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

  • #461
  • Sep 4, 2010 5:51pm Sep 4, 2010 5:51pm
Quoting TradeWell
I did try this myself.

My friend in Germany turned me on to trading, first by teaching me about CFD's. When I returned to the U.S., I wanted to get started trading them in demo. Broker after broker turned me down, saying "residents of the U.S. cannot trade CFD's". I looked into it (my German friend could not believe it), and found out it's true. I believe the U.S. is the only country where you cannot trade CFD's.

So it seems that any forex regulations that would have similar restrictions for foreign brokers applied to U.S. residents would...
That's exactly what I fear regarding the new FX rules. Here in Australia anybody providing financial services such as brokers for example are also bound to the fiduciary law (acting in the best interest of your client). Clearly open a FX account for a US Citizen is not in the best interest of the client neither for the broker. Just too much of a risk with law suits by the client and loosing a license to conduct business with a hefty fine in that country.
No business wants to get in trouble for a few bucks, try to take a PI insurance out here in Australia for the US and Canada and then compare the return made with US clients against the premium paid, not worth it.
  • #462
  • Sep 4, 2010 6:41pm Sep 4, 2010 6:41pm
Quoting Razzle
Having said that, taking a few hundred bucks off the average sucker with a micro account is a reasonable business,
Which is why Bush seems to have done the righ thing. You are guaranteed to lose your money. in fact if I were a Global dictator i would take a long hard look at forex trading and probably forbid 99% of people from trading for the fact that I wouldn't want a laid of person of 55 take his last $100 000, lose it and commit suicide after wards.

If 99% of all forex traders eventually lose, should forex trading even be allowed?
  • #463
  • Sep 4, 2010 6:52pm Sep 4, 2010 6:52pm
Quoting StephanusR
Which is why Bush seems to have done the righ thing. You are guaranteed to lose your money. in fact if I were a Global dictator i would take a long hard look at forex trading and probably forbid 99% of people from trading for the fact that I wouldn't want a laid of person of 55 take his last $100 000, lose it and commit suicide after wards.

If 99% of all forex traders eventually lose, should forex trading even be allowed?
There is no reason why you should lose money in forex. Its fairly simple and not rocket science.
  • #464
  • Sep 4, 2010 7:09pm Sep 4, 2010 7:09pm
Quoting Razzle
I was a partner in a gaming business based in Gibralter at the time that Bush first proposed the Unlawful Internet Gambling Enforcement Act.

I knew dozens of executives who where actually scared of boarding flights into mainland Europe on the grounds that they feared arrest and extradition. The processes that we (and our competitors) implimented to ensure that we where not dealing with US clients, was staggering.

Prior to UIGEA, we used to take hundred of millions on credit card payments, and illegally code the purchase as non gaming. The card...
I do understand what you are trying to say razzle and it is a good point......but I'm not talking about a gaming business based in Gibraltar, I'm talking about legit agency regulated OTC foreign exchange borkers.
  • #465
  • Sep 4, 2010 7:26pm Sep 4, 2010 7:26pm
Quoting StephanusR
Which is why Bush seems to have done the righ thing. You are guaranteed to lose your money. in fact if I were a Global dictator i would take a long hard look at forex trading and probably forbid 99% of people from trading for the fact that I wouldn't want a laid of person of 55 take his last $100 000, lose it and commit suicide after wards.

If 99% of all forex traders eventually lose, should forex trading even be allowed?

Following this logic, just ban all form of gambling. Don't trade if you cannot handle the lost.
  • #466
  • Sep 4, 2010 8:32pm Sep 4, 2010 8:32pm
Quoting TradeWell
So it seems that any forex regulations that would have similar restrictions for foreign brokers applied to U.S. residents would be carried out. If not, then why don't they offer CFD's to U.S. residents now? I don't think any of them want to disregard the U.S. government.
Actually, it remains to be seen how impending financial reform may affect the OTC derivatives trade. Part of the law has to do with bringing the OTC traded derivatives into exchange-based trade. Who knows, maybe sometime soon you will be able to daytrade micro-lot pieces of CDS's, CFD's, etc, etc.

