New York―July 6, 2009―FXCM Holdings, has received numerous questions after our first e-mail regarding the new NFA Compliance Rule 2-43(b). Please note that you will be able to use entry orders to place stops and limits after July 31, 2009. Entry orders provide the ability to realize profits and cut losses.
Using entry orders for stop-loss and limits after July 31, 2009:
For Buy Positions: Placing an entry order to sell below the price where you got into the position protects you from additional losses. Placing an entry order to sell above the price where you got in locks in profits.
For example, if you have a BUY EUR/USD position at 1.3900, you could place:
a stop-loss using a sell entry order (Stop Entry, SE) at 1.3800
a limit using a sell entry order (Limit Entry, LE) at 1.4000.
For Sell Positions: Placing an entry order to buy above the price where you got in protects you from additional losses. Placing an entry order to buy below the price where you got in locks in profits.
For example, if you have a SELL EUR/USD position at 1.3900, you could place:
a stop-loss using a buy entry order (Stop Entry, SE) at 1.4000
a limit using a buy entry order (Limit Entry, LE) at 1.3800.
The National Futures Association (NFA), our industry's self regulatory organization in the United States, has informed all Forex Dealer Members, which includes FXCM, that it has adopted new Compliance Rule 2-43(b) regarding forex trading. Read Compliance Rule 2-43(b) http://www.nfa.futures.org/news/news...ArticleID=2273
This rule requires orders be executed First In, First Out (FIFO). FIFO requires that when multiple positions are held in the same currency pair, the position which was first opened will be the first to be closed. This will prevent stop-loss and limit orders from being placed on individual tickets (orders and positions).
FXCM has always encouraged active risk management through the use of stop-loss and limit orders. The stop and limit orders that have been available through the “Open Positions” window are two entry orders that are linked to an individual open position. If a stop or limit order is triggered, the other is canceled. The FIFO rule prevents stops and limits from being attached to an individual ticket.
FXCM is introducing a new feature called OCO (One Cancels the Other) entry orders, which will provide traders with the same functionality as they have been accustomed, except that they are not linked to any positions. Watch This Video Presentation To See How To Manage Your Risk Using OCO Entry Orders: https://admin.acrobat.com/_a205571165/p91063619/
While FXCM acknowledges the NFA's concern and obligation to protect clients, FXCM would like to extend an option to those who would like to continue using the current platform functionality. Traders can transfer their accounts to Forex Capital Markets Ltd. (FXCM UK) and continue to place stop-loss and limit orders and maintain the ability to modify and close orders from the "Open Positions" window.
If you wish to maintain your current platform functionality, you can trade through FXCM UK, which is regulated by the Financial Services Authority (FSA) in the United Kingdom.
If you wish to transfer your account to FXCM UK, please complete the one page form:
Q: If I switch my account to FXCM UK what protection is available?
A: The FSA is the regulatory body that oversees spot FX trading in the United Kingdom. The market has been regulated in the UK much longer then it has been in the U.S. Accounts with FXCM UK are segregated in accordance with FSA client money rules. The financial services authority, one of the world's most respected financial regulatory bodies, regulates FXCM UK.
Q: How may I deposit funds to my account if it is housed with FXCM UK?
A: FXCM UK provides for bank wire, debit card, credit card, and check deposits and withdrawals. Please note there are different Web site links and funding details associated with accounts at FXCM UK. Visit FXCM - Depositing Funds Options for full details. Please also note clients have the option to hold their accounts in GBP, EUR, USD, JPY, CAD, and NZD. U.S. clients may send domestic wire deposits. http://www.fxcm.co.uk/depositing-funds.jsp
Q: Will I be able to place stop-loss and limit orders on individual positions after I transfer to FXCM UK?
A: Yes. All FXCM UK accounts will allow clients to place stops and limits as well as close positions from the "Open Positions" window.
Q: Will hedging be enabled on my account after it is transferred to FXCM UK?
A: Yes. All FXCM UK accounts default to have hedging enabled. That is to say that buy and sell positions will no longer offset each other. Buy and sell positions can now be held on the same account. Clients who wish to have hedging disabled can elect to turn the function off via MyFXCM. https://www.myfxcm.com
Q: Will OCO entry orders be enabled on my account after it is transferred to FXCM UK?
A: Yes. However, if the account does not have hedging enabled the OCO orders executed in the opposing direction of open positions will effectively offset those positions. Conversely, a market order to buy 100K GBP/USD will NOT be offset by an entry order to sell if the account has hedging enabled.
If you have any questions about the new regulations, or their effect on your risk management, please don’t hesitate to contact us at 1-888-503-6739, or e-mail us at email@example.com.
FXCM Holdings LLC Facts
As of January 2009
• FXCM Holdings LLC has over $100 million in capital
• More than 125,000 live accounts are traded on FXCM trading platforms
• An average of $500 billion in notional volume is traded each month on FXCM trading platforms
• In excess of $500 million in customer funds trading on platforms offered by FXCM
Trading FX on margin carries a high level of risk, and may not be suitable for all investors.