New Leverage Restrictions?

[pashaev]

Depends on the regulator. For example, brokers regulated by VFSC have not yet come under the restrictions.

 

[brianje]

The new restriction of leverage is total BS. It's not for protecting the traders but the brokers.

For traders, higher leverage is always better because, for example, you can just deposit $1k to your trading account with 500:1 leverage instead of $10k for 50:1 to have the same size of lots open.

And it's purely ignorant and uneducated to argue that high leverage = high risk. If you trade 1 lot, 100 pips negative means the same amount of loss, regardless of whatever leverage you are using. And low leverage makes hedging impossible and therefore it's actually safer to trade with a high leverage.

When it comes to risk management, it's about the size of the order and the potential loss, not about the leverage.

I say again, the new rule about limited leverage is total BS. It only benefits the big guys and the brokers, not the traders. And it's totally against the principles of the free market.

 

[Kirstysingy]

Yea it all gets very confusing, my broker has recently moved m to a Seychelles account

 

[ele020]

The new restriction of leverage is total BS. It's not for protecting the traders but the brokers.

For traders, higher leverage is always better because, for example, you can just deposit $1k to your trading account with 500:1 leverage instead of $10k for 50:1 to have the same size of lots open.

And it's purely ignorant and uneducated to argue that high leverage = high risk. If you trade 1 lot, 100 pips negative means the same amount of loss, regardless of whatever leverage you are using. And low leverage makes hedging impossible and therefore it's actually safer to trade with a high leverage.

When it comes to risk management, it's about the size of the order and the potential loss, not about the leverage.

I say again, the new rule about limited leverage is total BS. It only benefits the big guys and the brokers, not the traders. And it's totally against the principles of the free market.

Not sure if your comment also includes high leverages for newbie? I strongly believe higher leverage is a big no if you just entered trading.

 

[fxoday]

If possible Still prefer to use high leverage like as 1:500, it will depend with broker policy, there are broker that offers high leverage 1:1000, this is crazy thing maybe, but I think broker understand if many traders fails if use high leverage.

 

[brianje]

Not sure if your comment also includes high leverages for newbie? I strongly believe higher leverage is a big no if you just entered trading.

Yes, my comment also includes the newbie case.

The maximum risk you can have with trading forex is you will blow out your account with just a single trade.

But what is the biggest account a newbie trader would have? $500 or $1000? That's the maximum he can lose if he does something stupid.

Unless the newbie deposits $20k or even more to his trading account, he wont lose much with high leverage. And I personally dont know any newbie would deposit $20k into his first trading account.

Therefore, high leverage is actually safer for newbies because they only need a $100 account to learn how to trade forex. So the risk here is $100, regardless whatever leverage he uses. Meanwhile, if I recall correctly, it is required at least $25k in an account to trade stocks in the US because of the low leverage. In this case, the risk is $25k even if he uses the lowest 1:1 leverage.

And when **** happens, low leverage wont save you. When something like the EURCHF move happens, your whole account will be wiped off with just a 10:1 leverage.

Similarly, a $25k stock trading account 1:1 would just be blown up easily if he got into a short squeeze.

In short, high leverage = safer. Anyone that is against high leverage does not know anything about trading and risk management.

 

[ele020]

I get your point that a newbie will start with 500 or 1000 at max, but even this is not a small amount to loose. What about the market events which cause extreme price fluctuations?
Well this is my opinion and my advice to newbies... Your vision might also be correct as per your trading experience.

 

[Donovan.CC]

What is the new leverage restriction for ASIC regulation, and will it also affect traders that are currently trading with ASIC brokers?

 

[pashaev]

Yea it all gets very confusing, my broker has recently moved m to a Seychelles account

Apparently precisely in order to bypass the leverage restrictions.

 

[Ken_T]

We have the same issues in Australia now since last month