My goodness! Do you even trade currencies??? A 100 pip move can happen in a matter of minutes in this business, let along a 10 pip move. Completely random? This just goes to show that you don't understand the market about which you speak with such authority. Mathematically, you can prove just as much predictable structure to this market, as you can numerical randomness. I have found a boat load of repeatable Structures within the currency markets and so have many other technicians in this business. Even in the face of hard-core Fundamental news breaking on a currency, there are still very predictable Patterns that contain high probabilities within those types of moves. Your inability to see the predictable patterns that make up the price action of this market, is proof positive that you don't yet understand what's going on here. There is a high degree of mathematical structure INSIDE what appears to be "total randomness" to you. If you had taken the time to study the data that makes up the currency markets, then the markets Structure would fly off your computer screen and slap you in the face with a wake-up call. This is what I mean by EDUCATION being the problem and not leverage. You don't even understand that these markets have structure and that singular fact ALONE speaks volumes. This is just flat out silly and even more proof that you do not have a solitary clue about the things for which you speak with such authority. It is not the Stop that's at issue here, it is the entry into your position that matters most. This is WHY knowing that the market has structure and knowing WHERE those higher probability structures are taking shape and most likely to push price, is so important to the size and position of the stop itself. If you are using higher leverage, higher cost basis (per trade) and targeting larger Limit levels for profit, THEN you CAN use small stops and actually gets stopped out MORE THAN you strike your Limits and STILL turn a profit IF you remain consistent at what you are doing AND you know where the current price is located with the overall Structure of price. But, you don't understand any of this, do you? Or, why it makes your comment about not being able to use a 10 pip Stop, so incredibly telling about your skill level, do you? I'm not going to give away my specific trade techniques and/or my trade system, but I can promise you that a 10 pip stop (the way I trade) is FAR superior to a 100 pip stop any day of the week. It retains more of my available capital and it allows me to come to market consistently with high cost basis trades, which allows me to make larger profits per trade, than using a 100 pip stop ever could or ever would, mathematically. You need to do more homework. Silly. The edge is NOT inside the stop. The edge is inside your HEAD. That's pathetic and sad. And, you call yourself a trader? I've been trading currencies since 2004 and equity options since 2002. The reason I made the switch is precisely because of the unwarranted exposure to individual stock price manipulation and the better price structures found in the currency markets relative to the dollar per unit relationship. In the stock market, a customer can slip, fall and sue a company, causing news of a lawsuit to tweak the price structure at the most unexpected times. In the currency markets, Central Bank Interest Rate decisions OR the Expectation of FUTURE Central Bank Rate decisions, is what moves the pair/spot/option. In the stock market, I had to make sure that my trade signal for the underlying stock, was inline with the trade signal for its parent Exchange where it was traded. If not, the stock's price structure would invariably be conflicted by the weight of an Exchange moving in the opposite direction. In the currency market, I simply need to understand what market's interpretation of any Economic Report will have on the Central Bank's decision about rates - no worries about uncorrelated Exchanges, whatsoever. Am I profitable? Probably one of the most profitable individual traders you've ever met online - if not the most profitable you've ever met online, then certain one of the most you've met online, thus far. What do I call profitable? Turning $9,000 into over 8 figures in less than 2 years. By most standards, that would be considered, profitable. Am I going to post my bank statements for you to examine my work? No, so don't bother asking. But, I will tell you this, if you believe that 100:1 is over-leveraged, then you don't yet fully understand why the currency markets exist, or how to profit from them, consistently. That much is abundantly clear. If I could do in the equity derivatives markets, what I have done in the currency markets AND without high risk associated, then I would have stayed in the equity options business. Can I still trade equity options and remain profitable? Yes, but the underlying conditions in equities would not allow me to grow my capital at the same rate of speed and FX Leverage is what enables me to do exactly that. You have a lot to learn about how this business truly works and I would strongly suggest that you start by correcting your mistake when you declared that a 10 pip move is purely random. There is more "structure" in a 10 pip move, then you are currently aware of at this moment. Here's another freebie thought for you: Did you know that in the currency markets, you can turn a 10 pip Stop into a 20 pip Stop, actually LOWER risk and INCREASE net gains, all at the same time? I guaranteed you that you did not know that as a fact. Yet, it is true. It can be done, but NOT without and education in how this business works.
