I've been looking over some of these posts about people fuming over the proposed regulation to reduce leverage from 100:1 to 10:1.
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.
But now we are on to this leverage issue. We all know 95% of traders or more lose net when they trade retail 100:1 forex. The only people benefiting from this ridiculous excessive leverage are the fraction of successful low-capital traders, and of course the brokers.
The FOREX markets at 100:1 leverage at the retail level amount to a financial casino where volatile swings can either make or break your account. People arent trading in the interest of price discovery or hedging anymore -- its all about raw casino-like speculation which distorts the market.
The only winners if we DONT pass this leverage restriction to 10:1 are the brokers, who lure the financially illiterate and inexperienced amateur traders with flashy ads on news and financial websites promising great possibilities of wealth creation. These same brokers who aid in the destruction of over 95% of small-time FOREX traders.
Just food for thought.
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.
But now we are on to this leverage issue. We all know 95% of traders or more lose net when they trade retail 100:1 forex. The only people benefiting from this ridiculous excessive leverage are the fraction of successful low-capital traders, and of course the brokers.
The FOREX markets at 100:1 leverage at the retail level amount to a financial casino where volatile swings can either make or break your account. People arent trading in the interest of price discovery or hedging anymore -- its all about raw casino-like speculation which distorts the market.
The only winners if we DONT pass this leverage restriction to 10:1 are the brokers, who lure the financially illiterate and inexperienced amateur traders with flashy ads on news and financial websites promising great possibilities of wealth creation. These same brokers who aid in the destruction of over 95% of small-time FOREX traders.
Just food for thought.