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Thoughts on 50:1 Leverage

  • #261
  • Nov 4, 2010 9:59pm Nov 4, 2010 9:59pm
Article in WSJ today:
"Rep. Spencer Bachus, an Alabama Republican who will be one of the contenders to take over the House Financial Services Committee next year said Wednesday he wants to rewrite "job-killing provisions" of the Dodd-Frank financial overhaul law, starting with new rules on derivatives trading."

So, maybe high leverage will be back!
  • #262
  • Nov 4, 2010 10:13pm Nov 4, 2010 10:13pm
Quoting eagle4x
Article in WSJ today:
"Rep. Spencer Bachus, an Alabama Republican who will be one of the contenders to take over the House Financial Services Committee next year said Wednesday he wants to rewrite "job-killing provisions" of the Dodd-Frank financial overhaul law, starting with new rules on derivatives trading."

So, maybe high leverage will be back!
Personally, I hope you're right. Unless you are only capable of trading one or two currency pairs at a time (speaking from a retail trader perspective) this 50;1 leverage thing sucks

And I'm more than willing to argue with anyone about it !!!
  • #263
  • Nov 4, 2010 11:28pm Nov 4, 2010 11:28pm
There is a reason Oanda has the most traders and they are the most profitable. Because Oanda has always been 50:1. Full stop!
  • #264
  • Nov 4, 2010 11:35pm Nov 4, 2010 11:35pm
Quoting eagle4x
Article in WSJ today:
"Rep. Spencer Bachus, an Alabama Republican who will be one of the contenders to take over the House Financial Services Committee next year said Wednesday he wants to rewrite "job-killing provisions" of the Dodd-Frank financial overhaul law, starting with new rules on derivatives trading."

So, maybe high leverage will be back!
Bahahahaha...yea and maybe pigs can fly.

Only thing he wants to do is put the foxes back in the hen house so they can tank the world again. Why do you think Wall Street bankrolled RepubliCorps campaign.

But thanks to the Teabaggers, RepubliCorp does not have the Senate and there is no way in hell the Senate Majority (that no longer get's walls streets money) is going to be all that sympathetic.

But feel free to fantasize for a couple years until Dems take it all back and then some!
  • #265
  • Nov 4, 2010 11:41pm Nov 4, 2010 11:41pm
I could go on and on, but I'll leave you with this: Let's not turn this thread into a political thread or one of us will be suspended and it won't be me.



Quoting hubbahubba
Bahahahaha...yea and maybe pigs can fly.

Only thing he wants to do is put the foxes back in the hen house so they can tank the world again. Why do you think Wall Street bankrolled RepubliCorps campaign.

But thanks to the Teabaggers, RepubliCorp does not have the Senate and there is no way in hell the Senate Majority (that no longer get's walls streets money) is going to be all that sympathetic.

But feel free to fantasize for a couple years until Dems take it all back and then some!
  • #266
  • Nov 4, 2010 11:56pm Nov 4, 2010 11:56pm
Quoting GulfCoastPip
I could go on and on, but I'll leave you with this: Let's not turn this thread into a political thread or one of us will be suspended and it won't be me.
Sounds intriguing. Go on!
  • #267
  • Nov 5, 2010 12:04am Nov 5, 2010 12:04am
Quoting hubbahubba
Bahahahaha...yea and maybe pigs can fly.

Only thing he wants to do is put the foxes back in the hen house so they can tank the world again. Why do you think Wall Street bankrolled RepubliCorps campaign.

But thanks to the Teabaggers, RepubliCorp does not have the Senate and there is no way in hell the Senate Majority (that no longer get's walls streets money) is going to be all that sympathetic.

But feel free to fantasize for a couple years until Dems take it all back and then some!
So Mr. HubbaHubba, Why don't you elaborate a bit more as to why pigs can't fly and why he wants to put the foxes back in the hen house.. GCP is right.... you can turn this into a political argument, but you're wrong to do so.

I've already made that mistake. Never again. I'm anti Dem's or Rep's. I'm pro trader. Look carefully at the word "trader". Is it similar to "traitor"? That may not sound very pretty but if you don't look after your trader self and back those who act in your interest, who do you think will? Think about it.
  • #268
  • Nov 5, 2010 12:59am Nov 5, 2010 12:59am
AWESOME !! TAKE THAT ! nancy pelosi !!!



Quoting eagle4x
Article in WSJ today:
"Rep. Spencer Bachus, an Alabama Republican who will be one of the contenders to take over the House Financial Services Committee next year said Wednesday he wants to rewrite "job-killing provisions" of the Dodd-Frank financial overhaul law, starting with new rules on derivatives trading."

