Actually, the FIFO thing came first. That was last spring. The 100:1 cap only went into effect at the end of November.
Originally Posted by TopsandBottoms
As for your comments on FIFO, the bottom line is it doesn't matter one iota. No matter which contract you close at what time, the P&L all works out the same.
I hate to say it, but we're already way outclassed. Regardless, the institutions don't care about us at all. We don't swim in the same ocean as they do.
Now, they want 10:1 leverage, "to protect the client" - unhuh
What this does is dramatically reduce the amount of wiggle room for any trade you have on the table, if you have a small account. This one is smells like it's tailor made for the big institutions that have the capital that we do not, which means they have more flexibility - this is a full contact sport and we will be dramatically outclassed, and much more vunerable.
The claim of protecting the small investor is dubious at best. An undisciplined and reckless trader will liquidate their account regardless of the margin they are allotted, 400:1, 100:1, 10:1, 5:1, 1:2, whatever; leaverage is irrelevant if someone is exposing more than an acceptable percentage of their account
(*This would be a less terrible idea in fact - a regulation to limit the total stop loss setting on any particular trade as based on your account size, and it would actually protect a newer trader. However, I'm still opposed because I don't think the government should dictate what I do with my money or what you do with yours*). The only way to protect these people is to either tell them to learn the market, operate with discipline, limit their exposure until they learn, or tell them to invest elsewhere.
This also serves to limit the gains of small investors that have learned to use leverage carefully and only when everything lines up for an individual trade. Leverage is a means making the most of your careful study and management. This makes it much much harder to start small (like I did) and increase the size of your account to the point at which you can make real money. Don't be under the illusion that this will help small investors.
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