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Forex changed forever!

  • #261
  • Jan 21, 2015 3:02pm Jan 21, 2015 3:02pm
Quoting Profit Daily
{quote} So they are changing it to what it already is in the US. Their will still be brokers offering high leverage. I use them, they are fine. They managed risk properly. Risk has nothing to do with leverage. Lower leverage only requires a bigger deposit with your broker. I use high leverage brokers so I can keep the funds in my own bank account. So while I may be at 100:1 or 200:1 on the funds with my broker, I'm still only using 2-3% of my forex funds which I have in my bank. There is no safer way of protecting your money.
I agree with you that margin "available" does not mean much.

In my case for example you can give me 10,000:1 and it will not matter much to me.

I will keep using 10 or 20:1 max.

Now 1/15/2015 showed how high leverage can bring ECNs to their knees.

Now if you like trading with MM, than thats another story.

MM don't let you make money. As soon as you start transitioning to profitability they weed you out.

I don't believe people claiming to make decent money consistently with any MM.

I hear people claiming it all the time but I still don't believe them
So, you think you have rights? LOL
  • #262
  • Jan 21, 2015 3:58pm Jan 21, 2015 3:58pm
Quoting connect_ananth
the article suggests this to be temporary for this week's event , given that they have already been burnt would want to be extra cautious :-) i think given that the fodder brokers have to lure people is get rich with the leverage ... not sure if they would let go off of that handle as a permanent measure - the future days will clarify how the broker world /regulators are taking this event .. one off or keep retail trading at safe distance..... {quote}
"Suggests this to be temporary"?

After reading the article again I don't see anything temporary on it.

FXCMs leverage reduction is permanent.

The ironic part of it, is that FXCM lobbied against CFTCs leverage reduction regulation.

Now they are spontaneously lowering their leverage where they don't need to do it.

If I remember correctly the original CFTC target was 20:1.

If 20:1 was the leverage FXCM would be in the hole for "only" 120M !!
So, you think you have rights? LOL
  • #263
  • Jan 21, 2015 4:22pm Jan 21, 2015 4:22pm
Quoting Profit Daily
{quote} You are placing me unnecessarily at risk by reducing leverage. What aren't people understanding here. Lower leverage= bigger deposit= more risk
Completely agree with you. Has anyone read the NFA disclosure on trading on off exchange? Any Forex account is not protected by the bankruptcy code, even the segregated. In the event the company becomes insolvent, you can kiss your money goodbye. The creditors are given priority FIRST!

Not everyone uses leverage to increase risk/size of positions, I use it to decrease exposure of my capital. Our money's risk is not limited from trading but the moment it is deposited with our broker.

Instead, a regulation or system or anything should be put in place to protect themselves of such eventualities.
  • #264
  • Jan 21, 2015 5:06pm Jan 21, 2015 5:06pm
Quoting Profit Daily
{quote} I repeat: Their will still be brokers offering high leverage. I use them, they are fine. They managed risk properly. Risk has nothing to do with leverage. Lower leverage only requires a bigger deposit with your broker. I use high leverage brokers so I can keep the funds in my own bank account. So while I may be at 100:1 or 200:1 on the funds with my broker, I'm still only using 2-3% of my forex funds which I have in my bank. There is no safer way of protecting your money.
Protecting your money.....mmmmmmm.

There is trading according to the rules and then there is risk management by skirting obligations. Those who provide a minimal deposit whilst segregating their monies in seperate bank accounts are relying on no recovery from default. If the broker is trading according to rules which satisfy a regulators risk management and compliance requirements that offer protection to investors/traders, then the rogue trader does not have a leg to stand on legally here in Australia. It pays to read the fine print of your agreement with your broker as regulators will only step in and void contractual measures when there is clear direlection of duty on the brokers behalf.

Here in Australia, a defence such as retention of funds in a segregated account is not going to help you much. Asset protection measures such as this or the transfer of assets to a spouses name does not offer protection in these cicumstances. I suppose things are just different depenedent on where you reside and which country the broker is regulated in. ASIC is your friend here in Aus unless of course you abuse the very system it regulates.

If you wish to keep clean here in Australia using an Aussie broker, treat the risks of leverage seriously as there is recourse available to the broker if you don't.
  • #265
  • Jan 21, 2015 5:24pm Jan 21, 2015 5:24pm
Quoting Copernicus
{quote} Protecting your money.....mmmmmmm. There is trading according to the rules and then there is risk management by skirting obligations. Those who provide a minimal deposit whilst segregating their monies in seperate bank accounts are relying on no recovery from default. If the broker is trading according to rules which satisfy a regulators risk management and compliance requirements that offer protection to investors/traders, then the rogue trader does not have a leg to stand on legally here in Australia. It pays to read the fine print of...
when I speak of keeping my money in my bank account, I mean my bank account, not some maybe segregated account the broker claims. my money is safest in my account, broker only has what is requred to maintain my existing trades.
  • #266
  • Jan 21, 2015 5:29pm Jan 21, 2015 5:29pm
Quoting Profit Daily
{quote} when I speak of keeping my money in my bank account, I mean my bank account, not some maybe segregated account the broker claims. my money is safest in my account, broker only has what is requred to maintain my existing trades.
Ok. :-) I do the same but simply so I can earn interest on my non-utilised funds. This CHF debacle is going to be a nightmare for the legal industry and ASIC here in Aus. There are those with legitimate concerns regarding disclosure and risk management breaches of the intermeriadies who are likely to cause a class action, but there will also be many victims who won't be saved. Aus is fairly heavily regulated so you do need to keep squeaky clean as opposed to other jurisdictions if you want to survive a long time.