So, maybe high leverage will be back!
  • #269
  • Nov 5, 2010 3:52am Nov 5, 2010 3:52am
Quoting hubbahubba
There is a reason Oanda has the most traders and they are the most profitable. Because Oanda has always been 50:1. Full stop!
lol

Not true.
  • #270
  • Nov 5, 2010 8:42am Nov 5, 2010 8:42am
Quoting Marv
lol

Not true.
lol....care to elaborate?
  • #271
  • Nov 5, 2010 9:28am Nov 5, 2010 9:28am
Actually it's you who should elaborate. Back up your assumption with facts and then we'll talk.

For example: Why do you think the 'average risk per trade' for Oanda's trader population is lower than other brökers (as a result of having a little lower leverage), do you have any average risk per trade stats? Why could it not be because of other factors such as their having the lowest spreads/commission, or their interest policy, etc. etc.?
  • #272
  • Edited 11:55am Nov 5, 2010 10:01am | Edited 11:55am
Quoting Marv
Actually it's you who should elaborate. Back up your assumption with facts and then we'll talk.

For example: Why do you think the 'average risk per trade' for Oanda's trader population is lower than other brökers (as a result of having a little lower leverage), do you have any average risk per trade stats? Why could it not be because of other factors such as their having the lowest spreads/commission, or their interest policy, etc. etc.?
If that were the case then every fool would automatically have an account with Oanda and suddenly most of these fools would be making money in Forex (by your implied explanation) for a change.

If all it takes to turn Forex losers in to Forex winners are slightly tighter spreads on some pairs at some times of the day and a few extra pennies of interest on their $100 accounts that they used to trade at 400:1 or whatever then sign me up.......Oh wait, I'm already on Oanda and just fine with 50:1 thank you very much. In fact, a lot of pro brokers think even that is too high and limit themselves to 20:1. So now since I have countered with reason I suspect you will twist yourself into the "with higher leverage I can keep most of my millions somewhere else" pretzel. Too late as you have committed to the "interest and spreads" argument. That will be the argument of some other poster no doubt.

Anyways, all will be revealed in another 3 months I suspect. At that time the other brokers who are now limited to 50:1 will likely report an increase in the percentage of their traders who are profitable. It will help that they will lose a lot of their libertarian loser customers to off shore shady brokers still offering their 400:1 "freedumb" (sic) leverage.
  • #273
  • Nov 5, 2010 10:50am Nov 5, 2010 10:50am
Like most traders in these message boards, you have no understanding of the probability and statistics of a zero-sum game.

The green is a copy of a post of mine from another thread summing up my thoughts on those reports:

1) The distribution of winning traders vs. losing traders over time is a random distribution. Within such distribution, consistently winning traders will always be a small percentage. This is not a "myth".

2) This data doesn't really mean much for reasons already stated by someone else (i.e. lack of information on the data). Be aware that it does NOT describe long-term performance of traders. Unlike what the self-promoting bröker may want the newbie to believe, just because it had 50% profitable accounts in such report does NOT mean 50% of its traders are consistent winners. Far from it.

3) Low spreads + no commissions + interest on dormant accounts + large number of accounts are all factors that definitely help give Oanda an edge over other brökers as far as those stats are concerned and no, the 50:1 leverage is likely not one of them. (because the average risk per trade for all traders within the bröker is most probably still the same as other brokers)


Regarding leverage,

I won't get into another pointless argument about this, but will say this again:

It really is pathetic that you people buy the bullshit fed to you saying that limiting your buying power is a GOOD thing for you.
  • #274
  • Nov 5, 2010 10:58am Nov 5, 2010 10:58am
Quoting Marv
Like most traders in these message boards, you have no understanding of the probability and statistics of a zero-sum game.

The green is a copy of a post of mine from another thread summing up my thoughts on those stats:

[color=Green]1) The distribution of winning traders vs. losing traders over time is a random distribution. Within such distribution, consistently winning traders will always be a small percentage. This is not a "myth"....
So you are saying the Oanda data is simply manipulated data?......rrrrright.

I do agree with you on point 1 though. Over 50% of traders profitable on Oanda the last 3 months does not mean over 50% of traders are profitable. The next 3 months could be over 50% but completely different traders. So the overall average over a much longer period of time is likely much less.

That does not take away from the fact Oanda has a much higher percentage of traders profitable in a 3 month period. And btw as I'm sure this will be your next argument.......these were accounts that were active in the past 3 months. Yea, I heard that straw man argument but too bad so sad it's simply not true that they are including dormant accounts accumulating interest.
  • #275
  • Nov 5, 2010 11:03am Nov 5, 2010 11:03am
Quoting hubbahubba
So you are saying the Oanda data is simply manipulated data?......rrrrright.
If that's what I wanted to say, that's what I would have said.

Ok here's another post of mine that probably better explains my point:

I am sure that the percentage of people who actually LIVE off of forex trading is even smaller than 5%.

But when we talk about the number of profitable accounts within a bröker over a period of time, you would have about 30/40% as a mean (average) depending on the "house edge" (the bröker's spreads/commissions). The higher the house edge, the lower the mean. In a hypothetical bröker with 0 spreads and commissions, you'd have about 50% as a mean allowing for deviations of course for such statistic. (i.e. it could be 60% in one data sample, 40% in another, etc. but the average would be 50% for such broker)

But if you try to isolate the traders that have a real edge and win in the long run, it would be a very small percentage. You can't have 25 or 30% of market participants as consistent winners, because it's impossible. This is a zero sum game.

