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Leverage Reduction: First USA now Japan. Who's next?

  • #21
  • Oct 4, 2010 5:11pm Oct 4, 2010 5:11pm
No, the only thing weak is your ability to comprehend to situation at hand or that you are part of this sham as you just admitted in your last post. This much is now obvious. And you misnamed yourself in your ID selection because the first rule in successful daytrading is limiting your losses while letting your winners run. If, indeed, you were a successful daytrader you would know that fact.

Humble Regards.

Quoting daytrading
A few aspects of your story I am wondering about.

Firstly, I think traders who can produce consistent returns on low leverage must be somewhat more skilful than the one's who can only do it due to high leverage....
  • #22
  • Oct 4, 2010 5:29pm Oct 4, 2010 5:29pm
DT! Good to have you back

Quoting daytrading
While 100:1 has been the average leverage on FX (and some other products)for many years now, it is nonetheless insanely high.

I trade on 20:1 and have no problem to reduce it to 10:1 if necessary. If especially newer traders would follow that and tailor their position size accordingly, I believe the account blow-out statistics would show a much longer survival rate.

regards
daytrading
For those who do not understand this, you still have a lot to learn.
Measure twice, cut once
  • #23
  • Oct 4, 2010 5:33pm Oct 4, 2010 5:33pm
Quoting daytrading
Secondly, after 23 years in the business as a professional, I can tell you that its only the retailers who offer such high leverage....
Well, I've only been in the business for 20 years, so you have me beat. But here's the bottom line:

1) Those who have lots of money to invest will do just fine at 50:1 leverage or less. 10:1 leverage even if they have the megabucks to invest.

2) Traders who have a full-time job and are trying to grow their accounts and are working toward making forex their full-time job are going to have a very tough time with this new rule.

3) Supposedly this rule is to protect traders. This I don't believe. At high leverage traders can trade with a tiny amount of real money at risk, after the rule change traders will now have to put a much, much larger amount of money at risk and may end up borrowing money in order to make the same amount of monthly increase they were previously making. This makes their situation much more dangerous and damaging.

Personally, I keep high leverage accounts, but trade very small trades around 5:1. This gives me tremendous flexibility in being able to trade multiple strategies, add to trades, put hedges on, etc. and not have to worry about margin requirements getting out of control. After the rule change I will only be able to take 1 trade at a time or will need to significantly increase my capital at risk. I'm not gambler and do not take high leverage trades, I just want to keep the freedom and flexibility and low risk options I have now.

I'm so mad, I'm thinking about pushing the government for 1:1 leverage so only Bill Gates and Warren Buffet will be able trade. Let's see how many of the bigger players like that.
  • #24
  • Oct 4, 2010 5:35pm Oct 4, 2010 5:35pm
And the offer still stands: To all of you that think getting your buying power halved is good thing. I'll give you $50 dollars for every $100 you give me? Come now step right up!
  • #25
  • Oct 4, 2010 5:48pm Oct 4, 2010 5:48pm
Quote
Originally Posted by daytrading http://cdn.forexfactory.com/images/buttons/viewpost.gif
I trade on 20:1 and have no problem to reduce it to 10:1 if necessary. If especially newer traders would follow that and tailor their position size accordingly, I believe the account blow-out statistics would show a much longer survival rate.

regards
daytrading

Now see, I agree with some of what you say. My opinion though is that high account leverage should be allowed. It's everyone's own responsibility to trade responsibly and take low leverage trades. If someone throws their money into forex and trades using every bit of available leverage, then they will lose it all no matter if they have 500:1 leverage or 50:1 leverage. The only difference is they will lose more money blowing their 50:1 leverage account as undoubtedly they had to have a larger account in order to cover the huge margin requirement.
  • #26
  • Oct 4, 2010 7:16pm Oct 4, 2010 7:16pm
Quoting daytrading
If you take a close look at what the majority of institutional futures brokers and banks offer, you will find that 50:1 is the exception. Most are at 25:1 and were never any higher.

The only reason 500:1 down to 200:1 exists is to get 'poorer' participants to part with their money - which was a game unaffordable to them 15 years ago. This is a mega business like Las Vegas....and everyone wants to play.
This is exactly what I've said to these over leveraged forex gamblers, but they just don't understand for some reason.
  • #27
  • Oct 5, 2010 1:41am Oct 5, 2010 1:41am
Quoting Leche Mocha
No, the only thing weak is your ability to comprehend to situation at hand or that you are part of this sham as you just admitted in your last post. This much is now obvious. And you misnamed yourself in your ID selection because the first rule in successful daytrading is limiting your losses while letting your winners run. If, indeed, you were a successful daytrader you would know that fact.

