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Sunday, October 17, 2010

New USA Fx Trading Regs Take Effect

Beginning Monday, October 18th, the NFA and CFTC will be 'protecting' millions of Fx traders in America. What from? From 'themselves' of course as the government would have you believe.

You can bet American brokers are putting on a 'happy face' trying to save what business they can. Now here is the crux of it:
  • All trades are now First in first out (FIFO). If a trader puts in a longer term trade, and then later sees a short term opportunity, he/she can no longer close their second short term trade at a profit, while letting the first trade run. The first trade must be closed first.
  • No hedging: You cannot have a buy and sell order open on the same pair at the same time. This is a critical strategy used by many to mitigate risk while keeping good positions open during an adverse swing.
  • Leverage: American brokers now can only offer a 50:1 leverage or less. Yes, this does reduce risk for novice traders, but it also reduces profitability for good traders by cutting profitability by 2 to 10 times, depending on the leverage used.
  • No Offshore Accounts: American traders can no longer trade with brokerages 'offshore'.

1 comment:

  1. Type of Position . I will be faithful readers. Thank you once again.