Going offshore to escape the CFTC

Broker Discussion Forex Brokers
3642

I have had an account with Profiforex for about 3 or 4 years but have used it very little in the past year. I only have about 10 bucks in the account, which still appears on their trading station. According to a chat with them today it looks like the accounts of existing US traders will remain intact and continue to be tradable. Below is my copy of the chat transcript:

Operator Juliet has joined the chat.
Juliet: Dear compounder, welcome to Profiforex! My name is Juliet and I am happy to assist you. How may I help you?
Ticket S60222-T12721 is created. The chat transcript will be attached to this ticket after the transcript is saved by system.
compounder: What will happen to the accounts of US traders you already have?
compounder: Are you no longer accepting US traders?
compounder: The bottom of your website says that American traders will not be serviced.
Juliet: One moment please
Juliet: Thank you for your patience compounder
Juliet: We do appreciate it
Juliet: Our US clients get to keep their account with us
compounder: So you no longer accept new US traders but existing US traders can continue to trade with you?
Juliet: Yes compounder
compounder: Okay, that is good news for your present US traders. Thanks. Goodbye.
compounder: Wait.
Juliet: You are most welcomed compounder, okay
compounder: Why are you no longer accepting US traders?
compounder: New restrictions from the United States authorities?
Juliet: Yes, US regulations
compounder: I understand. Please send a copy of this chat to me by email. Thanks. Goodbye.
Juliet: You are welcomed once again compounder
Juliet: Sure
Juliet: Thank you for coming on Live Chat.
Should you have further questions or comments please do not hesitate to contact us again via live chat or e-mail: <[email protected]>.
Juliet: Enjoy the rest of your day ,bye
Operator Juliet has left the chat.

Hopefully Trump or another Republican will get elected and then finally put an end to this Dodd-Frankenstein nightmare that continues to actually stifle the American economy.

3643

Re: [B]Profiforex (Seychelles)[/B]

Thanks for that update, compounder.

Re: [B]LMFX (Macedonia)[/B]

I received an email from LMFX (the sender was not identified by name) asking how LMFX can gain the Trusted Broker designation in our List. Here’s a copy-and-paste of the email:

Hello Clint,

I’m writing you in regards of the trusted broker status at the topic that you manage at babypips.
Please let me know what is the procedure of becoming one of the trusted brokers. We do our business in a transparent way and will do our best to fit in the trusted brokers category.
Looking forward for your reply!

I will send a reply to LMFX today, acknowledging receipt of their email. I will also refer them to THIS POST in which I outlined the history of Trusted Broker designations in this thread.

And finally, I will commit to getting a conversation started in this thread about awarding the Trusted Broker designation to LMFX, and I will encourage qualified representatives from LMFX to participate in that conversation.

I can’t have a conversation with myself, so I need you guys to weigh in on this question:

Should we designate [B]LMFX (Macedonia)[/B] as a Trusted Broker in the Offshore Broker List?

Re: [B]SmartTradeFX (SVG)[/B]

I’m trying to gather more information on the issues that prompted the WARNING which currently appears on the SmartTradeFX listing on page 1. I started by attempting to open a live account with SmartTradeFX, and got stymied at the very first step — on their application, USA is not listed in the drop-down menu for country of residence.

I sent an email to SmartTradeFX, asking for information. Their Live Chat was offline at the time (it was 3am in SVG when I sent it), so I’m waiting for a reply. When I know more, I’ll report it here.

.

3644

Hello Clint,

I would like to apologize for not entering my name in the email sent to you. My name is Maria Bachvarova and I am an official representative of LMFX.

Thanks for the given opportunity of becoming designed as a Trusted Broker in case of a positive decision of the thread participants. We will be happy to answer any questions you may have and we will remain at your disposal.

Kind Regards,
Maria Bachvarova
Official LMFX Representative

3645

Thanks, Maria.

While you were submitting your post (which I am just now reading for the first time), I was composing a reply to your email, which I addressed simply to “LMFX”.

From now on, I shall address you by name.

Thanks for your participation in our thread.

.

3646

In fact, we DID think ahead - our first clients (and the driving force behind the formation of Tallinex) were a group of fund managers who controlled significant assets… and all traded based on GMT+0, so going ‘NewYork’ from the outset would not have put us in a great position there.