Given the nanny state mentality here (probably a good things in some ways), events like this tend to have industry repurcussions......and I hate intervention if you play by the rules. :-(
  • #267
  • Jan 21, 2015 5:37pm Jan 21, 2015 5:37pm
[quote=Copernicus;8013476]{quote} Ok. :-) I do the same but simply so I can earn interest on my non-utilised funds. This CHF debacle is going to be a nightmare for the legal industry and ASIC here in Aus. There are those with legitimate concerns regarding disclosure and risk management breaches of the intermeriadies who are likely to cause a class action, but there will also be many victims who won't be saved. Aus is fairly heavily regulated so you do need to keep squeaky clean as opposed to other jurisdictions if you want to survive a long time. Given the nanny state mentality here (probably a good things in some ways), events like this tend to have industry repurcussions......and I hate intervention if you play by the rules. :-([/quotI
I'm in the us, I wish I could take with ASIC broker. You think your in a nanny state? Lol come hang out here for awhile
  • #268
  • Jan 21, 2015 5:42pm Jan 21, 2015 5:42pm
Quoting Profit Daily
I'm in the us, I wish I could take with ASIC broker. You think your in a nanny state? Lol come hang out here for awhile
Yep I must admit some of the rules of the US such as shorting restrictions etc. would be a real headache. I feel for you.

I must admit despite the stiff regulation here, it seems to have been done quite well to at least give the trader reasonable flexibility but for the intermediary they are up your a** every minute and ASIC surveillances are never fun. Just the threat of one is enough to make the intermediary buckle and usually come to the negotiation table with the aggrieved.
  • #269
  • Jan 21, 2015 6:53pm Jan 21, 2015 6:53pm
NSA raising margin on CHF

OK...the news are piling up!

Forexmagnates busy spiting out news and more news about changes in forex.

http://forexmagnates.com/breaking-nf...rwegian-krone/
So, you think you have rights? LOL
  • #270
  • Jan 21, 2015 7:05pm Jan 21, 2015 7:05pm
I believe the EUR/USD is ready for a retracement.

But independent of a retracement happening or not, news like this one are convincing me that the Euro will go below parity.

Draghi is supposedly ready to inject 1.3 TRILLIONS on europe.

http://www.bloomberg.com/news/2015-0...ough-2016.html

Thats why the Swissies got tha heck out !!
So, you think you have rights? LOL
  • #271
  • Jan 21, 2015 8:36pm Jan 21, 2015 8:36pm
Quoting ForexOracle
I believe the EUR/USD is ready for a retracement. But independent of a retracement happening or not, news like this one are convincing me that the Euro will go below parity. Draghi is supposedly ready to inject 1.3 TRILLIONS on europe. http://www.bloomberg.com/news/2015-0...ough-2016.html Thats why the Swissies got tha heck out !!
Well, if SuperMario does release a bazooka like that I think you could be right and Euro might retrace a bit. I think that 'leak' today was to gauge reaction to the proposed figures. Overall I'd still be bearish as the ECB want that weaker Euro, and, as we learned last week, you don't fight the CBs!
"Risk comes from not knowing what you're doing." - Warren Buffett
  • #272
  • Jan 22, 2015 12:41am Jan 22, 2015 12:41am
Just got this mail from IC Markets...

Quote
In preparation for ECB's QE/Rate announcement please ensure your account’s exposure is kept to a minimum & is well capitalized to avoid liquidation. IC Markets will be changing the leverage across all pairs to 100:1 during the Asian session tomorrow. Any account with an exposure of greater than 50 times its value will be assessed for liquidation/position reduction prior to the announcement.
Quote
The reduced leverage will be effective until 26th of January 2015, post which normal leverage will be assessed on pairs.


Wonder if this is the NEW route the Brokers wanna take...?

Regards,

Ty
My job: I speculate and manage risk.
  • #273
  • Jan 22, 2015 8:48am Jan 22, 2015 8:48am
For the " nothing will change" " head stuck in the sand" people......

