Did I expect people will scream at me? Of course, and guess who that is, the paper traders, the guys with <10k accounts and other overleveraged cowboys who lose money over time. Pathetic...nothing to add to that...
dude, this is not about being able to invest money elsewhere that would otherwise be tied up in margin. This is about not running exorbitant risks. Banks are getting limited in the amount of leverage used, and so should anybody who trades retails with >10:1 leverage. What is so hard to grasp...
all your screaming does not help, tell me trading 50:1 or 100:1 is not taking completely outsized risk. The point is, anyone trading money on such basis DOES NOT understand risk nor should be trading because he/she is not only risking his own money but on a larger scale also adding to aggregate risk in the market as a whole.
Trader b is at a huge disadvantage because 10pips is a completely RANDOM move in ANY currency pair and thus can get stopped out at any second of the day. Trading on 10pips stops is a gamble and casino and has NOTHING whatsoever to do with trading, unless you run a fully automated strategy that takes advantage of tiny moves with a STATISTICAL edge. A discretionary trader on 200:1 margin with 10pip stops DOES NOT HAVE any edge whatsoever. Thats utter nonsense. Show me ONE fx trader who can show a trading record over 1-2 years who trades on such basis and who is making money. There is none!!! The trading cost alone would be 30% of your risk on such trade. LOL...
Wow thank you for answering my question. What about the second part then trading 0.10 lots using 100 and 200 pip spreads? Is that wide enough for you? Its just an example using random numbers would you like me to pick another one? Point is risk management and leverage are separate things. Also, care to give your opinion on the last part? Its also important to note that not everyone holds there position for the entire week day or even hour. So it is you that is stupid, I asked you to tell me, with out mentioning that 10 pips is to tight why trader b is at a higher risk and you failed to do so.
No, they don't, and there isn't much point in discussing your question until you realize just how incorrect a statement that is.
you still do not comprehend the issue at hand. Of course trading 0.1 lots at a 100pip or 200pip stop loss level is A LOT WISER way of trading than trading, lets say, 1 lot on like a 10pip stop. The point is that people seek leverage because they think they can make easy money in those markets which 95% of people prove they cannot. So do you really think those who set up 100:1 accounts really seek to trade 0.1 lots with 100pip stop loss levels? Please dont make me laugh. The dirty truth is that most of such guys attempt to max out their funds' leverage and thus cannot take any swings because they would get margin calls. So what options do they have: They take incredibly tight stops which most market makers and brokers just love to hunt for. Easy pray....problem is....the aggregate of all those traders add to systemic market risk. That is at the heart of regulators at the moment. And I welcome this because there is no easy money. Believe me or not, but this limitation will safe A LOT of those newbies a lot of money!!!
exactly so the issue isnt leverage its risk and education, people have a I want it now and I want to put as little effort into it to get it attitude. Wouldnt it be smarter to educate the traders rather then just stop them all together and punish those who trade .1 with 100 pips?