If the CFTC does this, say goodbye to retail forex in the USA

[Pharaoh]

Jan,

The "Governor of D.C." just runs the city and has nothing to do with national policy. This is a probably a good thing, considering that one of them got busted on drug charges while in office.

If complaining to the CFTC fails, the next step for traders would be to complain to the US Congress and to President Obama. We can all also hope that brokers band together and file a legal challenge if this happens. If they do, I'll be looking for ways to support this challenge.


Spak3060,
Although I think 10:1 is way too low, a strategy that requires 500:1 upfront is probably not the safest way to trade. I personally open individual trades in the 5:1 to 10:1 range, but save my remaining leverage to either scale in to winning positions or to place separate trades on pairs unrelated to the long term ones I've got "parked" in my account.


Special note for the math challenged who have made some strange assertions earlier in this thread - no broker can force you to use more leverage - except by setting minimum trade size. If a broker has a minimum trade size of 1 fill lot on accounts with only a $1000 balance, seek a different broker. Also, a pip on trading a full lot of xxxUSD is worth $10 no matter what leverage you are using or how much money is in your account. Risk management is done by controlling your trade size and SL.

 

[briansnj]

Jan,

The "Governor of D.C." just runs the city and has nothing to do with national policy.

Yeah. Sorry Jan. lol D.C. is not considered a state so only has a mayor and 2 Reps.

But yes, writing/calling Congress and Pres. Obama would certainly help.

 

[qwertymyfx]

if the writing was on the wall for sometime, how come not many took action?

 

[Pharaoh]

There have been rumors for awhile, but it's hard to take action against rumors. Now they have a proposal on the table and have to legally at least let the public make comments. Whether they pay even the slightest attention to these comments remains to be seen.

 

[FOREXorBUST]

My letter to the CFTC

Hey all,
I'm new here so this will be my first post. I joined this forum in my never ending search for truth and education about trading Forex. I have been searching & studying for 9 mos. preparing to try my hand at Forex. I've had a demo account since day 1, blew my first 5k in demo money, now I've started over with another 10k demo. It's down about $500 but I haven't traded consistantly on it with any one system or set of rules. I've decided to hold off until I define my trading strategy & rules. Then I hear about this CFTC C$#&$$*P!!
This is a Drag! My Forex career may well be over before it's begun! Any way. I just wanted to post the letter I wrote and also urge everyone to spread the word to as many people as you can to write to them. I was on their website and I only saw 66 comments filed on this!!! Here is what I wrote.


To whom it may Concern:
I want to voice my STRONG OBJECTION to the Proposal by the CFTC to limit Retail Forex Investors leverage to 10:1. This will do nothing but hurt the individual investors AND Brokers and it will force us to move our Trading currencies and businesses Off-Shore because WE HAVE THE RIGHT TO INVEST OUR MONEY AS WE SEE FIT! The Small Investors should have the same opportunity as the Big Investors to make a profit. If you want to help the small investors, regulate Brokers from being able to change their spreads in order to Hunt Stop Losses! This alone accounts for the majority of people loosing money in Forex! Please HELP the small investors, the Mom’s & Pop’s to achieve the American Dream of Prosperity and Independence. Again, I Strongly Urge you to Remove the section of the Proposal that limits leverage to 10:1. As far as I am concerned (and everyone else, judging by the other letters to you that I have read) this would undermine our Constitutional Right to “THE PURSUIT OF HAPPINESS”

Peace and Happy Trading to all!

 

[briansnj]

Some interesting commentary from industry leaders I found at a trading magazine's website and thought they were worth sharing.

From what I have been reading, the brokers are shaking in their boots if not completely mystified at the stupidity of the 10:1 consideration.

**************

“If this rule goes through [customers are] not going to trade with our firms anymore. They’re going to take our accounts and go to the UK or unregulated offshore locales. This could mortally wound the U.S. domestic industry,” says Charlie Delano, director of government affairs at FXCM.

FXCM Chief Marketing Officer Marc Prosser adds, “If this proposal is meant to protect retail forex traders, we don’t think this accomplishes that stated objective. In fact it does the opposite.”

Glenn Stevens, CEO of GAIN Capital, says, “To stay competitive in a global marketplace and protect against further incidences of fraud to the retail sector, 100-1 leverage is required. If in fact the 10-1 leverage rule proves to be highly unpopular with traders, as an informal poll from FXStreet indicates…U.S. customers may look to services based in other countries [and] more people will trade with unregulated firms.”

 

[witsnpips]

absolutely, brokers are definitely shaking in their boots, not just the traders.

 

[wisefxtrader]

Hello !

Thanks for letting me and my associates know about that issue. Darn CFTC and OBAMA and big banks who created big mess. It has nothing to do with retail level trading.

By the way, I tried to read CFTC proposed bill or rule link but it is invalid and I have tried searching it in google I could not find it.

I would appreciate for anyone to give me proper link where I can read CFTC proposed then I can pass it to my associates we need to fight back. I felt that CFTC has gone too far what happened to America's capitalism ?

Thanks!


Moderator Hint - Look here...

CFTC Press Release seeking public comments

Rules proposal in the Federal Register

 

[^eagle^]

A little forward thinking.......

I am not confident in the current adminstration doing anything about this. If we are unsuccessful at stopping this has any one thought about how we can keep leverage inside our border?. How about Native American reservations? Technically they are a foreign country. that is how they are able to gamble on their lands.

Can we set up brokerage firms on Indian LAnd. What legalities would be involved to make this happen .

Im no lawyer or anything. This idea just came to me today as I was listening to this. It reminded our plight is not unlike what the native Americans went through. We our fighting for our survival.

 

[spak3060]

Protest to the CFTC's proposal to limit forex leverage to 10:1

Title:the CFTC's proposal to limit forex leverage to 10:1
Saturday, January 30, 2010 8:21 PM
From: spak3060
To: "secretary@www.cftc.gov" <secretary@www.cftc.gov>
Hello Mr/Mrs,
When I heard about the CFTC's proposal to limit forex leverage to 10:1, I really worried, because my basic strategy has been based on the leverage 500:1. This strategy needs simultaneously to open many positions with a lot or half a lot for each of them. If the CFTC's proposal submits as a rule, I and other traders who use such these strategies need a huge investment to trade in forex, and it's impossible.
I protest, as a member of Forex Peace Army, to submit this proposal as a rule. I hope CFTC omits this proposal, as soon as possible.

Best Regards


Spak3060