Regardless, we hope to have some good news soon for everyone with east-coast tendencies :slight_smile:

3647

I received another email from [B]LMFX[/B] (Macedonia) — this one from the CEO:

LMFXconnect

Dear Clint,

Thanks for the reply and the explanation! I have decided to reply to that email personally, because I consider it important for our business development.

My name is Venelin Videnov and I’m the CEO of LMFX.

I see that Maria already posted a reply in the topic at Babypips. I’ll be monitoring it closely as well.

If we get positive votes from the community it will be an honor for us to become one of the trusted brokers. Let me know if you need any details from or have any questions.

You can contact me directly at <[email protected]>

Have a great day ahead!

Kind Regards,
Venelin V
LMFX Social Department

This broker is certainly eager to join the top echelon on our List.

I think we owe them the courtesy of a thorough discussion and a timely decision on their request to be considered for the Trusted Broker designation.

I’m especially interested in the opinion of anyone on this thread who has traded (live) with LMFX.

I prefer not to express my own opinion, until the rest of you have weighed in.

I’ll wait to hear from you guys.

.

3648

Leverage up to 1:1000…?

Bummer…! I have a Tallinex micro account and get only 1:400. :50: Not that I “need” 1:1000.

:smiley:

3649

Actually if you contact Tallinex support they can increase your leverage to 1:1000 on micro account.

3650

Actually, they can’t - leverage above 1:400 on micro accounts (1:200 on Pro) is solely based on on-going assessment by the risk profiling system.

3651

Oh ok I saw on the Tallinex website about the max leverage of 1:1000 and contacted live support and they said I would need to contact email support to raise my leverage to 1:1000 but I never tried it yet so I am a bit confused at this point …

3652

You may have chatted with a new team member who was unaware of the situation (it was previously possible to get leverage manually increased to 1:600), but the current position is as I stated previously because the process is now totally automated and no manual adjustments are possible. Assessment is continuous and based on the most recent 30 days… I know that a number of clients have 1:1000 so it’s quite possible to achieve if your trading is ‘sensible’.

3653

Thanks for the detailed explanation in your last couple of posts in regards to why your sever time is the way it is. I have to admit that I previously thought your company didn’t put much thought into choosing the server time that you currently have. But, now I see there was a reason why you have the server time as you have it now. However, the 5:00pm EST New York close is a key part of my trading system and I have no other choice but to use another broker with my trading system (maybe I will now use TradersWay). I still will keep my Tallinex account and at some point in the future I may use it again, IF I happen to change to a different trading system in which the server time doesn’t matter.

If Tallinex ever decides to have their MT4 with a Daily candle open at 5pm EST, then I will certainly use it with my current trading system.

3654

As I mentioned, we ARE looking at options that will allow clients to run on NY time if they wish, and we hope to have at least one option over the next couple of weeks that resolves the situation.

3655

Hello all,

I am hoping someone out there can help me. I spent the last 9 months working my butt off to create an EA with my developer in Romania, and now it looks like it works very well and will be quite profitable. I am a US resident, this EA utilizes hedging as a part of its strategy… furthermore, I depend on a large amount of leverage from the broker.

I created an LLC this week all ready to start my trading business, and I met with a US tax attorney to ensure I was setting things up properly and in the most tax efficient manner. He informed me that the offshore broker that I am using is illegal to use as a US resident, and recommended that I close the account down immediately. I then looked into US brokerages and quickly learned that due to restrictions like no hedging and small leverage, I would not be able to use my EA I worked so hard to build.

After reading this thread and others on the topic of US residents having trading via offshore brokerage accounts, I am not convinced that it is actually illegal for me to trade in non US based brokerage. From what I have read, the restrictions seem to be targeting the institutions, many of whom have either shut down their US arm of operations or simply stopped accepting US clients altogether.

I happen to trader with an offshore brokerage which accepts US clients. Am I within my rights to do so? Will I have trouble come tax time? If it’s a problem for me to trade as a US citizen in this offshore brokerage, what options do I have. I have certainly worked too hard to create this thing to stop here. I want have no interest in tax evasion or anything like that… I just want to trade! Any help would be greatly appreciated.

Oh, and if any of you know of tax attorneys who could be helpful in this manner I would love to get their information. Thanks!!

3656

1 post and you are posting this. You must have some bot, trading is one aspect, the broker is the other. How trustworthy are they really? What about the so called liquidity providers? From what I understand Forex is not a regulated market. If it is, it’s in the country of the broker, are you going to go to that country and fight it out with them if there is a problem? Go offshore presents a different risk.