The FXDC has issued another statement on fighting fraud in retail forex and the CFTC proposal's impact. Here it is: Fighting Fraud in Retail Forex Over the past decade the Commodity Futures Trading Commission (CFTC) has found itself engaged in a seemingly endless battle with con-men, ponzi schemers and hapless fund managers operating in the retail forex arena. The difficulty for the CFTC lay in the fact that 90% of the people engaged in this criminal activity were not registered or licensed with any regulatory body and in many cases were simply common criminals who never actually engaged in any trading but simply misappropriated customer funds for their own use. The CFTCâs answer to fighting this problem has been to propose dramatic new regulations that would require anyone soliciting customers to trade retail forex get a license and be registered with the CFTC. This new licensing regime would go a long way towards ending the problem of forex fraud in the United States. However, all of this potential progress will be wiped away due to another CFTC proposed rule which would require customers post a 10% margin deposit in place of the current 1% margin rule recently adopted by the primary regulator of retail forex over the past ten years, the National Futures Association (NFA). Here is why the 10% margin rule will make forex fraud worse than it has ever been: The adoption of the 10% margin rule will make it impossible for U.S. based forex dealers to compete with competitors from the United Kingdom. UK dealers are regulated by the FSA, which has no leverage restrictions whatsoever. The U.S. retail forex industry simply wonât be able to compete and will be decimated, leaving no legitimate forex dealers left for customers to trade with. In this environment fraud will flourish. With no widely recognized brand names left in the United States it will become harder for the trading public to screen out the con-men. Last year the major forex dealers of this industry spent over $100 million building up their brand names precisely to separate themselves from the rabble. When a customer clicks on the website of a brand name in the retail forex industry they can quickly find links directing them to the CFTC or NFA do conduct a background check. But when the brand names disappear it will then fall upon forex traders themselves to sort through the rabble and this will be much more difficult and leave traders much more vulnerable since fraudsters are highly unlikely to give customers an option to do background checks with regulators. Adding to this vulnerability is a worrying trend of traders who are developing an âantiregulatoryâ attitude when it comes to forex regulation. Traders are going from valuing the consumer protection offered by regulators to being hostile towards regulation since they are starting to see regulation as something that smothers consumer choice in the name of nanny statism. This attitude will harden should the 10% margin rule pass thus turning the CFTC into the bad guys in the minds of many traders. Once again, in this environment fraud will flourish. Furthermore, a lot forex fraud involves boiler rooms that peddle so called âforeign currency options,â which require customers to make a deposit in order to purchase an over-priced premium. By increasing margin requirements these con-men can make even bolder requests of their customers and charge even more ridiculous amounts for premiums before they run off with a clientâs funds. Perhaps most troubling of all is that unregulated dealers from around the world will be the biggest beneficiaries of the 10% margin rule. These unregulated forex dealers donât have to worry about capital requirements, risk management models, marketing ethics, dealing practices or even returning a customerâs funds. These dealers will be out of the reach of the CFTC and they will thrive. At the end of the day, fraud will become impossible to police. Background checks are impossible to do for unregulated offshore forex dealers. Some of these con-men simply setup a website, put up a phony address in a foreign locale and claim to be a large and mainstream forex dealer when in reality there is just some lone hustler, sipping tea in a cramped apartment running the whole show. In the aftermath of the shutdown of the U.S. retail forex industry U.S. traders will be bombarded by offshore forex boiler rooms and many will be taken advantage of unnecessarily. There is no cop on the beat in the world of the unregulated, overseas retail forex dealer. Therefore, it makes no sense