Welcome back Meta-Traders.The developments are coming fast and furious regarding the new Forex regulations due to take affect in the US starting on October 15th.
I spent some time this afternoon in a Webinar sponsored by my favorite referring broker Trader's Choice FX. The session lasted almost 2 hours, and there was lot of fluff, dead air and marketing. It was almost 25 minutes into the session before we got to any real content. So I'll save you guys the time and give you the executive summary. Here goes:
- The new regulation applies to all US Citizens residing in the US. If you are a US Citizen living outside the US, or a non-US Citizen living inside the US, you may not be subject to this regulation.
- All non-US-based FCM's which have an office or presence in the US which hold accounts for those who reside in the US are required to return their accounts to the US under the new rules.
- Safety and security of funds should be paramount in any decisions you make as to where to fund your account. For brokers based outside the US, or non NFA or CFTC based brokers inside the US, you are completely subject to the financial condition of the FCM. In other words, if the FCM goes under, you can loose all your money. Fine for a few grand, but don't be the farm on these brokers. So stick with large, well capitalized brokers.
- All the major FCM's handled by Trader's Choice (FXCM, Forex.com and FXDD) are all subject to the regulations and are all repatriating their accounts but all doing so differently.
- These regulations are not as bad as they sound. Traders who trade with high leverage (beyond 12:1) typically loose their accounts. The presenter challenged the audience to provide a brokerage statement for more than one year which shows successful trading of an account at this leverage level and nobody took him up that I'm aware of.
Now on to the good stuff. Here are the 3 options provided by Trader's Choice FX:1) Open an account with Citi FX Pro. This was a bit of a shocker since this large US-based bank will allow you to trade with FIFO and Hedging, but subject to the 1:50 leverage. Strangely enough, Citi is not subject to CTFC or CFC regulations, and the accounts are FDIC insured up to the 250K limit. In my first hand experience, this is an abberation, and its just a matter of time before Senators Dodd and Frank get word of this loophole, so don't bank on it.
Also, Citi's minimum account size is 10K and they will not split accounts down further. That counts them out for me. Not that I can't swing 10 grand, but I'm not about to bet 10 grand on any single forex robot. Someday, but not now.
2) Open an account with Forex.com US. This is perhaps the least favorable option because they (just today) released their NFA-compliant version of Meta-Trader 4. On the plus side, this is a reputable and well-capitalize broker. On the down side, performance of non-US accounts may change when they are brought back under US rules.
3) Open an account with FXDD US. These guys have a bit of a leg up since they have had a MT4 version which meets US-rules in place for some time.
Trader's choice also indicated they will pay a 5% deposit bonus on any new account $250 or above. Also FXDD has a solid reputation with spreads as low as 2 pips on EUR/USD.
In summary, my major takeaway from the presentation is that these regulations are in place to protect you and your funds. There are very few profitable systems which are rendered ineffective by these regulations.
Take care folks and stay tuned for some interesting, first hand experience I got this week trading my new IamFX account live. Check back later for that...
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