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This is a discussion on FxPro Discussion within the Forex Brokers forums, part of the Commercial category; [QUOTE=FxPro Group;2489136]Dear Spinola, the big discussion in the wake of Black Thursday has centred on leverage, quite erroneously in my ...

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Old Mar 22, 2015, 10:38am   #25
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[QUOTE=FxPro Group;2489136]Dear Spinola,
the big discussion in the wake of Black Thursday has centred on leverage, quite erroneously in my opinion. I personally don’t see this as a situation that could’ve been managed any better with lower gearing. For example, even with a book composed solely of 1:100 orders, with 100,000,000 exposure (i.e. 1,000,000 margin) a 30% move would’ve caused a loss of 29,000,000. With 1:50 leverage the loss would’ve just been 28,000,000 rather than 29.

How?

Pair goes down by 30%

Case 1 leverage 1:100 , My 1000, position 100,000
I loose 30,000

Case 2 Leverage 1:50 My 1000, Position size = 50000
I loose 30% of 50000 = 15000

More the leverage more you loose ( or gain) is it not
Or am I missing something!
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Old Mar 24, 2015, 9:12am   #26
 
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FxPro Group started this thread [QUOTE=moka2;2513096]
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Originally Posted by FxPro Group View Post
Dear Spinola,
the big discussion in the wake of Black Thursday has centred on leverage, quite erroneously in my opinion. I personally don’t see this as a situation that could’ve been managed any better with lower gearing. For example, even with a book composed solely of 1:100 orders, with 100,000,000 exposure (i.e. 1,000,000 margin) a 30% move would’ve caused a loss of 29,000,000. With 1:50 leverage the loss would’ve just been 28,000,000 rather than 29.

How?

Pair goes down by 30%

Case 1 leverage 1:100 , My 1000, position 100,000
I loose 30,000

Case 2 Leverage 1:50 My 1000, Position size = 50000
I loose 30% of 50000 = 15000

More the leverage more you loose ( or gain) is it not
Or am I missing something!
Dear Moka2,

The extract you take from this article is written from a broker’s point of view. In each instance note that the total notional exposure is the same i.e. 100,000,000, but the margin posted with a prime broker is different (1,000,000 on 1:100 and 2,000,000 on 1:50). A 30% move against you is 30,000,000 but the extra loss on 1:100 is 29m and 28m on 1:50.

In the example you provide you are looking at it from a client’s point of view and this does not equate to the example given by our CEO in the article. In both cases you have only specified your deposit size and leverage, which will determine the maximum lot size you can open. So, with 1,000 deposit on a 1:100 account you could open a maximum of 1 lot, whereas with a 1,000 deposit on a 1:50 account you could open a maximum of 0.5 lots (if you are not using stop losses). As you can see both are totally different trades and as your example shows, different losses incurred on a 30% move.

The premise of our CEO’s comments are that lower leverage wouldn’t necessarily have caused brokers to lose any less than they did on the SNB move. This of course is subject to opinion and a point that is being debated within our industry.

Kind Regards,

FxPro Team
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Old Mar 24, 2015, 2:22pm   #27
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Leverage is innocent!

[QUOTE=FxPro Group;2514082][QUOTE=moka2;2513096]

Dear Moka2,

The extract you take from this article is written from a broker’s point of view.

How would we know that! as a trader of course what make seance is more the leverage more the loss (gain)
And in a event like this the trader ( if the broker demands recovery of negative balance, which I guess you have a legal right to call upon) the person using more leverage is going to get heart more.. simple logic is it not?

No wonder Equity markets do not have such ridiculous leverage!

It is the promise of Huge gains due to high leverage that sucks people in to this.
They conveniently don;t look at the flip side of the coin and as a industry participant OTC brokers don;t want them to look at it either
It seems you are not ready to accept any criticism about OTC
Why don't you look at at what I said before about Client Money protection
HOW exactly is Client money "better protected" with OTC broker than a SIPC covered Equity and Options broker?
How? show the legal proof!
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Old Mar 24, 2015, 5:41pm   #28
 
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FxPro Group started this thread [QUOTE=moka2;2514466][QUOTE=FxPro Group;2514082]
Quote:
Originally Posted by moka2 View Post

Dear Moka2,

The extract you take from this article is written from a broker’s point of view.

How would we know that! as a trader of course what make seance is more the leverage more the loss (gain)
And in a event like this the trader ( if the broker demands recovery of negative balance, which I guess you have a legal right to call upon) the person using more leverage is going to get heart more.. simple logic is it not?

No wonder Equity markets do not have such ridiculous leverage!

It is the promise of Huge gains due to high leverage that sucks people in to this.
They conveniently don;t look at the flip side of the coin and as a industry participant OTC brokers don;t want them to look at it either
It seems you are not ready to accept any criticism about OTC
Why don't you look at at what I said before about Client Money protection
HOW exactly is Client money "better protected" with OTC broker than a SIPC covered Equity and Options broker?
How? show the legal proof!
Dear Moka2,

If you were to attend our seminar in London you would hear first-hand that we are very clear about how higher leverage can mean greater risk and we also have a full Risk Disclosure Statement on our website that addresses leverage in detail. We take this very seriously as it is in our interests to protect our clients. This is why we honoured our Negative Balance Protection policy following SNB, a policy that is not a regulatory requirement, to offer as part of our service.

In respect of retail client money rules these are very strict under both FCA and CySEC and we follow them to the letter. If we did not we would not be allowed to operate as a firm and offer our award winning services. As mentioned before, all retail client funds deposited with FxPro are totally ring-fenced and segregated in investment grade banks.

Kind Regards,

FxPro Team
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Old Mar 24, 2015, 6:20pm   #29
 
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Hi team,
I have just downloaded the MT4 demo from FX Pro specifically to use your new quant system. However where is it exactly ? Can't seem to spot it in the indicators etc.

thanks
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Old Mar 24, 2015, 11:01pm   #30
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[QUOTE=FxPro Group;2514680][QUOTE=moka2;2514466][QUOTE=FxPro Group;2514082]

As mentioned before, all retail client funds deposited with FxPro are totally ring-fenced and segregated in investment grade banks.

Yes and I am not implying that you are not doing that!
And all traders/ investor wish that Broker's don;t go down
but the fact remains that if a a OTC broker goes down ( due to any reason) and if there is a shortfall in the Client Seg account .
Then unless the broker is in UK under FCA as of today there is no compensation mechanism .

Nothing in USA
Nothing in Australia
Don;t know about Canada and other EU countries
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Old Mar 25, 2015, 5:35pm   #31
 
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Originally Posted by Pat494 View Post
Hi team,
I have just downloaded the MT4 demo from FX Pro specifically to use your new quant system. However where is it exactly ? Can't seem to spot it in the indicators etc.

thanks
Dear Pat494, you should be able to build your strategy from the FxPro Quant url which is http://quant.fxpro.co.uk/. From here you can launch the strategy builder and get under way.

Kind Regards,

FxPro Team

Trading CFDs involves a high risk of loss.
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Old Mar 25, 2015, 6:46pm   #32
 
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Quote:
Originally Posted by FxPro Group View Post
Dear Pat494, you should be able to build your strategy from the FxPro Quant url which is http://quant.fxpro.co.uk/. From here you can launch the strategy builder and get under way.

Kind Regards,

FxPro Team

Trading CFDs involves a high risk of loss.
thanks
The page doesn't recognise that I already have a demo account with you, nor my email address ?
So I opened another one
um getting into a muddle here I think
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