Humble Regards.
See, now you are getting personal. Funny - I had a premonition prior to answering your post the first time - but I always extend the benefit of the doubt.

You seem full of rage and sarcasm - not the traits of a good trader in most cases. I can see your frustration about the possibility of such regulations and at the same time this tells me that you need the leverage - because if you didn't you would not fight the argument as sternly as you do.

I am no part of any sham, nor have I been. I neither have to prove any success to you....but I am digressing.

Fact is that tens of thousands of newbies every year think they can become traders (or better, great traders) with maybe $1000 starting capital. For most the story ends in either having to refund their accounts after a few months or the dream is over very quick.

The reason for this is two-fold.

Firstly, I always wonder what makes people think that a profession that has a very very small success rate (much like brain surgery in terms of people who really ARE great) is laying itself bare for the skills to be attained by cruising a few forums and putting a few thousand dollars up with 500:1 leverage? Sound like the gold-rush days in the wild west to me.

Secondly, the statistics clearly tell the story of new traders being over-leveraged, and their position size is too high relative to the offered leverage.

I have no need to make any of this up - I have coached traders, I have profitable balance sheets, I have run a research firm for many years and I am trading since 1987/8 - for institutions and for myself.

Please don't be disappointed if I will not take you up on your generous offer that you have made twice during the discussion.

With this I will leave - which I am sure you are quite happy about:

I have merely stated my very personal opinions and views on the matter - nothing more, nothing less. You may take those as they are, misconstrue them or embrace them. It's entirely up to you.

regards
daytrading
Enter Signature
  • #28
  • Oct 5, 2010 2:19am Oct 5, 2010 2:19am
Nice to see all your guys talking about this :
From what these authority have done:

It Seems that :The whole world now know what caused this worst ever financial crisis:

Not Subprime, It's the leverage in Forex Market!

Things not only funny like this, more funny is :
Just check around in the forex market in recent month,
Some authority use exactly same phycho way to make forex more crazy and irrational !!!

But maybe all your guys are wrong:
Probably ,the Uncle tom and japan authority know exactly what forex is !

They are trying to pretect their citizen by Reduce funny leverage ......!!!!
  • #29
  • Oct 5, 2010 2:35am Oct 5, 2010 2:35am
it will be worldwide. well, perhaps they will make an exeption for some small fry like us, so we lose our money faster

.........................................................

www.deadcount.blogspot.com
  • #30
  • Oct 5, 2010 8:23am Oct 5, 2010 8:23am
Quoting daytrading
A few aspects of your story I am wondering about.

Firstly, I think traders who can produce consistent returns on low leverage must be somewhat more skilful than the one's who can only do it due to high leverage. So your argument is rather weak.

Secondly, after 23 years in the business as a professional, I can tell you that its only the retailers who offer such high leverage. If you take a close look at what the majority of institutional futures brokers and banks offer, you will find that 50:1 is the exception. Most are at 25:1 and were never...
So high leverage is only for scalping? Or only scalpers use any leverage?

small participants...see my other posts about the disgust of having such people in the market. Currency wars are heating up too since I mentioned it first and the true motivation. No one in DC are sitting there awake at night trying to figure out the leverage and the sucess rate of someone opening a $250 account. Unless it was how to tax 'em.
  • #31
  • Oct 5, 2010 8:44am Oct 5, 2010 8:44am
The great mentality of this thread is that the disappearance of high leverage means that you can no longer get rich of the 1k starting balance. Fact is that even if they offered you 1000:1 leverage you would still go bust. Reigning in the leverage means that as a small cap investor you need to consider smarter trading options.

For those who think that trading and making huge annual returns works long run think again. How many threads are there today that promise this and how many survive till tomorrow. You need to have a larger focus than just 'oh no, my leverage has been cut in half, how will a be a millionaire by tomorrow'
  • #32
  • Oct 5, 2010 8:57am Oct 5, 2010 8:57am
Amazingly (or not), the same Dodd-Frank bill that goes after the small retail trader (who had nothing to do with the 2008 financial crisis) didn't touch Fannie, Freddie, the Fed or the leverage of "too big to fail" financial institutions (all of which had EVERYTHING to do with the financial crisis).
  • #33
  • Oct 5, 2010 9:04am Oct 5, 2010 9:04am
Quoting Longshot
Amazingly (or not), the same Dodd-Frank bill that goes after the small retail trader (who had nothing to do with the 2008 financial crisis) didn't touch Fannie, Freddie, the Fed or the leverage of "too big to fail" financial institutions (all of which had EVERYTHING to do with the financial crisis).
Longshot, its funny you post that!

