Wednesday, March 24, 2010

Forex Leverage Regulations Will Kill The Industry in America.

I am sure most of you have heard about this issue by now. 100:1 leverage regulated to 10:1 max is the bottom line. Unfortunately, many do not understand the implications for traders like myself... especially those who do not trade currencies.

High leverage makes the relatively small percentage moves in currencies comparable to instruments in other markets (such as equities, futures, commodities, etc.). Risk of loss beyond trading balance is managed with automatic liquidations margin agreements, so there really isn't risk beyond what you invest (which cannot be said the same for other markets or instruments).

If this passes, I will not be able to trade as I do today. I trade at 50:1 leverage and would have to consider setting up a foreign entity to trade through a foreign brokerage, or consider another market which I really don't even want to consider. I was MADE TO BE A FOREX TRADER. 10:1 would not allow me to do the style of trading I do without significant (5 times as much) additions of capital to my trading account.

Glad to hear that a broker who I have an account through is taking a stand...

OANDA Deems CFTC Leverage Proposal Unfair and Non-Competitive

Also, a solid interview with Robert Green (full disclosure, I have used Greentradertax for tax advice and other related services) from Greentradertax about the nature of the proposed regulation and impact on the forex business.

1 comment:

  1. I suggest that you trade with the most recommended Forex broker: AvaTrade.


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