Going offshore to escape the CFTC

It’s Friday the 13th.

Don’t worry about ladders, black cats, or broken mirrors. – Just watch out for the CFTC.

Oh, wait, that’s not just on Friday the 13th. – That’s every day!



Anyway, guys, have a Happy Friday the 13th.



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BROKERAGE ACCESS UNCERTAINTY

So, the most recent theme appears to be ESMA as a threat,
layerered upon the existing CFTC threat. Personally, I’m ramping
up a fully automated scalable trading operation,
and the only way forward I can see
is to diversify trading across our small range of brokerage offerings,
to handle the increasing threats of brokerage denial to U.S. persons.

I’m increasingly attracted to brokerages such as Evolve.Markets
although that does expose a risk of crypto value fluctuations… And
to hold the minimum equity, consistent with using maximum buying
power so that brokerage failures would minimize worst case risk…

What is the way forward? Political action?

hyperscalper

Good day to all. First let me introduce myself. My name is Esteban (middle name). I have been following this forum and specifically this topic for about a year on and off. Gained a lot of information from it. I just felt compelled to share my experiences with one of the brokers here as a warning about doing Forex offshore.

The brokerage is LQDFX. I have seen many positive reviews by them. I had a positive view of them until lately. I joined them in July '17 with about $3k. At first it was pretty good as are most brokerages out there. I deposited more money in the last month or so but I started to notice, well blatantly, actually, that all my orders in demo and live would go against me, the old trade against your client. I mean every order. Do I know how to trade? Yes. I use math and statistical analysis: Ranges, standard deviations, distributions, coefficient of variations and so on. I even have several winning streaks going for a few months. Still do. I guess that was the problem.

I noticed that prices would never retrace or only slightly, my opening price would be used as support and resistance every time. They tried at first not to make it too obvious, but now it is ridiculous. For example, I would try to trade the hot currency (not pair), and every single time, price would go against me in all pairs, every time. Didn’t matter what the time of day was. I get the hint. I even found a way to beat them @ their own game but I’m done.

Now I am in a dispute to try to get all my funds back which is substantial and they are using all kinds of tricks. “We will offer other means of withdrawal other than credit card” or “we have strict rules about money laundering when requesting a withdrawal via VLoad”, when I never initiated a VLoad withdrawal nor do I have a VLoad account. So what I am saying is STAY AWAY from LQDFX. Hopefully I’m get my money back but still disputing. I closed all my accounts and am waiting for a Bitcoin refund (hopefully @ a good rate, hopefully). My advice to anyone, avoid these offshore thugs. I was going to try some of the others but at this point, I just want my money and go back to trading options. At least I know where my money is. Good day to all.

Have you actually done a differential comparison
against another more reliable price feed to verify this?
Seems odd to me…

[EDIT] You say: “For example, I would try to trade the hot
currency (not pair), and every single time, price would
go against me in all pairs, every time.” My super specialty
is Currency Trend and Cluster Analysis. Are you saying
you target a Currency, and possibly take a “basket” style
trade in the associated Pairs? Very sophisticated, if so,
but if that broker is not an ECN and is distorting pricing just
to defeat you, personally… That’s something I just “ain’t
never seen…” and I look carefully for that sort of thing…

hyperscalper

HyperScalper,

I don’t know your background in trading but I have seen that sort of thing…targeting traders…not just in Forex but in other markets as well. The issue for me at this point is not in my trading strategies, because I know they work, that’s why I am warning others to stay away from this broker. My biggest issue is getting my money back. If you cannot get your money back from a broker, strategy is mute. Like I said, I figured a way to beat brokers (which I will not delve into), no matter the market but if you cannot get your funds, and that is the bigger issue, what is the point. I stand by my statement. Don’t trust LQDFX. How are you going to initiate a withdrawal by credit card, which they made me verify my identity (OK, that’s standard), email me back saying, you can withdraw via other methods, when in the past, you had to withdraw via the method you deposited. Then after several back and forth emails, they cave in and gave me ONE withdrawal via credit card. Then two days later do the same thing again…come on…

OK, thanks for the warning about the broker, but you
shouldn’t just drop the fact that you can “beat the markets”
without going into some tantalizing details, please.

I’ll go first. I beat the markets by buying under-valued Currency
Pairs, and selling over-valued Currency Pairs. Period.

