SEC bans Broker-Dealers from retail forex transactions

It`s already here. IB just stopped offering leveraged fx trading to traders unless the trader is considered an "Eligible Contract Participant" (ECP). One of the criteria for being an ECP as an individual is that you have to have $10 million in net worth thanks to the stupid incompetent SEC.

At the end, they just don't want to give the little guy a chance. They want you to hand your money over to the mainstream wall street guys, the "professionals" to play with by investing in mutual funds despite numerous studies has shown that those "professionals" fare no better than animals like monkeys and cats or dart-throwing in those investment contests. And you see those "professional" traders from supposedly top investment firms like Goldman Sachs lose Millions and Billions of dollars trading http://www.reuters.com/article/us-go...9AK01C20131122 and yet they are allowed to play with other people's money, even raising money for Barack Obama. We trade with lot more stringent risk management and money management rules and we get banned with this and that, we can't do this and you have to be that to open an account, you have to reside in here to do that, blah blah blah, all bullshit.

When one thing good finally comes along, they have to ban it. When in fact some real crooks like Bernie Madoff comes along, they were useless; they allowed him to con $70 Billion and they still didn't even catch him, didn't even question him. It was his sons who voluntarily went to the Feds to confess that finally put Madoff in jail. Imagine if his sons hadn't gone to the Feds, Madoff would still be out today continuing his Ponzi scheme conning people. This is how competent SEC is and in the meanwhile all they know what to do is ban leveraged fx trading against the little guys who hasn't done anything wrong.

https://www.sec.gov/answers/patterndaytrader.htm

Pattern Day Trader
FINRA rules define a pattern day trader as any customer who executes four or more day trades within five business days, provided that the number of day trades represents more than six percent of the customers total trades in the margin account for that same five business day period. This rule represents a minimum requirement, and some broker-dealers use a slightly broader definition in determining whether a customer qualifies as a pattern day trader. Customers should contact their brokerage firms to determine whether their trading activities will cause them to be designated as pattern day traders.
A broker-dealer may also designate a customer as a pattern day trader if it knows or has a reasonable basis to believe that a customer will engage in pattern day trading. For example, if a customers broker-dealer provided day trading training to such customer before opening the account, the broker-dealer could designate that customer as a pattern day trader.
Under FINRA rules, customers who are deemed pattern day traders must have at least $25,000 in their accounts and can only trade in margin accounts. For more information on pattern day traders and related FINRA margin rules, please read the SEC staffs investor bulletin Margin Rules for Day Trading.

https://www.sec.gov/investor/alerts/daytrading.pdf

And those SEC "officials" are completely clueless about what they are regulating. All they know is banning leveraged fx trading. But I bet you if you go up to any SEC agents/officers and you ask them to define "leveraged fx trading" and describe WHY is it bad and needs to be banned or how do fx traders trade, 90% of them won't be able to tell you a thing. Because they are all just security lawyers that have no clue about how financial market works. They sit behind their desks all day and just push papers. When they do audit the firms that they supposedly regulate, all the check is whether they filled out all the necessary forms correctly. Do they actually check whether the firm stealing money or not? Do they check whether all of their transactions were conducted free of conflict of interest against their clients? Do they check if their transactions violate any market trading rules? No because they have no idea how those firms work or what they do. And yet we place so much trust in them to watch over the firms that we hand our money to.

After the financial crisis of 2008, they came up with Dodd-Frank rule that supposedly would guard against another financial crisis but you know what? It didn't even address the root cause of the financial crisis. The financial crisis was caused by the over-collateralization of mortgage-backed securities that were based on sub-prime loans and then being passed on as quality instrument thanks to the complacent review agencies. You know what? Those re-packaged crap sub-prime loans are still being sold today just under a different name. Dodd-Frank is NOT doing anything to stop them so if those repackaged crap get out of hand, the same financial crisis will happen again. And yet the only thing that Dodd-Frank did prevent is US traders trading with otherwise highly regulated brokers outside of US and preventing good brokers overseas from accepting US traders. And that's REALLY going to prevent another financial crisis. LOL

This is the ONLY time that I hope Donald Trump wins because one of his campaign promise is that he will get rid of the useless Dodd-Frank rules.

Pipimaster69 it looks like you should ban YOURSELF from trading!

Recently Belgium also banned distribution of Forex, CFDs, and Binary options among Belgian retail clients. Didn't France also ban Forex advertising too recently? I don't know why all of a sudden there's such a major crackdown on this business. Why now, why all at once?

Because they've got nothing else better to do. That's why.

Exactly. What I really find ironic, is despite all of this "protecting me from myself", I can walk into any casino in Vegas and place my life savings on black and nobody will say a word. Oh wait, the government has their hand in that. How about the poor people who spend their paycheck on lottery tickets? Nobody stopping them. But God forbid, I want to trade a little forex or maybe play some online poker. Nope, too risky.