3657

I am new to this board, but not new to trading. Furthermore, I believe it should be my choice as a US citizen to determine if i want to take those so called risks or not. BTW,many large corporations are headquartered offshore. Anyway, i am looking for someone to help answer my question regarding the legality of me doing so as a us based retail forex trader.

3658

You are correct: It is [B]not[/B] illegal for you — as a U.S. resident — to trade offshore.

You got false information and bad advice from that tax attorney. More on that at the bottom of this post.

Here are 3 posts addressing your specific issues. They are somewhat repetitive on certain points, but I think you will benefit from reading all of them.

http://forums.babypips.com/forex-brokers/36221-going-offshore-escape-cftc-post711796.html#post711796

http://forums.babypips.com/forex-brokers/36221-going-offshore-escape-cftc-post643933.html#post643933

http://forums.babypips.com/forex-brokers/36221-going-offshore-escape-cftc-post692867.html#post692867

Regarding bad legal advice from tax attorneys:

You may have been talking to the same tax professional which I previously recommended in this thread. As the [I]Edit[/I] in the second link above explains, I no longer consider that person/firm to be a reliable source of information on [B]taxes applicable to offshore trading by U.S. residents.[/B] On taxes applicable to trading with U.S. brokers, he is very knowledgeable.

.

3659

Hi Clint,

tough call there. On one side I find it great that finally we might have a potential new broker on the list, especially that two of their member - including the CEO - came to take action so they become a trusted broker. This is something very positive.

On the other side it seems like we have no members who have traded with them and in that case it is hard to put someone in a trusted broker spot without having enough experience with the brokerage. Maybe we should wait a little until people start writing about them.

One comment: these are usually the times when “new members” usually register and start writing what a wonderful broker they found :-)))

I wish you a great Sunday,

FE

3660

Agreed. — There is no rush here.

As regular participants in this thread log in over the next week, or so, I hope that we will get some useful comments and opinions.

I will be on the lookout for interlopers attempting to pad the voting results.

Happy Sunday to you, as well, FE.

3661

As regards the “legality” of the offshore broker, it is not illegal, and you’re getting very good advice from Clint and others on that issue.

I’m more interested in your EA strategy, as you want to scale up to a serious trading business, so I’ll just comment on that. MAYBE IT’S BEST to move that discussion to another thread? Anyway, here are my questions and concerns. None of this is to “snoop” and steal your strategy but just to get some basis for evaluating, and giving some advice.

  1. Is this a scalping strategy? Can you provide some more details of the approach. I can imagine that you might want “hedging” so that you could “attack” the market with Limit orders from either side buy/sell, and then when one or the other is “hit”, you could cancel opposite side orders, and take a small scalping targets profit on retracement. If it’s similar to that, then I could see why hedging (or the ability to take opposite side orders simultaneously in same symbol on brokerage) would make sense. Otherwise, intra-instrument hedging is just the same as exposure modulation, and it’s not necessary.

  2. Very high leverage. Why do you want high leverages? Of course, if you have a legitimate reason for that, then you’ll be killed by the U.S. 50:1 limitations. But I’d like to know exactly why you need high leverage, as you pointed out. Also, does your intended trading strategy require a Small, Medium or Large account funding to operate efficiently?

  3. A legitimate concern for a business would be limitations on offshore brokerage money transfer arrangements, so when you choose your offshore broker (perfectly LEGAL) you’ll want to have an in-depth PRIVATE discussion about transfer arrangements, and other things such as funds security; SOME OF WHICH should remain confidential with your broker, to fend off CFTC pressures should the methods be widely discoverable… 'nuff said. It’s a war anyway, between the U.S. agencies and the rest of the world, which is the rationale for this Amazing thread.

So if you want to put in a pointer to another thread to discuss the Strategy, and building a trading business in general, then that’s probably a good idea; leaving this CFTC thread to discuss purely the brokerage and business aspects, and availability of quality brokers for U.S. persons (or beneficiaries of your corporate entity).

Depending on your Strategy, you may be interested in the following topics, and I may be able to assist you in some of them: 1) Bid/Ask spreads (vary widely, as well as account types), 2) direct connection versus through a “service bureau” for your MT4 EA , etc. So if you need any advice on such issues, feel free to ask.

hyperscalper