Granted, I don’t
know anything about that broker, but I’d be remiss if I
were not sceptical of your claim that they were significantly
meddling with price. Still, perhaps it happens with non ECN
brokers…

Sure, put it in another more relevant thread, but what
about sharing? I’m posting a 2 week pips-equity curve since I also
know how to “beat the market”… but I digress ! LOL
(a bit off-topic… but maybe that’s fine)
(something wrong with the uploader… I’ll try to upload…)
[EDIT] guess something was wrong with my brain… so uploaded…

hyperscalper

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HyperScalper,

I stand by my original post. I’ll let the users decide. From my experience, any good trader does not share his/her strategy. Brokers read this forum and post as fake users, I’m pretty sure of that. If you want to share your strategy, that’s on you. I have nothing to gain by warning of users about a particular broker. If Clint or whoever wants to keep them on the list, fine, but anyone who reads my post has been warned.

OK, whatever, but that does not settle your claims of
price fixing/manipulation… And why wouldn’t a good trader
share a strategy? Would that reduce your personal returns?

I can share my strategy, or describe it; but there is a technical
infrastructure required in order to implement it, so no one can
easily replicate it… And after all, if other traders were to succeed that
is unlikely to affect your personal gains…

Just my 2 cents…

hyperscalper

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Right. I just do my best to protect the intellectual property of my strategy and open trades. The rest is just not really going to matter. Brokers, yes, will B Book you, if you’re trading is not consistent, but that’s your problem to fix, not something to blame on them. Go be the best trader you can be, and the rest takes care of itself.
Check out how I learned over a long time that I only have me, myself, and I to blame for losses and only the price action itself to recognise. My track record is at MyFXBook, Signalstart, and Darwinex.

I didn’t give up because I knew there was a clean way to become a legitimate professional asset manager and strategy provider.

OTB Low Risk master account – #41 at SignalStart – 18 months track record – consistent new equity highs
outside the box master account

NEW OTB High Risk account attracting more attention now – #4 at SignalStart – 4 months track record – trading like the old days when I was excited about having developed my own strategy that has a real proven edge in the markets.
outside the box high return

NEW DARWIN (Dynamic Asset and Risk Weighted Investment)

DARWIN – ticker BUX
A Darwin is a financial asset based on a trader (or automated strategy) trading at Darwinex. As an investor you can buy and sell DARWINs just like you would trade stocks. Each DARWIN has a certain value when you buy it, and depending on the performance of the trader who provides the DARWIN, the value will go up or down. Behind the scenes, each time the DARWIN’s trader places a trade, Darwinex opens or closes a trade in that asset on behalf of investors, given what they have calculated to be optimal risk to minimise Drawdown and maximise Profit. Each DARWIN starts from 100 at inception and the price updates every 30 seconds based on the performance.

@outsidetheboxhk very interesting, and I hope that is not
misconstrued on this forum as advertising…

Personally, I am glad to be out “of the client business”… All
due respect to past clients… :slight_smile:

[EDIT] so much better to form a private trading group, and just
focus on the task at hand… Oh, what is that? making money,
of course ! LOL [EDIT2] Also known as “beating the markets”…

hyperscalper

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Hey Hyperscalper,
You sure post some interesting comments. If I may ask, what is the advantage of a private trading group versus just trading for yourself? Is it for the additional capital? Tax considerations? Or is it something else?

Thanks

@shatnerreborn Well this is off topic but in general achieving
"scalability" could benefit from a pooling of resources. But my
original idea was a personal operation. Still, just like this forum
where ideas are sourced from lots of participants, that occasionally brings in
useful actionable ideas…

And for a scalable long term operation, it really needs to become
more of a business with staff to perpetuate the infrastructure, etc…

But the main threat to me is the lack of availability of a range of
premium brokerages for U.S. persons to use… Right now, we are
just barely “ok” but there needs to be a breakthrough in our access to
quality brokers !!!

[EDIT] This forum is all about ACCESS to and AVAILABILITY of
quality brokerages… for U.S. persons.

[EDIT2] And further to the availability and quality of brokers, plus the
SAFETY of funds on deposit; one of the
most important risks is availability of FUNDS TRANSFER, as that is
one of the “choke points” used against brokers who may be hosting
accounts for U.S. persons… !!!

hyperscalper

Yes, been using Clint’s list of brokers since 2012, and I can say funds transfer has been the single biggest issue I’ve had to deal with.

@ShatnerReborn
Yes, the only truly unrestricted mechanism I have been able
to find is Crypto. Either in natively crypto funded brokers like
Evolve.Markets or maybe SimpleFX or this new Coinexx
broker or others… just transferring native crypto to some local wallet
like Coinbase or even a private crypto vault… But crypto
funded brokers constantly subject us to Crypto / Fiat exchange
rate fluctuations.

From the fiat funded currencies brokers like FinProTrading and
TurnkeyForex, you have to wait for conversion to crypto in their
wallets before transfer can take place. But the exchange risk
is “temporary and transient” since Cryptos are held only for
the purposes of the transfer process.