Franks has announced today he's going after Fannie/Freddie regulations in hopes it helps out the two mortgage lenders. He feels Fannie Freddie shouldn't have foreclosed homes and is looking to regulate the two mortgage companies foreclosure practices.

Franks has a love for the two. I personally believe they have him in their back pocket. But thats just my opinion.

http://topics.nytimes.com/top/refere...ank/index.html
  • #34
  • Edited 9:48am Oct 5, 2010 9:26am | Edited 9:48am
I think you misunderstood me (either on purpose as an out or there is a language barrier). Notice my big smile and my use of "humble regards" in my posts? That is considered being "nice".

Anyway, good pips to you at whatever leverage you choose. Just don't be mad when they get around to "Coming for you..." No one will be left to speak for you. Certainly not successful independent traders such as myself. We have great memories.
Quoting daytrading
See, now you are getting personal....
  • #35
  • Oct 5, 2010 10:02am Oct 5, 2010 10:02am
Quoting Razor_trader
The great mentality of this thread is that the disappearance of high leverage means that you can no longer get rich of the 1k starting balance. Fact is that even if they offered you 1000:1 leverage you would still go bust. Reigning in the leverage means that as a small cap investor you need to consider smarter trading options.

For those who think that trading and making huge annual returns works long run think again. How many threads are there today that promise this and how many survive till tomorrow. You need to have a larger focus than just...
1000:1 = $100 per lot?
So your motivation of gov't knows best is my 100 dollars is protected(due to tax increases in janurary). Or should I lose the 100,000 instead with no leverage since we'll lose it anyway.
Sounds like SEC rule 2520 again, which proves my theory more than common sense watching the leaders would.

Same people protecting my 100 bucks are the ones protecting me from happy meals and soft drinks, yet legalizing drugs.
  • #36
  • Oct 5, 2010 6:02pm Oct 5, 2010 6:02pm
Techno79,

Your are 100% correct........its NOT all about the leverage, its about having choices made for us instead of the trader deciding what is best for he or she. Its about our freedom of choice being taken away by a bunch of liberal do nothings. Sure if you can trade you can survive this socialist invasion into our freedoms. Its just the beginning folks & if you don't wake up the only thing you"ll be able to trade will be the war stories about the times you did trade.

Techno79.........from one AMERICAN to another thanks for that post.
_______________________________
  • #37
  • Oct 5, 2010 7:17pm Oct 5, 2010 7:17pm
Quoting acetrader
its NOT all about the leverage, its about having choices made for us instead of the trader deciding what is best for he or she. Its about our freedom of choice being taken away by a bunch of liberal do nothings. Sure if you can trade you can survive this socialist invasion into our freedoms. Its just the beginning folks & if you don't wake up the only thing you"ll be able to trade will be the war stories about the times you did trade.
AMEN! Well said.
  • #38
  • Oct 5, 2010 8:45pm Oct 5, 2010 8:45pm
I have my account set up with Forex.com. Just got notified that they are changing my leverage Oct. 8th to 50:1. Can anyone recommend a broker that still allows 100:1 or 200:1 leverage? I assume it will have to be a broker with operations only in the UK?
  • #39
  • Oct 6, 2010 3:52am Oct 6, 2010 3:52am
Quoting fap103
I have my account set up with Forex.com. Just got notified that they are changing my leverage Oct. 8th to 50:1. Can anyone recommend a broker that still allows 100:1 or 200:1 leverage? I assume it will have to be a broker with operations only in the UK?
http://www.activtrades.com/index.aspx?page=forex_stand
that broker for example offers a really high leverage.

nearly every EU based broker offers such a high leverage.

but, right now the market is really volatile and makes huge movements - personally I don't think that such a high leverage is needed in this times
Pecunia non olet
  • #40
  • Oct 6, 2010 4:03am Oct 6, 2010 4:03am
Quoting acetrader
Techno79,

Your are 100% correct........its NOT all about the leverage, its about having choices made for us instead of the trader deciding what is best for he or she....
i'm not a friend of such high leverages - but i can only agree to your post. everyone is responsable for his own acc, if someone would like to use a leverage of 100:1 he should have the possibility to do so.
this regulation is an irregular intervention in the free market and helps nobody
Pecunia non olet
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