that CFTC would encourage people to open accounts at these offshore dealers instead of trading at a perfectly compliant and regulated domestic forex dealer. A Healthy, Regulated Industry with a Cop on the Beat The key to solving forex fraud resides within the CFTCâs own proposed rules (absent the 10% margin rule). Over the last several years the NFA has aggressively tightened up its rules regulating retail forex by raising the minimum capital requirement to $20 million (which doesnât include additional capital requirements on net positions), conducting more aggressive audits of firms (NFA registered forex dealers must submit monthly reports to CFTC and weekly reports to NFA), imposing tough marketing standards, and raising the bar in general for admission to the Association. As a result, the days of the small time forex dealer with just a few thousand dollars in capital opening a forex firm have long since ended. These tougher regulations have cleared out the worst elements in the dealer community, leaving only the unregulated forex referring broker community to be cleaned up next. These rules will do exactly that. But by requiring customers post 10% margin and wiping out all forex dealers (who are not engaged in fraud and who want to see an industry where the only people employed in it are licensed and on the level) the trading public will be left with no one but the ponzi schemers to do business with inside the United States. The fact is the overwhelming majority of customers who trade in the retail forex industry are not victims of fraud. They are investors who enjoy trading currency online. They should not be punished for the sins of criminals. And they wonât be in a well-regulated domestic forex industry that works with the CFTC to report on those solicitors who are not going by the new letter of the law. But first there has to be a healthy industry to regulate in order to finally put an end to fraud. If the 10% margin rule is withdrawn thatâs precisely what we will have. Statement taken from here http://blogs.fxstreet.com/francesc/files/2010/02/fighting-fraud-in-retail-forex.pdf
It would really help if you were able to get a respected industry person to echo these sentiments publicly on national media...
This rule is going to kill forex in the US and send everyone overseas. This is a really bad move I think and is just going to hurt us more as a country. The regulators think they are doing more positive but instead it is really going to have a negative effect.
It amazes me to sit here and watch Asiaprop spread this nonsense about how dangerous it is to trade with anything above 10:1. Would AsiaProp consider 11:1 to be just as dangerous? How about 9:1, is that "just ok" because its under 10:1? This is ludicrous and the people pumping and dumping this stuff on the net right now, are more than likely plants for who - I don't know - somebody! L-e-v-e-r-a-g-e, is not your problem. Your problem is a total lack of education about WHY you are entering your trades to begin with. L-e-v-e-r-a-g-e, is not the economies problem, or the money supplies problem, or the "systems" problem, or the World Bank's problem or the IMF's problem, or the "Fill-in-the-blank's" problem. The issue here is Futures Market having leverage within the Government sufficient to increase the liquidity of the Currency Futures Markets. Is the CME behind this? Is the ISE behind this? Heck, somebody is behind this. In situations like these, the best way to find out is to ask the question: Who has the power to change the rules AND who stands to gain the most from 10:1? The rest is moot, quite frankly. Do FCMs stand to gain? Do Brokers stand to gain? Does any Retail FX Intermediary stand to gain? Does the Trader stand to gain? No, would be the answer to all of the above. Does the CME stand to gain? Does the ISE stand to gain? Does the stock market stand to gain (from returning FX traders)? Do the Exchange based financial world stand to gain? Yes, would be the answer to one degree or another to these questions. Beyond all of this, you don't have to trade at 10:1 if you don't want to. You can retain up to 100:1 if you so desire. Just don't trade with ANY U.S. based FX Intermediary subject to CFTC rulings. It is as simple as that. Do your own homework, there are some good alternatives to U.S. based FX gateways out there.
That is very easy too...simply program to recognize US IP numbers...Betfair do that... As soon as you go onto their site they tell you that you cannot bet as the country is "forbidden",but you can access their data. NiN