Article Forex Trading New Rules Same Game

T2W Bot

Staff member
1,454 54
It is the job of every serious-minded Forex trader out there to keep abreast of the latest news and events, which could potentially have an effect on their day-to-day trading activities. This month is a big month for the world of Forex trading in that we have seen brand new legislation enforced which will no doubt ripple across the activities of all Forex traders participating or looking to participate in the markets over the course of the future. This ruling has been met with praise by some and scorn with others, yet needless to say, it is here to stay and we should all be aware of its appearance moving forward. The ruling I am talking about is the introduction of the latest Commodity Futures Trading Commission (CFTC) Compliance rule, which will substantially reduce the amount of leverage available to retail Forex traders.
The ruling came into effect on October 18, 2010, and in simple terms, dictates that all retail Forex traders will be required to...
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duffypratt

Newbie
1 0
There's a different problem with the leverage restrictions. It exposes a careful trader to additional risk that the broker will go bankrupt or otherwise breach its contract. Suppose you have $100K available for trading and you are willing to risk 2% per trade or 5% at any one time. At 100:1 leverage that means you could, with a reasonable cushion, put $15-20K into your brokerage account and trade with the idea that a deep drawdown might require refunding. The rest of your available trading assets could go someplace safer, perhaps someplace Federally insured. With 50:1, you need to deposit twice as much money with your broker. How does this protect the careful trader, who actually thinks about all the various risks that face his capital?
 

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