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CFTC Final Retail Forex Rules - 50:1 Leverage

  • #41
  • Aug 31, 2010 8:09pm Aug 31, 2010 8:09pm
Quoting lasty
Margin Fx brokers arent brokers in the real sense. They are infact price makers. They make a spread and when the position will become large enough they hedge it. Quite simply they have a luxury of you dealing on their spreads.As all banks know spread income is a revenue source.
They arent big enough to move markets. If your broker skews a price well away from the market, then its time to change brokers.
Its not in their interest to burn clients. It costs them to get a client onboard and the more you trade the more they make on their spread.
why...
See this is what I thought. They make money from spreads and hedge their risks. But then why would they do SL hunting and do requoting? These behaviours would suggest they do trade and are trying to make profit on top of earning the spread.
Make your losses in demo. Earn your profits live.
  • #42
  • Aug 31, 2010 8:45pm Aug 31, 2010 8:45pm
Quoting Forexia
Yes, I am Serious....
"Dukascopy is an ECN"...lol...best line of the night. Thanks. I can go to sleep with a smile now. Too funny. What commission do they charge per trade again?

"But if overtime, traders got better educated become more right than wrong?" Seriously? Average FX trader once he goes live lasts 3 months and never re-deposits. Why? Because they sign up for a broker that eventually takes their money and think that they don't understand trading. The average will never be smart, and it starts by the fact that they give their money to Dukascopy, FXCM, and Oanda.

And by "give their money" what I mean is...you deposit funds so that they get that much richer in the end.

As much as this regulation is good and helpful, I'm not sure the traders in this market deserve anything good to happen.
  • #43
  • Aug 31, 2010 8:46pm Aug 31, 2010 8:46pm
Quoting Forexia
See this is what I thought. They make money from spreads and hedge their risks. But then why would they do SL hunting and do requoting? These behaviours would suggest they do trade and are trying to make profit on top of earning the spread.
"This is what I thought"!!! Dude, when you have a "bingo" moment, stick with it. Hunting and requoting add to their profits, and in the end, if you deposit $10,000, it means that within three months, they will have transferred that $10,000 to their balance sheets and out of your account.
  • #44
  • Aug 31, 2010 8:55pm Aug 31, 2010 8:55pm
Quoting wannatradefx
"This is what I thought"!!! Dude, when you have a "bingo" moment, stick with it. Hunting and requoting add to their profits, and in the end, if you deposit $10,000, it means that within three months, they will have transferred that $10,000 to their balance sheets and out of your account.
Quoting lasty
Margin Fx brokers arent brokers in the real sense. They are infact price makers. They make a spread and when the position will become large enough they hedge it. Quite simply they have a luxury of you dealing on their spreads.As all banks know spread income is a revenue source.
They arent big enough to move markets. If your broker skews a price well away from the market, then its time to change brokers.
Its not in their interest to burn clients. It costs them to get a client onboard and the more you trade the more they make on their spread.
why...
Did you read lasty's post? Can you comment on lasty's post? Stop commenting on mine. I already admitted I don't understand and that's why I asked the question in the first place.
Make your losses in demo. Earn your profits live.
  • #45
  • Aug 31, 2010 9:34pm Aug 31, 2010 9:34pm
man, they better not limit it any more than that. oh well, citi was already 50:1 without these guys and deutsche bank is still an option so i could give a crap abot these clowns. i like 100:1 muself. just the little extra cushion. i trade baskets so this would suck for myself personally. most people here dont trade 14 pairs at once so they wouldn't need it but us that do are a different case. i calculated i need at least 56:1 anyways. i could live with 50:1 and i dont hedge so whatever. anymore limits on leverage and it will become just plain stupid to me. that's why i'm glad banks don't have to follow these stupid ass rules. they don't need to. they make the market and they are banks not brokers. I only trade with brokers because i havent got to the level of bank trading like it should be quite yet. that's why they call them brokers. because that's how traders usually end up
  • #46
  • Aug 31, 2010 10:52pm Aug 31, 2010 10:52pm
Quoting lasty
http://www.allforexworld.com/Snaps/?...-US-Citizen--1
Isnt it illegal to withdraw the money and use it for purposes inside the US?
  • #47
  • Edited 11:19pm Aug 31, 2010 11:18pm | Edited 11:19pm
Quoting FnickB
Isnt it illegal to withdraw the money and use it for purposes inside the US?
Dunno,

Who is to say your not going on holiday outside of the US ;-)

Someone was saying that they are thinking about making online gambling and spreadbetting legal in the US. I suspect this falls under the same category.

Prohibition doesnt work.. You guys should know that by now :-))
  • #48
  • Aug 31, 2010 11:35pm Aug 31, 2010 11:35pm
Quoting FnickB
Isnt it illegal to withdraw the money and use it for purposes inside the US?
No, but you do have to adhere to compliance laws (report all foreign bank accts). Additionally, the foreign acct or business entity cannot be used a vehicle to evade taxes.

Keep in mind, there are bilateral agreements with our Gov and foreign countries so banking info is already free flowing in many case. Don't screw with the law, it will catch up to you.

Some more info on IRS website: http://www.irs.gov/businesses/small/...106568,00.html
  • #49
  • Sep 1, 2010 1:16am Sep 1, 2010 1:16am
Quoting hazelj80
man, they better not limit it any more than that.
It could very well happen.



