Why Do Some Retail Traders Hate Sensible Regulations?

[cowmadagan]

Originally posted by: Pip hog
"This reminds me of the furor over the regulation by CFTC through the NFA to ban offsetting ("hedging") positions in the same currency pair -- a practice that has zero benefit to traders and much benefit to brokers. Mathematically those concurrent offsetting positions were completely pointless and basically anyone who did that was such a hopeless amateur that they need the government to help them out anyway."
"As someone who has worked in S&T for different investment banks for years now, and judging by your remarks, it is you who is the less educated one, not myself."

Banks hedge their gov't bond holdings as a forex position with cash, and also with forex options for 80-120% of their positions. Judging by your remarks, you should know that.
Maybe the banks are amateurs too.

 

[Stony]

Originally posted by: Pip hog
"This reminds me of the furor over the regulation by CFTC through the NFA to ban offsetting ("hedging") positions in the same currency pair -- a practice that has zero benefit to traders and much benefit to brokers. Mathematically those concurrent offsetting positions were completely pointless and basically anyone who did that was such a hopeless amateur that they need the government to help them out anyway."
"As someone who has worked in S&T for different investment banks for years now, and judging by your remarks, it is you who is the less educated one, not myself."

Banks hedge their gov't bond holdings as a forex position with cash, and also with forex options for 80-120% of their positions. Judging by your remarks, you should know that.
Maybe the banks are amateurs too.[/QUOTE]

Guess you have a good point there....

 

[clem699]

Piphog,you are wrong by assuming that brokers deceive people and feed fat by luring them to trade more with high leverage.I do not also agree that the issue is not about money management.Money management is an integral part of any investment.

In any investment,there is always a level of risk and often,the more you are able to take risk could increase your profitability or that if you are not well capitalized do not trade,could justify the proposal of the CFTC.High leverage no doubt could be harmful but a good trader will always make good and sensible use of it.A good retail trader has the choice of determining the level of risk he can cope with in which he could come back another day to possibly gain back lost funds.What we are concerned about is not futures trading or its leverage,what we are saying is that forex traders who have good education about the market but are not well capitalized should be allowed to grow with time.

You talk about deceitful ads,but that is for the uneducated person who open a very small account and want to get rich quickly,no real broker will lure a trader to enter any position,it is usually the trader's decision.You will over- trade basically if you are greedy or not well educated.

For instance,i have 3 pretty small account which i intend to increase to 5 soon.I am gradually growing these accounts and no broker will ever force me to open any position against my will and i do not over-trade.Assuming these accounts are all the U.S,If the proposal sails through that means i will have to close 2 and use the money to fund just one account and may need to add few more dollars to it.

What we are saying is that some of us are not financially buoyant but have reliable trading strategy,we should be allowed to grow without any fear of bankruptcy should two trades or just one trade goes against us.

 

[Forexwatchman]

I am going to ignore your original ad hominem in calling me uneducated on this. As someone who has worked in S&T for different investment banks for years now, and judging by your remarks, it is you who is the less educated one, not myself.

Yes, futures trading has higher leverage. But you and Pharoah are conveniently ignoring the clearinghouse effect of futures trading that reduces counterparty risk and makes trading far more safe. The retail FOREX trading is done completely OTC, meaning the high leverage carries counterparty risk as there is no clearinghouse to necessarily balance out everything.

I think its hilarious how it still escapes you, and how you find any way possible to try to explain away the fact that borrowing a ****load of money and trading with it is riskier than putting up more money and borrowing less money to trade with. As I already said in my original post, this isnt about money management. I suppose you wouldnt care if there were 1000:1 leverage since its all about money management, as you cliam.

This is simply disingenuous at best. These tactics feed the brokers. The flashy ads that say "TRADE FOREX NOW LIKE A PRO BEEP BEEP YOU CAN BE RICH" is preferable for you apparently compared with a more professional ad. This isn't supposed to be a gambling market where cartoons lure you in to play, FOREX is not meant to be used as a casino but as a hedging and trade-use market.