I am agreeing with you that Oanda has a better trader performance rate (i.e. mathematically speaking: a higher 'mean/average' for the percentage of "profitable accounts over a limited period of time") compared to other brokers. But I am disagreeing with you that its root cause is the 50:1 leverage and I've explained why.
  • #276
  • Nov 5, 2010 12:01pm Nov 5, 2010 12:01pm
Quoting Marv

I am agreeing with you that Oanda has a better trader performance rate (i.e. mathematically speaking: a higher 'mean/average' for the percentage of "profitable accounts over a limited period of time") compared to other brokers. But I am disagreeing with you that its root cause is the 50:1 leverage and I've explained why.
The next quarterly report will shed more light on that since the other brokers will now be at 50:1 for that period.

Sadly....there will still be many in denial after that and will chalk it up to all the losers going overseas or whatever. But at that point you are splitting hairs because it still does not take away from the fact the losers are using higher leverage. Whether it is the leverage itself or the type of people who use that leverage or why or how is unimportant.
  • #277
  • Nov 11, 2010 8:41pm Nov 11, 2010 8:41pm
I just noticed a recent post I submitted,
number six hundred and ten,
has been relegated to the recycle bin.

It was said it was because it was political,
since it was flamed by who some wrote is a liberal.

The article didn't side on democrat, teaparty, or republican,
it was completely non-partisan.

I don't know who he is, just goes by hubbahubba,
must have been drinking a bottle of rum,
when he made up that name similar to a pack,
of chewing gum.

I merely attached an article about leverage,
man that drink hubba had must have been a strong beverage.

I don't mean this to be personal,
my post was meant for discussion of the article,
there's no reason to critcize the Wall Street Journal.
  • #278
  • Mar 24, 2011 12:33pm Mar 24, 2011 12:33pm
Quoting hubbahubba
The next quarterly report will shed more light on that since the other brokers will now be at 50:1 for that period.

Sadly....there will still be many in denial after that and will chalk it up to all the losers going overseas or whatever. But at that point you are splitting hairs because it still does not take away from the fact the losers are using higher leverage. Whether it is the leverage itself or the type of people who use that leverage or why or how is unimportant.

I have been a successful trader off an on for several years, regardless to the leverage I use. Of course, 500:1 instead of 50:1 allows me to set aside a smaller amount of margin, and since I do not use stop losses, it allows me to keep my negative trades open longer if I know the market will be coming back around. However, I think the 50:1 leverage is nonsense and just another way for the U.S. government to control the flow of money into its own pockets.
  • #279
  • Mar 24, 2011 1:54pm Mar 24, 2011 1:54pm
This was brought back out of nowhere... But hey, I'll say it again...

Standard institutional accounts never allowed 500:1 leverage. I hope you all understand that's crazy. You can go read up on why they did this at retail shops.

A real institutional account is 50:1 or less and has always been that way as far as I know. If you are a successful trader for over a couple of years, you would most likely have an institutional account. You would be getting tighter spreads along with true interbank pricing and more reliability as far as a counterparty. Using leverage to allow for no stops and trades to run against you is not professional at all.

You tell me how these Institutions, some or most who diversify in plenty of instruments, have always been doing this with 50:1 leverage or less. If your strategy needs to use a crazy amount of leverage, I would seriously question your strategy, or at least, your entry points need some serious work.

So how is 50:1 nonsense? (I don't really care for an answer)
  • #280
  • Mar 24, 2011 2:20pm Mar 24, 2011 2:20pm
Quoting Monroe
...So how is 50:1 nonsense? (I don't really care for an answer)
I was never the 50:1 that bothered most people (of course I have decided I will speak for "most people"). But it has been the almost constant bombardment from the CFTC and NFA that has created such a large outcry. First it was reducing 200:1 to 100:1. OK...fine and good. Then Anti-Hedging rules. Again one can open two accounts and accomplish the same thing. After that, FIFO. Now we're getting steamed, because this has opened the door for retailers to introduce "fuzzy math" into their statements while claiming to "protect" me from myself. Finally the latest thing 100:1 to 50:1.

It isn't that 50:1 is terrible, granted I would prefer 100:1, but it doesn't materially effect my trading or that of "most people". But rather it is the implication that us retail traders are stupid and cannot look out for themselves, thus need a "nanny" to do it for them. So under the guise of "looking out for the little guy" they bend him over the table and shove a fat pole where the sun doesn't shine, and say, "this is for your own good".

Whether you have 500:1 or 50:1 leverage doesn't matter. A prudent trader will still use only what his best judgement dictates, but now there's not choice. Its the Government's pole up your @$$ or nothing.

WOW I feel so much better now.
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