Well late is better than Never.

Read this ..may be inspired by this


http://www.bloomberg.com/news/articl...ho-mostly-lose

Probably the most on target thing I've seen anyone in this thread say ever since I made the prediction that IB would be done for the Retail Trader.

Like I said before the other shoe dropped, you have Oanda, which is still a Retail Shop - but at least it is not FXCM or any of its wholly owned, monopolistic, black-labeled ghost brokers.

As far as the ECP requirement is concerned, that has not been a problem for me for several years now. I've done well in my business and I worked for years in order to get there. However, I will not remain with IB because they could have solved this problem for Retail Traders with just a small amount of paper work and some not so drastic legal expense, but they refused to do so.

Now, if you want to remain at IB, you can lower your total assets required by becoming what 7 USC 1a defines as a "Commodity Pool" down to $5 million instead of the $10 million. You would be an "ECP" but under a different section of 7 USC 1a. You can read about it here if the $5 million requirement appeals to you: https://www.law.cornell.edu/uscode/text/7/1a. In general terms, you need to figure out what type of legal entity you need to become in order to maintain your status as a Forex Trader living in the United States - that is - if you still intend to be a resident here in the United States.

Of course, the question then becomes, if you are no longer a "resident here" in the United States and you are now a resident elsewhere outside the United States, do you really have a "broker problem" anymore. Those are questions that only you can answer for yourself and they have everything in the world to do with your residential address, where you maintain a utility bill, etc., etc., etc. I am giving no legal advice here, whatsoever.

I am simply saying that where you are located physically at any given moment may or may not have anything at all to do with where you are a "resident" and where you pay "some" bills. Now, if you are NOT a Full-Time Trader and you do not generate all your revenues from trading, this might not apply to you. However, what if you were an "employee" of a company doing business outside the United States, where that business maintained its own internal investment management department, division or business unit and it maintained several trading accounts exclusively for that purpose. Again, I am giving absolutely no legal advice, whatsoever. I'm merely asking questions here based on the topic at hand.

There are other "similar" scenarios where you might not officially "reside" in the United States though you are physically within the United States for prolonged periods of time and you are an employee at a fairly high level within a company that just happens to have a field office in the United States but is registered as it own legal entity outside the United States. Of course, I just can't think of any "exact" scenario right off the top of my little head right now. However, I am sure that with some thought and after sitting down with "proper" and "wise" legal counsel who understands legal concepts of "jurisdiction" and "taxing authorities" that you won't have too much difficulty figuring it out. In other words, do your homework.

Now, if you spend more time figuring out that trading Forex is not as difficult as it is made out to be, then you can do quite well with someone like Oanda, until you grow your accounts to a point where you are no longer classified as "Retail" and you have some funds available to spend some money with a good entity structuring attorney to get you going in the right direction, so that you can set-up a Prime Broker relationship on a real trading platform for once in your life.

Once you do, you will never want to go back and of course, you won't have to either. However, you might want to maintain a tiny cash test account for research purposes with a Retail Bucket Shop. I still like to do certain kinds of testing and research of a particular kind on my Retail Bucket Shop account. It has a very small amount in it and I've had it open for years now.

Very Ironically, and I mean VERY ironically, you can actually do fairly well with Binary Options, if you are a fledgling or struggling spot forex trader always taking naked positions in the market and unable to effectively handle the swings before bailing out at a loss, or setting such a tight stop that the natural ebb and flow of the market takes you out at a loss. I am not referring to consistently profitable traders who are currently working their way out of Retail Hell and have already learned how to trade. I'm talking about those who are still struggling and who have not yet learned that Forex is all about Magnitude and learning how to properly account for it and measure it prior to entering a naked trade.

I first learned how to trade under the late George Fontanills, and some of his earliest guidance on Options. George, later went on to co-found Optionetics, but I got my first dose of Options education from George, before Optionetics came on the scene and everybody jumped on the bandwagon. I mention options not because Binaries are the same derivatives as Vanilla, but because of the mandatory creative mindset that must go into trading either successfully. When you combine that with the fact that Nadex provides both Long (for debit) and Short (for credit) types of Binaries, though they are not "standard" or "conventional" types of American/European contracts, you can put together some interesting strategies that do force a level of creativity and and thought behind what you believe the actual (real) market behavior will ultimately turn out to be. In the process, you will be forced to learn about Intra-Session Market Magnitude and Market Magnitude relative to any specific Time Frame for that matter. A subject that is indispensable for long term profitability as a Trader.

