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CFTC proposal to cut Forex leverage to 10:1




Update (September 1st, 2010):
CFTC has reached a compromise with the Forex Dealer Coalition (FXDC) regarding leverage requirements:
instead of 10:1 leverage cut in the proposed earlier rules, the new 50:1 leverage will be introduced on October 18th, 2010 for all U.S. customers.


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trader

February 25, 2010

And people should not smoke.. and eat fatty food blah blah blah..
My god.. I've managed to take $500 and in 2 years turn into something I do full time for myself . There are smart people and stupid people in every aspect of life. Just one more govt. Intrusion. I would want that same person to be able to start with something other $5K or $10K..... I want everyone that is willing to learn and put the effort in , the ability and chance.
I still go to Vegas and win / lose. Should I not be able to go there? It's MY MONEY... It's MY LIFE.
SHEESH.
Obviously I'm moving all my accounts overseas.

trader

March 16, 2010

If CFTC is so concerned about saving our money, why they don't allow hedging anymore? They are only trying to make us stop trading. We should be allowed to use leverage of 1000:1.

All forex brokers allow clients to set desired leverage and it should be up to me how I choose to spend my money and I should be in charge of deciding if I want 1:10 or 1:1000 leverage.

It it happens, I'll move all my funds off-shore and my trader friends will do the same.

trader

March 17, 2010

Hello all, I have not been reading what is the main goal for CFTC to reach but let me understand this 10:1 proposal. (I am not a PRO in Forex but I am at the beginning stage)

1 LOT = 100000 (standard)
1 LOT = 10000 (mini)

Example I. (100:1 standard):
If I buy 1 Lot EUR/USD = 10 USD / 1 pip

Example II. (100:1 mini):
If I buy 1 Lot EUR/USD = 1 USD / 1 pip

Example III. (10:1 standard)
If I buy 1 Lot EUR/USD = 1 USD / 1 pip

Example IV. (10:1 standard)
If I buy 1 Lot EUR/USD = 0,1 USD / 1 pip

Can someone confirm if the examples are correct?? If they are then there is no point for CFTC to change the leverage. A trader will trade 10 lots instead the 1 lot before when 100:1 leverage was and the result will be the same, correct or not? At that case Traders will make and lose same money as before.

If CFTC is warried about traders to win money - there is no point in changing leverage. If CFTC is warried about traders losing money (slowly or quickly)?!?!? - should reducing the leverage to 10:1 help anything?? If someone wants to trade they will have to add extra ZERO for their deposit.

Now is the question. Is that a big deal?? Will that help?? Or I am completely wrong with the examples above? If someone does not have the money - they will deposit only 1000 USD anyways and trade with 10 LOTS anyways. Who is stupid will remain stupid and who is not will find the way to keep trading.

I have to read the CFTC proposal, why it is. What is the main purpose for suggesting this change actually?? Can someone tell me, please. I really do not understand the difference if my counting is correct. :-))

BrokerGuru

March 17, 2010

Examples reviewed, corrections are highlighted in BOLD:

Example I. (100:1 standard):
If I buy 1 Lot EUR/USD = 10 USD / 1 pip

Example II. (100:1 mini):
If I buy 1 Lot EUR/USD = 1 USD / 1 pip

+++++

Example III. (10:1 standard)
If I buy 1 Lot EUR/USD = 10 USD / 1 pip

Example IV. (10:1 mini)
If I buy 1 Lot EUR/USD = 1 USD / 1 pip

+++++

Whether it's 100:1 or 10:1 leverage, the pip value remains the same:
1 standard lot = 10 USD/pip
1 mini lot = 1 USD/pip

Leverage only determines how many of those lots you can pull off in every trade.
The more lots you open, the more risk you take.
Everyone is smart enough to decide how much to risk, or are they?

(CFTC tries to offer help to those who never meant to be investors. The rest needs no help from the authorities.)

trader

March 20, 2010

I believe people in the US take more risks than any other country in the world. As a result, people loose more than they win in general. CFTC doesn't care about people's money and their life. They only care about USD flowing from US traders to traders from other countries in the world - outflow of currency.

PS. Gamblers will always gamble. If you impose tax in Vegas, gamblers will move to somewhere else. They don't like regulations, at least not those that takes away freedom from them.

A good regulation: All foreign exchange should be regulated by the government. But it's not happening. People are being scammed. CFTC doesn't care about that? Make a website, put a list of brokers that are regulated by regulating authorities. Tell people not to invest anywhere else. But that's not happening.

A bad regulation: Reducing an already reduced leverage. It won't help. If I choose to go for higher leverage, US market isn't the only option for me. Just imagine how much money will flow to other countries once this is enforced.

To me it looks like CFTC likes to gamble more than anyone else: take a chance and see what happens hoping it will go in the right direction.

trader

April 6, 2010

Yeah, people wanna defend other people who cant trade who say this new rule should be imposed. they say why should a trader have that much leverage if they don't need it and that scams are all over the place, enticing new traders. when was it my duty to care about people who don't want to educate themselves and learn from their mistakes? I did just fine learning my lessons and think it's ridiculous to limit leverage like that. as far as I'm concerned, it's everybody for themselves. they don't like that, they can go find another business to start or stay at their day job. I just don't get why people care so much about someone they never met or will trade with or teach how to trade. leverage isn't gonna stop a scam or people from loosing money if that's what they're trying to accomplish. I like 100 and 200:1 myself. if i was trading one pair at a time with FIFO rules, then I wouldn't even care. i haven't traded with CFTC brokers for months now. the last was MBT

trader

May 9, 2010

this rule will be aplied to US brokers, not european ones, thus moving US brokers to europe - a good stimulation of business activities for europe. why US regulators create so many barriers in speculative trading?

MrJinks

June 25, 2010

Hi, BG.

How is this issue been going on lately ? It's been a long time since I've hearded about it...

Did they decided something about it ?

Thanks in advance,
MrJinks.

BrokerGuru

July 8, 2010

There were no news or talks since the public opinion letters were received by CFTC.

Forex brokers that formed a Coalition remain firmly against the leverage cut, while many brokers also have taken actions to move/open new businesses overseas (in case of..)

So, we're still waiting, but from the past months events and overall reaction from individual traders and dealers, it is obvious that CFTC has received no support whatsoever regarding their leverage cut proposal.

trader

August 10, 2010

I am not with this regulation this 10/1 it is really a mess for minor investors who have mini accounts in USA.

trader

October 15, 2010

this was the last straw...first 200:1 went down to 100:1, then first in first out rule, then no hedging, now down to a useless 50:1 maximum leverage...THAT"S IT ...I'VE HAD IT!

BYE BYE stupid usa brokers, nfa and ftc BULLSHITERS!
IT"S MY MONEY AND I WILL "CHOOSE" my leverage and if i want to hedge or not. HOW DARE YOU!!! NAZI's.

trader

November 1, 2010

Trader - you said everything i was thinking. thanks



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