The leverage requirement in the proposed rule has been replaced in the final rules with a mechanism whereby the Commission sets parameters (the release specifies a minimum 2 percent security deposit in the case of major currencies and 5 percent of the notional value of the transaction for all other currencies) and the Commission periodically reviews the appropriateness of those parameters. NFA is authorized to set specific security deposit levels within those parameters, and is required to review periodically and adjust as necessary both the particular security deposit levels and the designation of which currencies are “major” currencies, in light of such factors as changes in volatility.



Not only could the 50:1 change but also what they decide to designate what is a major currency.

They are required to review these parameters periodically.

50:1 will not effect me but I see a lot of BS coming our way.
  • #50
  • Sep 1, 2010 1:18am Sep 1, 2010 1:18am
Quoting Abigail

Hi All,

Wanted to send a link to our official statement regarding these new rules. Check it out if interested!

http://www.ibfx.com/Corporate/post/2...nsactions.aspx

Happy Trading,

Abigail


Let's hope IBFX and other brökers/MM's are better informed this time round than they were about last year's Compliance Rule 2-43, a sea of misinformation and a fiasco which led to this warning!!




http://cdn.forexfactory.com/attachme...1&d=1247920498
  • #51
  • Sep 1, 2010 7:13am Sep 1, 2010 7:13am
50:1 may be okay for some of you big traders, but its not for me. i trade minis and now it will take me double the move to make my pips! this is like getting a 50% pay decrease. i'm out of the market sorry cftc.
  • #52
  • Sep 1, 2010 9:59am Sep 1, 2010 9:59am
Quoting Abigail
Hi All,

Wanted to send a link to our official statement regarding these new rules. Check it out if interested!

http://www.ibfx.com/Corporate/post/2...nsactions.aspx

Happy Trading,

Abigail
Abigail,
My broker (FX Sol. UK) says they see nothing in the new reg. that would force a US citizen to move their account back to the US. and that nothing will change with my account. Why is IBFX interpreting this differently? thank you
  • #53
  • Sep 1, 2010 12:14pm Sep 1, 2010 12:14pm
Quoting hamlet
50:1 may be okay for some of you big traders, but its not for me. i trade minis and now it will take me double the move to make my pips! this is like getting a 50% pay decrease. i'm out of the market sorry cftc.
Just think of it this way. It will take you twice as long to lose everything.
  • #54
  • Sep 1, 2010 12:23pm Sep 1, 2010 12:23pm
Quoting hamlet
50:1 may be okay for some of you big traders, but its not for me. i trade minis and now it will take me double the move to make my pips! this is like getting a 50% pay decrease. i'm out of the market sorry cftc.
FXCM says the same thing
  • #55
  • Sep 1, 2010 1:04pm Sep 1, 2010 1:04pm
  •  onu
  • | Joined Feb 2006 | Status: superior senior member | 746 Posts
Thx the heaven I'm not an US citizen....

---------------------------------------------
http://www.myfxbook.com/members/pc8multifx
  • #56
  • Sep 1, 2010 3:16pm Sep 1, 2010 3:16pm
Quoting Forexia
ec, are you looking for the link with the published final rules? If you are, here below is the link:

http://www.cftc.gov/ucm/groups/publi...ster083010.pdf


Make sure your Acrobat PDF is configured right.


Hope it helps.
Yeah, it may actually say something about the overseas restrictions somewhere? Have you tried reading it? It's 170 pages long!
  • #57
  • Sep 1, 2010 5:55pm Sep 1, 2010 5:55pm
Quoting ecTrade
Yeah, it may actually say something about the overseas restrictions somewhere? Have you tried reading it? It's 170 pages long!
ec,
I skimmed the entire 170 pages and can't find anything said about offshore restrictions. Anyone else find anything on the subject?
  • #58
  • Sep 1, 2010 10:04pm Sep 1, 2010 10:04pm
Quoting hamlet
50:1 may be okay for some of you big traders, but its not for me. i trade minis and now it will take me double the move to make my pips! this is like getting a 50% pay decrease. i'm out of the market sorry cftc.
You are looking at it the wrong way. You are not getting a 50% pay decrease -- 20Pips will still be $20 you will just have to have $200 covering it instead of $100.

I am not trying to be offensive but it sounds like you may be a trade or two away from blowing your account if you are so fully leveraged during the trading day.
  • #59
  • Sep 2, 2010 1:10am Sep 2, 2010 1:10am
In my personal opinion this new 50:1 leverage is only going to hurt more the Forex market within the US. Most brokerage firms as long as the traders will start to go overseas looking for more favorable leverages and not so tight regulations.

We'll have to see how this develops during Sept and Oct's first couple of weeks.

Happy trading to everyone!
  • #60
  • Sep 4, 2010 12:55am Sep 4, 2010 12:55am
Quoting daadfx

In my personal opinion this new 50:1 leverage is only going to hurt more the Forex market within the US. Most brokerage firms as long as the traders will start to go overseas looking for more favorable leverages and not so tight regulations.
Most pikers probably wish that was true, they like to think moving their 100 buck accounts has an impact, but in reality I doubt it's going to make much difference to a bröker's bottom line. Most people who want/need to use ridiculous leverage don't last five minutes in this game, their trading activities probably aren't cost effective for brökers anyway, plus they're transient and blame brökers for their losses so frequently move from bröker to bröker.

I mentioned this before in another thread, most established brökers have a solid core of consistently profitable traders who trade volume, that's where the money is, not the nickel and dime underfunded overleveraged suckers who last five minutes and move on.

If you can't make it with 50:1 then chances are you ain't going to make it period!
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