Though Nadex is relatively thinly traded as compared to some of the other larger Retail Basket Cases out there and certainly as compared to other Exchanges, their volume and OI (Open Interest) has grown since they converted from HedgeStreet to Nadex and they are in fact a "Matching and Clearing Exchange." That means they are not trading against you. For the way in which their instruments work, their fees per transaction are "reasonable" and if you are trading correctly, downright negligible. The broad spectrum of instrumentation is also fairly impressive which means that Nadex must have some degree of reasonable Exchange Membership capable of providing liquidity to "match" buyers and sellers at the speed with which they make deals available on their platform.

For example - just compare transaction processing speeds, platform availability and overall latency (provided you do have a true high speed ISP account) with any standard Retail FX Bucket Shop. How many re-quotes do you see on Nadex as compared to your bucket shop. How much slippage do you see on Nadex as compared to your bucket shop. What is the platform availability rating during News or Economic Reports on Nadex as compared to your retail shop. How consistent is the pricing model during low volume and high volume market periods on Nadex as compared to your bucket. These questions are important and if all the alleged buzz words that Retail Bucket Shops like to use sch as STP/ECN etc. are real - then the proof should be in the overall performance you see in the actual platform being used to place your trades.

People have naysay'd Nadex. I understand why. The word "Binary" connection to "Option" does (on the surface) take a while to get used to. I had difficulty with it for years because of my formal training in conventional Options strategies. So, I considered Nadex to be rather juvenile when they first came to the scene after the buyout and restructuring where they re-tooled the operation under new leadership and changed the name of the company. So, I get the whole "Binary" thing. However, Nadex, is doing it right. They are not screwing you in the many ways that you are vary familiar with because they have a fiduciary responsibility to their institutional customers that they tell you about straight up in your "Agreement" documentation. The fact that they operate as an Exchange and they simply "Match" your order with the counter-party is very important.

The real irony to all this is that you guys (you Retail Forex Traders) can turn Nadex into something even bigger than it is right now. More traders means more Open Interest and higher volumes which translates to higher levels of liquidity at deeper levels in the options chain and that provides more opportunities for everyone through a wider range of options strategies and methodologies.

With Nadex Spreads, when you look at the structure of the instruments, overall net effective margin requirements are lower and overall net effective profit potential is higher because overall net effective leverage is higher. Now, higher leverage all by itself is no cousin to safety or risk mitigation, especially for the novice FX Retail Trader who classically over leverages themselves. But, when you couple the inherent structural leverage with the resultant profit potential and the fixed loss factor, if done correctly you could be not just more profitable with Nadex Binaries but significantly more profitable, if you are trading down at the Retail Trader cost basis levels - which most of you on this board would qualify. If you are trading cost basis levels above the $300k level, then you certainly have other more viable (professional grade) options for engaging both FX Spot and FX Options with good contract specifications.

Trading Forex profitably is not hard. The hard part is gaining the knowledge necessary before you finally realize that trading Forex profitably is not hard.

Probably the most on target thing I've seen anyone in this thread say ever since I made the prediction that IB would be done for the Retail Trader.

Like I said before the other shoe dropped, you have Oanda, which is still a Retail Shop - but at least it is not FXCM or any of its wholly owned, monopolistic, black-labeled ghost brokers.

As far as the ECP requirement is concerned, that has not been a problem for me for several years now. I've done well in my business and I worked for years in order to get there. However, I will not remain with IB because they could have solved this problem for Retail Traders with just a small amount of paper work and some not so drastic legal expense, but they refused to do so.

Now, you can lower your required total assets required by becoming what 7 USC 1a defines as a "Commodity Pool" down to $5 million instead of the $10 million. You would be an "ECP" but under a different section of 7 USC 1a. You can read about it here if the $5 million requirement appeals to you: https://www.law.cornell.edu/uscode/text/7/1a. In general terms, you need to figure out what type of legal entity you need to become in order to maintain your status as a Forex Trader living in the United States - that is - if you still intend to be a resident here in the United States.

Of course, the question then becomes, if you are no longer a "resident here" in the United States and you are now a resident elsewhere outside the United States, do you really have a "broker problem" anymore. Those are questions that only you can answer for yourself and they have everything in the world to do with your residential address, where you maintain a utility bill, etc., etc., etc. I am giving no legal advice here, whatsoever.

I am simply saying that where you are located physically at any given moment may or may not have anything at all to do with where you are a "resident" and where you pay "some" bills. Now, if you are NOT a Full-Time Trader and you do not generate all your revenues from trading, this might not apply to you. However, what if you were an "employee" of a company doing business outside the United States, where that business maintained its own internal investment management department, division or business unit and it maintained several trading accounts exclusively for that purpose. Again, I am giving absolutely no legal advice, whatsoever. I'm merely asking questions here based on the topic at hand.