Just one week after the SBN earthquake, the changes are piling up.
Attached Image (click to enlarge)
Click to Enlarge Name: MarginChanged5.png Size: 117 KB
So, you think you have rights? LOL
  • #274
  • Jan 22, 2015 9:34am Jan 22, 2015 9:34am
OK, but brokers would have been risk free during SNB mayhem, only if they had set leverage to 4:1, maybe 5:1.
  • #275
  • Jan 22, 2015 9:39am Jan 22, 2015 9:39am
Quoting probabilityf
OK, but brokers would have been risk free during SNB mayhem, only if they had set leverage to 4:1, maybe 5:1.
No...the move in some currencies was up to 40%, so the only way to protect themselves would have been a max leverage of 2:1.
At 4:1 a 25% wipes you out, and at 5:1 a 20% move wipes you out.
  • #276
  • Jan 22, 2015 12:38pm Jan 22, 2015 12:38pm
Quoting majkara
{quote} No...the move in some currencies was up to 40%, so the only way to protect themselves would have been a max leverage of 2:1. At 4:1 a 25% wipes you out, and at 5:1 a 20% move wipes you out.
Your calculation is correct but your logic is wrong.

Not everybody was exposed to CHF.

You are counting as if everybody was exposed to those big moves which is not true.

The best way to see how a lower leverage would change things, is to get the whole amount of the margin call and do a direct proportion calculation.

Using FXCM as an example with the 50:1 standard American levverage.

So, if at 50:1 they got margin called for 300M

At 20:1 the margin call would be 120M

At 10:1 margin call = 60M

At 5:1 margin call = 30M

At 2:1 margin call =12M

Now this is just a simplification because FXCM had different leverages outside the USA.
So, you think you have rights? LOL
  • #277
  • Jan 22, 2015 7:56pm Jan 22, 2015 7:56pm
On forums all over the net people are complaining about an increase of slippage and prices jumping around.

The first to be blamed is the broker, but I don't think they can do much about it.

LPs got burned as well on the SNB event so from now on they will be extra cautious with the quotes they send to their clients.

On top of that, LPs will try to take their losses out of some naive's butts, so expect more stop hunting.

Forex will never be the same.

The changes are just starting.

As volatility increases higher spreads are also in the pipeline.
So, you think you have rights? LOL
  • #278
  • Jan 22, 2015 8:44pm Jan 22, 2015 8:44pm
Quoting ForexOracle
On forums all over the net people are complaining about an increase of slippage and prices jumping around. The first to be blamed is the broker, but I don't think they can do much about it. LPs got burned as well on the SNB event so from now on they will be extra cautious with the quotes they send to their clients. On top of that, LPs will try to take their losses out of some naive's butts, so expect more stop hunting. Forex will never be the same. The changes are just starting. As volatility increases higher spreads are also in the pipeline.

You really seem to be enjoying all the doom and gloom. For those of us who earn a great living trading forex, we need to be much more optimistic. I truly believe everyone is in a panic over a one time event and in a few months this will be in the past and things will normalize. Forex trading is not going anywhere. There will still be brokers offering high leverage. Matter of fact, they may be the only ones left as traders leave the brokers who will no longer offer it.
  • #279
  • Jan 22, 2015 8:53pm Jan 22, 2015 8:53pm
Quoting Profit Daily
{quote} You really seem to be enjoying all the doom and gloom. For those of us who earn a great living trading forex, we need to be much more optimistic. I truly believe everyone is in a panic over a one time event and in a few months this will be in the past and things will normalize. Forex trading is not going anywhere. There will still be brokers offering high leverage. Matter of fact, they may be the only ones left as traders leave the brokers who will no longer offer it.
Wrong assumptions pal!

The thing is that I don't like to keep my head stuck in the sand.

As stated before. I would like forex to stay just the way it is. Or should I say the way it was Wednesday before the SNB event.

The problem is that things are changing and more profound changes are in the horizon.

Thats all I'm talking about.
So, you think you have rights? LOL
  • #280
  • Jan 22, 2015 10:17pm Jan 22, 2015 10:17pm
Quoting gravitist
Oracle, No, fx hasn't changed forever. No, there will be NO regulation changes (in fact the GOP-led Congress is going to overturn Dodd-Frank). No, it's not that big a deal. Turn on the news, they're talking about Belgium,France, Obama, Miley Cyrus..... what I haven't heard on CNN, MSNBC, or even FauxNews , is SNB. Nobody outside of forex cares.
As a trader, real estate investor and entrepreneur, I can attest that Dodd-Frank is nightmare of "unintended" consequences. Maybe you don't see it in your gummint job, but it's great example of clueless bureaucrats doing what their worst at. And it didn't even get to the heart of the 2008 financial crisis. Little Ricky the Retail Forex trader had nothing to do with it. Neither did the mobile home investor with his seller financing. But Fannie, Freddie, the Fed and regulators did. I know plenty of bank auditors and they'll quietly tell you that CRA forced them to make ridiculous loans. Now they can't even do their jobs because of busybodies from various alphabet soup agencies dropping by every hour.

As for retail forex, it's always been caveat emptor. Putting your life's savings in a single FX broker is no different than putting it all on black at the baccaret table...or a late-night real estate investment scheme.
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