Change is always a trade-off. Old doors close and new ones open. The smarter mouse just keeps going through the open doors, going for the cheese. Don't you like cheese?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #467
  • Sep 4, 2010 9:57pm Sep 4, 2010 9:57pm
US citizens are not allowed by law to trade CFDs

But forex with non-US brokers is okay

What is the big confusion ???
  • #468
  • Sep 4, 2010 11:28pm Sep 4, 2010 11:28pm
Quoting Gcapman
US citizens are not allowed by law to trade CFDs

But forex with non-US brokers is okay

What is the big confusion ???
http://en.wikipedia.org/wiki/Contract_for_difference

CFD's restricted by the SEC now but that might change as the exchange-based derivatives market develops.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #469
  • Sep 4, 2010 11:39pm Sep 4, 2010 11:39pm
Quoting Gcapman
US citizens are not allowed by law to trade CFDs...
To clarify, it is not the citizen who is restricted, but the resident. This would apply for the new forex rules as well.

For example, a German citizen who is a resident of the U.S. would not be allowed to trade CFD's. Brokers typically ask for proof of residence, not citizenship.
  • #470
  • Sep 4, 2010 11:51pm Sep 4, 2010 11:51pm
Quoting The Fool
http://en.wikipedia.org/wiki/Contract_for_difference

CFD's restricted by the SEC now but that might change as the exchange-based derivatives market develops.
That would seem to contradict the intent of the regulations being discussed here. CFD's inherently use higher leverage. If the requirements for forex are modified to 10 to 1, I can't see CFD's allowed in their current form. I would guess the SEC would not allow exchange-based derivatives to exceed this ratio as well.
  • #471
  • Edited 7:57am Sep 5, 2010 12:40am | Edited 7:57am
Kucklehead,

Spot on with that post, but there is plenty of blame to go around for the mess we are in now & that includes the Republicans, but Frank & Dobb are the architects of it all with the blessing of congress. Giving away these free 100% loans to the oppressed welfare crowd served ONLY to help these none deserving borrowers get loans that we are all having to pay for.

No opportunity to kill the free enterprise minded people in this great country will be passed up by unqualified president obama & his regime.
There is surely more to come that will just take more freedoms from the people & give it to the liberals now running this great country into the ground. I see you have brought out a few of the supporters of this circus
now running the goverment. I am now hearing the Hedge Fund crowd that whole heartly backed this regime are having second thoughts about their heavy financial support of a president that is making jimmy carter look better everday.............& I thought that would be hard to do.

Thanks for your views knucklehead.

Who said this, I do & a hell of lot of others do too.
  • #472
  • Sep 5, 2010 1:01am Sep 5, 2010 1:01am
Quoting TradeWell
That would seem to contradict the intent of the regulations being discussed here. CFD's inherently use higher leverage. If the requirements for forex are modified to 10 to 1, I can't see CFD's allowed in their current form. I would guess the SEC would not allow exchange-based derivatives to exceed this ratio as well.
http://www.reuters.com/article/idUSTRE5BE5AA20091215

There has been alot in the news lately about new opportunities offered by moving OTC derivatives into exchange-based trade. The CFTC approves all kinds of derivatives trades - earlier this year they approved contracts based on opening movie box office returns (yeah - that's important) - so why not CFD's. Are CFD's "inherently" highly leveraged? I don't know. There can be regulated leverage on those and then leverage that the particular exchange may like to offer with those bounds, I suppose.

It's moot to me. There's a million things to trade & I have a hard enough time focusing on a handful.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #473
  • Sep 5, 2010 1:42am Sep 5, 2010 1:42am
Quoting The Fool
The CFTC approves all kinds of derivatives trades - earlier this year they approved contracts based on opening movie box office returns
It was shot down.

First 60 seconds: http://maxkeiser.com/watch/the-keise...chael-krieger/
  • #474
  • Sep 5, 2010 3:32am Sep 5, 2010 3:32am
Quoting TradeWell
To clarify, it is not the citizen who is restricted, but the resident. This would apply for the new forex rules as well.

For example, a German citizen who is a resident of the U.S. would not be allowed to trade CFD's. Brokers typically ask for proof of residence, not citizenship.
Then the rules can be gamed by a US citizen. Find somebody in a country that allows CFDs, get his residential papers whatever, pay him for it etc. Setup an offshore company registered at this residential place.