There are other "similar" scenarios where you might not officially "reside" in the United States though you are physically within the United States for prolonged periods of time and you are an employee at a fairly high level within a company that just happens to have a field office in the United States but is registered as it own legal entity outside the United States. Of course, I just can't think of any "exact" scenario right off the top of my little head right now. However, I am sure that with some thought and after sitting down with "proper" and "wise" legal counsel who understands legal concepts of "jurisdiction" and "taxing authorities." In other words, do your homework.

Now, if you spend more time figuring out that trading Forex is not as difficult as it is made out to be, then you can do quite well with someone like Oanda, until you grow your accounts to a point where you are no longer classified as "Retail" and you have some funds available to spend some money with a good entity structuring attorney to get you going in the right direction, so that you can set-up a Prime Broker relationship on a real trading platform for once in your life.

Once you do, you will never want to go back and of course, you won't have to either. However, you might want to maintain a tiny cash test account for research purposes with a Retail Bucket Shop. I still like to do certain kinds of testing and research of a particular kind on my Retail Bucket Shop account. It has a very small amount in it and I've had it open for years now.

Very Ironically, and I mean VERY ironically, you can actually do fairly well with Binary Options, if you are a fledgling or struggling spot forex trader always taking naked positions in the market and unable to effectively handle the swings before bailing out at a loss, or setting such a tight stop that the natural ebb and flow of the market takes you out at a loss. I am not referring to consistently profitable traders who are currently working their way out of Retail Hell and have already learned how to trade. I'm talking about those who are still struggling and who have not yet learned that Forex is all about Magnitude and learning how to properly account for it and measure it prior to entering a naked trade.

I first learned how to trade under the late George Fontanills, and some of his earliest guidance on Options. George, later went on to co-found Optionetics, but I got my first dose of Options education from George, before Optionetics came on the scene and everybody jumped on the bandwagon. I mention options not because Binaries are the same derivatives as Vanilla, but because of the mandatory creative mindset that must go into trading either successfully. When you combine that with the fact that Nadex provides both Long (for debit) and Short (for credit) types of Binaries, though they are not "standard" or "conventional" types of American/European contracts, you can put together some interesting strategies that do force a level of creativity and and thought behind what you believe the actual (real) market behavior will ultimately turn out to be. In the process, you will be forced to learn about Intra-Session Market Magnitude and Market Magnitude relative to any specific Time Frame for that matter. A subject that is indispensable for long term profitability as a Trader.

Though Nadex is relatively thinly traded as compared to some of the other larger Retail Basket Cases out there and certainly as compared to other Exchanges, their volume and OI (Open Interest) has grown since they converted from HedgeStreet to Nadex and they are in fact a "Matching and Clearing Exchange." That means they are not trading against you. For the way in which their instruments work, their fees per transaction are "reasonable" and if you are trading correctly, downright negligible. The broad spectrum of instrumentation is also fairly impressive which means that must have some degree of reasonable Exchange Membership capable of providing liquidity to "match" deals at the rate they make then available on their platform.

People have naysay'd Nadex. I understand why. The word "Binary" connection to "Option" does (on the surface) take a while to get used to. I had difficulty with it for years because of my formal training in conventional Options strategies. So, I considered Nadex to be rather juvenile when they first came to the scene after the buyout and restructuring where the re-tooled the operation under new leadership and changed the name of the company. So, I get the whole "Binary" thing. However, Nadex, is doing it right. They are not screwing you in the many ways that you are vary familiar with because they have a fiduciary responsibility to their institutional customers that they tell you about straight up in your "Agreement" documentation. The fact that they operate as an Exchange and they simply "Match" your order with the counter-party is very important.

The real irony to all this is that you guys (you Retail Forex Traders) can turn Nadex into something even bigger than it is right now. More traders means more Open Interest and higher volumes which translates to higher levels of liquidity at deeper levels in the options chain and that provides more opportunities for everyone through a wider range of options strategies and methodologies.

With Nadex Spreads, when you look at the structure of the instruments, overall net effective margin requirements are lower and overall net effective profit potential is higher because overall net effective leverage is higher. Now, higher leverage all by itself is no cousin to safety or risk mitigation, especially for the novice FX Retail Trader who classically over leverages themselves. But, when you couple the inherent structural leverage with the resultant profit potential and the fixed loss factor, if done correctly you could be not just more profitable with Nadex Binaries but significantly more profitable, if you are trading down at the Retail Trader cost basis levels - which most of you on this board would qualify. If you are trading cost basis levels above the $300k level, then you certainly have other more viable (professional grade) options for engaging both FX Spot and FX Options with good contract specifications.

Trading Forex profitably is not hard. The hard part is gaining the knowledge necessary before you finally realize that trading Forex profitably is not hard.

And, no. I'm not going to say I told you so about IB.

And, no. I'm not "back."

Canadian traders excluded? Goodbye!!

Audi Ous. Or, Audi the 8L out.

Audi 5000

I like the 8L. Always have.