal! Sure, the bucketshops will probably lose a portion of their business but who cares, we'd be better off without them anyway, and others will adapt and devise new products and business models to survive. Impact? Negligible.

Quoting Forexia
This is a battle once again about the individual's freedom of choice....
You're never going to win that one I'm afraid. Traders are a minority and viewed by the majority as fat cat scavengers, exploiters, the reason for the financial crisis, high oil prices, falling property values, and every other friggin thing that goes wrong and one of the reasons for their lot in life. Basically no-one gives a shit about traders, not even other traders!
  • #57
  • Aug 24, 2010 7:10pm Aug 24, 2010 7:10pm
Quoting pipmutt
Gosh there's just so much to reply to and to be honest I don't have the time, energy, interest, or inclination, sorry. But here's a bit to be getting on with.....
Well for that, you have Wannatradefx to blame. He's the one who got me started.


Quoting pipmutt
Ok so they opened offices offshore to offer what some of their clients wanted, that was a viable business decision rather than an attempt to support the underdog but at the end of the day there's a limit to what they can do, are willing to do, or that is viable for them to do.

The point I was trying to make in an earlier post was that the vast majority of successful traders rarely have a need to use leverage in excess of 10:1. They probably wouldn't ever have a need to be equally long and short on the same pair (appropriately called 'nedging'!),...
The issue of this new rule is not about its impact on our traders' trading style or broker's business; it's an issue of having our trading strategies and business being dictated unnecessarily and invasively. I don't care I would rarely need to use 100:1 leverage; I don't want that to be taken away from me. I don't want anything that has to do with my trading to be dictated to. We rarely really need to curse at our country's leader but would you like Congress to pass a law tomorrow to explicitly forbid it? No. Why? Because that's infringing on how we live and how we talk. Even though we don't use a lot of things but we still don't want those to be taken away from us.

And besides, what's even more disturbing is that this is just a start. They are chipping away at the Retail Forex Industry one piece at a time. Today, with this new rule, like you said, they are just making the small Retail Forex brokers lose a portion of business. Tomorrow, they will aim at another aspect of the Retail Forex business. And besides, everybody feeds on each other in any business. The "Big Players" in the Forex business, who do you think they feed on? The small Forex brokers. With the small Forex brokers gone, what do you think happens to the Bigger Forex brokers?

Stopping this regulations is not just stopping this one; it's sending a messsage to those fat cats "Do something constructive with your time and budget or F--- off!!"
Make your losses in demo. Earn your profits live.
  • #58
  • Aug 24, 2010 8:05pm Aug 24, 2010 8:05pm
"the vast majority of successful traders rarely have a need to use leverage in excess of 10:1"

I dont think such general statements are very helpful, nor accurate. For example, the EuroFX future has ~40:1 overnight margin, intraday usually much more (depending on firm). Even higher leverage is applied with the index contracts. Limiting spot to 10:1 while the CME can contiune to apply SPAN margins with 40:1 and more would be one-sided favouritism in my opinion. While i agree that requirements like 200:1 or even 100:1 are sort of stupid, there should still be comparable margining across fx products within nfa/sec/cftc oversight. Everything else would just fail the common sense test..
  • #59
  • Aug 25, 2010 12:27am Aug 25, 2010 12:27am
Quoting pipmutt
Gosh there's just so much to reply to and to be honest I don't have the time, energy, interest, or inclination, sorry. But here's a bit to be getting on with.....


It will be if you expect brokers to go out of their way to fight in the corner of the minority who produce minimal revenue for them. They did it once with 2-43, expressed their opinion, made a very weak argument in my opinion, and lost. Ok so they opened offices offshore to offer what some of their clients wanted, that was a viable business decision rather than an attempt to support...
Pipmutt-

I agree with everything you're saying. 100%. Nice to have someone that gets this on these boards.
  • #60
  • Aug 25, 2010 12:30am Aug 25, 2010 12:30am
Quoting Forexia
Well for that, you have Wannatradefx to blame....
Forexia-

Gee, I'd like stocks to have 50 to 1 leverage too. Why are they limiting me there? Every real market has a regulated leverage process. Overleverage is always what gets people in trouble. Bringing that down doesn't take down the market or impede your rights. If you believe that to be the case, then you should be saying you want 1000:1 because, darn it, that's what you want and no one should limit you. People turn that turn this nonsense into a function of their "rights" sound like loons in the Tea Party.
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