Only problem with this scheme is that the IRS might want to know about the source of income ......
  • #475
  • Sep 5, 2010 3:38am Sep 5, 2010 3:38am
Quoting maheswara
no real traders need 1:100 , unless he is trying to double his money everyday ...
lets presume margin comes down 10:1. you would now have risk five times more of your cash in your bank account with bucketshop OANDA. If oanda goes broke, your money is gone. Thus is increases the risk to the trader. If you have $100 000 cash with FDIC protected JP Morgan, you would now only have to risk a tiny amount of your capital with oanda with 400:1 leverage.
  • #476
  • Sep 5, 2010 3:57am Sep 5, 2010 3:57am
Or, if you're serious, establish residency in another country and trade from there. I'm thinking Panama or Costa Rica - plenty others I'm sure. They have easy programs that you can use to establish residency, requiring, of course, a minimum investment in certain sectors of the economy - but its < 6 figures, and your "investment" can be something that makes money for you - a teak plantation, a boutique surfer hostel, whatever. OK, so you're there and you have established residency - you don't actually have to physically be there very much. Nevertheless, after a certain amount of time as a resident you can gain citizenship. As a citizen you can take advantage of their socialized health care and other bennies, for what they are worth. But you don't have to wait to form a corporation (a SA - sociedad anonima) - and that is what you trade from. Your foreign corporation's revenue can not be taxed by the USA, but you will have to pay local (in-country) taxes. And if you take a dividend or wages from the corporation's trading revenue then you must pay US tax on that. But you may not need to take much, because your SA needs a yacht where you can entertain your investors, it needs a nice villa in the mountains - the corporate retreat - you can have your quarterly "visioning" retreats there. And the SA will probably trade from accounts at Deutsche Bank or whatever, so you will need to travel (on the SA's dime) to Europe several times a year. You need to hire several capable secretaries to help you out. The stress of trading a multimillion dollar fund gets really intense. Trips to Milan to buy shoes - they need to look nice. Business expenses just never quit. You get the idea. Or you can keep trading minilots and fuming about the guvmint.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #477
  • Edited 4:47am Sep 5, 2010 4:29am | Edited 4:47am
Before any of that you are going to have to give up a lot of your money to payoff uncle sam before you can give up your citizenship. Something that congress/president slipped into a bill that became law back a couple of years ago. Do a search on it. As well as once your change us citizenship, your still going to have to file taxes for several years after you give up your citizenship so uncle sam can still come after you for tax purposes. Also, your going to have to payoff the new government every year and hopefully their laws do not change where you can no longer do that. Such as change in power say in venezuela. Barring all those things sure you can make it.

Regards,
Jeff

Quoting The Fool
Or, if you're serious, establish residency in another country and trade from there. I'm thinking Panama or Costa Rica - plenty others I'm sure. They have easy programs that you can use to establish residency, requiring, of course, a minimum investment in certain sectors of the economy - but its < 6 figures, and your "investment" can be something that makes money for you - a teak plantation, a boutique surfer hostel, whatever. OK, so you're there and you have established residency - you don't actually have to physically be there very much. Nevertheless,...
  • #478
  • Sep 5, 2010 5:21am Sep 5, 2010 5:21am
Quoting azjeff
Before any of that you are going to have to give up a lot of your money to payoff uncle sam before you can give up your citizenship. Something that congress/president slipped into a bill that became law back a couple of years ago. Do a search on it. As well as once your change us citizenship, your still going to have to file taxes for several years after you give up your citizenship so uncle sam can still come after you for tax purposes. Also, your going to have to payoff the new government every year and hopefully their laws do not change where...
venezuela?...why not canada or england or italy. seems to me more than half of rich people are leaving the US anyways.
Anything can happen in FOREX. There's no 100% sure
  • #479
  • Sep 5, 2010 5:32am Sep 5, 2010 5:32am
To clarify the leverage for CFD's here in Australia is 10:1 to 20:1 and no bank, broker, bucket shop, criminal you named will let you trade CFD's here in Australia if you are an US Citizen.
  • #480
  • Sep 5, 2010 6:00am Sep 5, 2010 6:00am
I am interested in moving eventually out of the U.S for awhile, not to evade the 50:1 law, because I don't care, thats a fine amount of leverage. Just for other reasons. I was always wondering how to do that if you already have a legitimate LLC/corp trading business in the States. Would you dump that business and start a business outside the U.S or would you just keep your business entity in the States and just live outside the States? Surely you would prefer trying to not pay as much taxes if your not living here, so what The Fool was saying is interesting.

I wouldn't want to give up my U.S citizenship, but trading from an SA and living there (Panama or whatever) while buying and living as much as possible with the SA's "business expenses" and paying yourself something like 20-40k and paying US taxes on that wouldn't be so bad.

I have heard you can be exempt to up to 91,400$ in taxes if you can prove you lived and made the money outside the US for that whole year.

BTW, I don't know much about any of this, I am just starting to look into it, but it seems there are some loopholes... and of course, there has to be...
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