If you guys really like futures leverage so much, stop trading bull**** FX lots and move on to currency options/futures....play with the big boys instead of feeding the brokers who are screwing EVERYONE over by forcing higher leverage so people trade more and feed their coffers more.

Your reply certainly did not lend more confidence towards your educated opinion as it left huge holes in your logic that weren't present in your original post. Honestly I believe you aren't here to debate anything but instead to argue for a proposal that an overwhelmingly large number of informed and successful traders strictly disagree with, and so I'm going to make my reply here short and final.

The biggest problem you still have with your argument is that it implies that it is better to shut down the retail forex industry in the U.S. because that is exactly what will happen if this proposal is passed and thus take all power away from the CFTC and NFA at regulating the U.S. retail industry since it would no longer exist! So instead of educating traders we just force them off shore or back into the furtures markets? The consequences from there on should be apparent form my last post.

Also, what part of your experience did you fail to realize the power of money management in controlling risk. How you can say "this isn't about money management" is beyond me. This is ALL about money management! No broker forces high leverage upon you, you get to choose your broker and your leverage. I use 100:1 and believe that to not only be reasonable but also fair. I choose when to buy or sell based on a solid strategy that includes measuring risk/reward ratios and over time it has paid off. Again I ask you to defy logic and explain how anyone would voluntarily choose to use 10:1 leverage if 100:1 was available off shore? Even congress agrees with us on this one as I posted a few weeks back https://www.forexpeacearmy.com/fore...rned-cftc-retail-forex-leverage-proposal.html
But again, they are probably misinformed like all the rest of us dummy's who don't want to "play with the big boys". I hope to god you don't really mean that piphog!

 

[Agent86]

It's obvious piphog has a stake it this

This 10:1 protects no on.

The price per pip remains the same

If you loose 10 pips then you loose the same whether it's 400:1,100:1 or 10:1 or even 1:1 The cost per pip is no different.

The only difference is the amount of sustainable loss in pips. If you don't have enough money to really sustain you or your strategy because you can't meet a 10,000 minimum deposit or perhaps you have a strategy like me who can double my lots every 150 to 200 pips.

If your strategy and balance does not allow you to sustain a 50 pips loss etc. then you simply may not have the equity or balance to trade at all.

So the only thing that will change really is that small traders won't be able to get involved at all which is the whole purpose of leverage to begin with and only people with large sums of money can trade.

In which case it because a bit futile because many of the people may not even trade if the reward is not high enough.

The reduction of leverage decreases the reward as well as the risk.

Although the per pip value remains the same what happens is that with higher leverage you can risk little to gain so much more.

With low leverage the ratio of how much you have in your account and the amount you risk changes, however the actual amount your risking is exactly the same.

So essentially you can trade longer until you drain your account, but you still lose or gain the same, and as I pointed out the only difference really is that you might not be able to trade at all or double down on lots as you may want to know. Other then that the rule stinks really bad just more government control.

And with low leverage it sort of defeats the purpose because you risk little to gain little because you don't have the ability to open as many positions.

However, with high leverage you could develop a strategy that will allow you to open more positions and generate higher rewards.

You simply can't do that with a higher requirement of margin.

And in addition even the rewards you get do not allow you to double down on your lots as you double your balance or even triple your balance.

With high leverage you could double down every 100 pips or so depending on your risk threshold.

You simply can't do this with lower leverage.

Even micro traders enjoy both the entertainment factor as well as the high leverage and risk/reward topics.

If a micro trader can trade lets say 1% margin and each micro lot is worth .10 trading a lot size of 1000 with a margin of $100 he would not need $1000 just to trade a micro lot. Thats just silly. Most people aren't going to do that. They'll just take their $200 or $250 bucks and play on line casinos for entertainment.

