Using Offshore brokers and MORE leverage than allowed by US/EU regulation

Discussion in 'Taxes and Accounting' started by John AC, Aug 10, 2019.

Are you using a higher leverage than legally allowed in your country?

Poll closed Aug 24, 2019.
  1. Yes

    2 vote(s)
  2. No

    5 vote(s)
  3. I don't want to answer

    2 vote(s)
  1. John AC

    John AC

    Hi traders,
    I have been trading for six months in the forex market. Almost everybody that I know is trying to get 1:500 leverage because it's more profitable, especially when scalping and day trading. It's no secret that we traders in the US (and UE as well, since last year) are especially limited (no hedging, 1:30, ...).

    According to the regulation and the law, what are the legal consequences for a professional trader (or a prop firm) if he's using higher leverage ( and hedging) in his professional practice -under a more restrictive country like the US?
    ...just a warning or maybe a fine...?

  2. luisHK


    Ya should upgrade your company...
  3. John AC

    John AC

    Thanks for your answer. Luis, can you please elaborate a little bit more? Please, stick to the topic.
  4. luisHK


    Well, about the question in the OP, I don't know what sanction you incur directly, but recall several offshore firms taking on American customers were closed and the funds frozen. I m surprised firms would still offer American citizens leverage they shouldn't by law.
    As of my previous post, i don't think many people dealing with a serious portfolio ask for even close to 500leverage, such a leverage is a good way to blow up your account way faster than u built it and it is likely offered by suspicious bucket shops which will help u blowing up in case u become profitable. I doubt the people u know make any money in the market long term, and again would advise u to seek more successful traders when looking for market related advice
  5. John AC

    John AC

    Blowing your account has more factors involved, as you know. About the topic, check around and you will really be surprised what this industry offers and to whom. Thanks for offering your point of view. Very much appreciated.
  6. SunTrader



    Leverage has noooothing to do with being profitable.
  7. bbpp


    There are no legal consequences if US retail traders trade with offshore forex brokers.

    A firm accepting US customer may face CFTC charge with civil penalties but I never heard such thing as customers' accounts frozen. Offshore banks accounts can be frozn for money laundering, but not for retail forex trading accounts.

    For higher leverage, it is a two side sword: if you can profit from market, you can profit more with high leverage; If you had been losing, you will lose more with high leverage.
    There is no such thing as a loser can use high leverage to turn himself into a winner.
    Only a winner can use high leverage to win more.
    Last edited: Aug 11, 2019
    john777 and tomorton like this.
  8. John AC

    John AC

    Thanks BBpp.That makes sense. A lot. So, now, what about a firm? Does a prop firm get in trouble, or a pro trader using offshore FX brokers?
  9. bbpp


  10. tomorton


    I'm wanting to make sure we're all starting off on the same basis.

    When you say almost everybody you know is trying to get 1:500 leverage because its more profitable, does that mean that almost everybody you know is making a profit? Or does it mean they haven't made a profit yet but they want higher leverage so that if they ever do make a profit it will be bigger?
    #10     Aug 11, 2019
    Sig likes this.