Why do you care, I wish these regulators would leave people alone

The fact is that people are smarter then they are and they know what they want to do already.

I pointed this out in a previous post already. People do not need or want protection from them self. These fools put them so high over everyone else they try to pose as someone who cares and want to regulate you in the name of protecting you.

If that were really true then let the people vote and decide and let them get what they want.

But oh no God forbid, then people like piphog would not be able to force others into submission to their will.

The people just don't want it, they don't like and they know better then pip hog does. But in his own twisted mind he thinks he knows better what people need then they know what they need for them self.

I think I speak for the people, buzz off and leave us alone we know what we are doing, but you don't know what we are doing thats the problem.

As I pointed out in another post, some like to gamble let them. Some want to invest with higher risk, let them, while others want lower risk so let them.

Why won't you fools leave others do what they want.

How about this: You trade the ratio you want, and I'll trade the one I want oook.
It's quite alright to leave me alone and let me trade the way I want to.
And if I leave you alone then you can trade the way you want to.

Whats wrong with that ?

And yet if I decided that I want to open an account in another country then piphog likely would not want to allow me to trade higher leverage in those countries either.

You see this is nothing more then StarWars where Darth Vader must crush all that oppose him so that everyone can be protected by the empire; and then there shall be peace LOL.
What a joke and piphog-sith is confused.

Piphog- give in to your hate, I sense that you still have good left in you.

Happy chatting

 

[Agent86]

And yes I would love 1000:1 leverage

Yes I would enjoy 1000:1 leverage

Why not it sounds fun !

 

[piphog]

Your reply certainly did not lend more confidence towards your educated opinion as it left huge holes in your logic that weren't present in your original post. Honestly I believe you aren't here to debate anything but instead to argue for a proposal that an overwhelmingly large number of informed and successful traders strictly disagree with, and so I'm going to make my reply here short and final.

The biggest problem you still have with your argument is that it implies that it is better to shut down the retail forex industry in the U.S. because that is exactly what will happen if this proposal is passed and thus take all power away from the CFTC and NFA at regulating the U.S. retail industry since it would no longer exist! So instead of educating traders we just force them off shore or back into the furtures markets? The consequences from there on should be apparent form my last post.

Also, what part of your experience did you fail to realize the power of money management in controlling risk. How you can say "this isn't about money management" is beyond me. This is ALL about money management! No broker forces high leverage upon you, you get to choose your broker and your leverage. I use 100:1 and believe that to not only be reasonable but also fair. I choose when to buy or sell based on a solid strategy that includes measuring risk/reward ratios and over time it has paid off. Again I ask you to defy logic and explain how anyone would voluntarily choose to use 10:1 leverage if 100:1 was available off shore? Even congress agrees with us on this one as I posted a few weeks back https://www.forexpeacearmy.com/fore...rned-cftc-retail-forex-leverage-proposal.html
But again, they are probably misinformed like all the rest of us dummy's who don't want to "play with the big boys". I hope to god you don't really mean that piphog!

Wow, so typical to quote Congress when it suits you, then call them idiots when you disagree. That was only one random congressman who stated that, so saying "Congress agrees with us" is total bull****.

So, basically your argument boils down to "we are worried that all these brokers will go overseas". First of all, these rules won't affect the real currency traders that are actually moving markets and able to take on high leverage, it will only affect the retail traders essentially because if youre going to speculate, theres no point in speculating on lots -- brokers give you access to bank feeds (and yes, the vast majority force you to trade 100:1, not let you choose...) so you can get buried and, like a good casino, they find ways to keep you coming. I think, mark my words, there will be a large-scale investigation into retail forex trading and people will be shocked at how much of the retail trading is virtual and no real trades are getting routed.

Like i said before, the industry has truly become nonsense when I can't tell the difference between my poker/casino site advertisements and forex broker advertisements.

Listen, like most traders, I am a free-market classical liberal. But the past few years have really demonstrated that if you don't set sensible regulations on people, it can create moral hazards that lead to systemic issues.

I am not surprised that no one on this forum has supported what I have said, and that is quite a shame. Move your accounts overseas if you want -- but just realize that after the measure passes, every major economy replicates what the US does, since the US is the leader. If you want to trade at high leverage, then learn about the futures market and speculate with those instruments instead of these ridiculous (and as I said I suspect, FAKE) lots markets feigned by "brokers".

If retail retail currency brokers in the US go bankrupt because of this, I say good riddance. And why the hell do you all care as a trader if you can just run overseas?

One last note, I think after all that has happened, it is hilarious that this idea that leverage is "all relative" is still pervasive! The same rationalization where people excused high leverage as a function of "relative money management" has existed since the Tulip bubble. CASINO CLOSED!

 

[Pharaoh]

brokers give you access to bank feeds (and yes, the vast majority force you to trade 100:1, not let you choose...)

My car's manufacturer "forced" me to accept a car capable of going over 100 MPH (I tested it once in the middle of New Mexico, it really can go that fast - wheeeee!!!!).

Driving that speed is dangerous. Driving that speed all the time under all traffic conditions is suicidal. Guess what? Those guys in Detroit were kind enough to install a gas pedal and a brake pedal. This allows me to go as fast as I like (up to the limits of the design of the vehicle) or as slowly as I feel necessary. I can drive at dangerous speeds and risk both a ticket and an accident if I like. I can drive normal speeds if I like. I can drive really slowly and annoy all the other drivers if I like. My car goes exactly as fast or as slow as I want it to (if you have certain models of Toyota, you may experience some exceptions to the usual rules regarding driver control of vehicle speed - hee hee!).

Most US forex brokers give you an account that has the ability to use 1:100 leverage. Not one of them "forces" anyone to use all that leverage.

Simple risk management (setting SL and lot size to risk a small percent of your account) will naturally keep your leverage under control. If you get lucky enough to catch a big trend and scale into a position, then you can use more and more of that leverage with no real risk to your account.

On the other hand, 10:1 means that you'll need a very large amount of money to be able to open trades or to keep modest trade sizes open without a margin call. It's like getting an automatic speeding ticket if you ever break 10 mph.

If everyone never drove faster than 10 mph, the roads would be a lot safer, but this would not be sensible. Even a regulation that stringent wouldn't keep some idiots from driving off a cliff.

 

[PipStar]

I am not surprised that no one on this forum has supported what I have said...........................

I am not surprised either. You have the right to your opinion but you are supporting a rule of 10-1 leverage which is nonsense. My strategy requires high leverage and this rule would basically kill it. So why should I support a rule that is not in my best interests and by the sounds of it not in the best interests of anybody at all? Almost everyone is opposing it. The real surprise is that you don't seem to understand that some traders need high leverage to trade their system.

 

[Agent86]

The problem with liberals

Hi all

I'm not talking politically here, but only conceptual.

The problem with liberals is that every time they get an idea because they personally experienced something.They get an idea then want to force that idea on everyone else regardless of what the majority want.

IE - Ah haa I think 10:1 is good, lets force everyone into submission; and if I can't convince them it's better, no big deal. I will align forces with those in power and crush all those that oppose me then we shall have a universal mindset.

Why can't these liberal minded just trade the way they like,on a platform that allows what they want; and leave the rest of us alone. But Nooooo, they have to force you into submission at all costs.

Guess what piphog whether they pass it or not, NO one accepts it or your way of thinking about it. Or perhaps only very few.

Did you know that ?
Can you accept that ? (doubtful)

Hey piphog, did you know that no one agrees or few agree regardless of the outcome did you even stop and think of this ?

Did you know that ?

Rhetorically NO;

Well now it's confirmed that most disagree with you.

Please update this for your records and future reference.

I'm happy to have helped with the updating of your records.

Happy trading