So Crypto transfers are closest to “frictionless” transfer
mechanisms. Still it is far from ideal that Funds Transfer
mechanisms are under attack.

[EDIT] I’m too busy going live with a new BOT this week, so I just
don’t want to talk about it further. I very much like Evolve.Markets
and FinProTrading/TurnkeyForex and that’s where I’m focusing
my firepower and scalability.

hyperscalper

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What a nice auto you drive my friend, congrats… maybe one day I’ll get to half of that

JUST POSTING THIS OLD ARTICLE WHICH CONTAINS
SOME UNDERSTANDING OF CFTC.

Oddly enough, I actually do have “dual citizenship” and according
to this, my “residence” outside the U.S. could make things OK
for me. It’s not gonna happen, but that is Mr. Green’s opinion.

I think this is misleading by strongly implying it is illegal for U.S. persons
to use an offshore broker. I don’t think this is true.

FORBES ARTICLE FROM March 2017

by Robert A. Green

"American retail forex traders should not go offshore

The CFTC does not permit foreign or domestic forex brokers or banks to act as a counterparty to American retail forex traders unless the firm registers with the CFTC, SEC or U.S. bank regulator. It’s the law from the Commodity Futures Modernization Act (CFMA) of 2000. Some unregistered foreign forex dealers accept American retail clients, and they may become a target of CFTC enforcement. A CFTC attorney told me the CFTC views an American-owned foreign corporation as a “dummy corporation,” which does not evade their regulations on this matter. Americans with dual citizenship living in a foreign country may be able to trade forex off-exchange with an unregistered forex dealer. Even though the law focuses on counterparty brokers, traders should not contravene U.S. regulations."

hyperscalper

Coinexx is Turnkey-fx which is also finprotrading. They’re all registered separately in London and ran by the same group of people out of India.

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NOT ENOUGH BROKERS BUT PLENTY RIGHT NOW

@nicholishen Thanks for the interesting inside info…

I haven’t done anything with Coinexx since I have about a dozen
accounts to hook in as “BOT copy slaves” and if these brokerages
don’t “go away” then that’s enough. My fear is that they may
"go away"… and that bothers me…

hyperscalper

My fear is that they may “go away”

Very real concern. It’s known that the company was started by the son of a highly connected Indian police official… and it’s rumored that in India he’s basically untouchable, so good luck getting any kind of reimbursement when they do go away. Also makes you wonder why the company was first registered as Turnkeyfx then finpro and now another spin-off, coinexx. Speaking of such business matters with these companies, I used to get withdrawals in under 48 hrs and my last one took over a week with repeated bullshit excuses why my transfer hadn’t been sent. I’d say don’t sweat a couple hundred bucks you can afford to gamble, but if you have thousands over there, be concerned, very-very concerned.

FINPROTRADING TRANSFERS

I have a business colleague who had complained about
a wire transfer being slow from FinProTrading. But then he
switched from a regional to a national bank and there were
no issues at all. So I don’t have any direct experience with
difficulties at FinProTrading transferring money.

My understanding is that TurnkeyFX.com (just focusing on the
websites for identification) is the service provider for both
TurnkeyForex.com and FinProTrading.com .

I won’t be holding more money in an account than necessary,
and will be using from 30% - 60% of buying power most of
the time… So, in the end, if an account is totally lost it will
already have generated far more in revenue that what might
hypothetically be lost, worst case… So I don’t worry.

Gedanken Experiment: Roughly, with 500:1 leverage,
$5,000 equity will control 500x5000 = 25 lots of
buying power, so a $10,000 account would be using roughly
half its buying power controlling an aggregate 25 lots more
or less continuously. Roughly, 1 lot is $10/pip so that’s
$250/pip aggregate buying power… that’s how I think about it. So
10 pips throws off $2500 / day which makes $10,000 in
a week or so as revenue… That activity is spread over 28 Pairs,
where perhaps a dozen are active at any given time to achieve
the aggregate result. That’s how it should work.
Just using even half of that buying power,
you have 2 (or a few) weeks to offset any
risk of losing the original a$10,000 account equity…
and you’re already break-even. But that $10k is not
going to be lost, or at least I’m not concerned about it
right now…

[EDIT] That’s the advantage of using 500:1 leverage brokers,
as opposed to 50:1 which reduces the equity risk by a factor
of 10 to achieve the same work. The work is done by a BOT
which holds a large number of concurrent positions. Where each
“position” in a Forex symbol like EUR/USD is actually somewhere
between 2 and 4 price and lot size staggered positions to improve
the cost basis, etc…

[EDIT2] … and then everything that BOT does is “slave copied” into
several other brokers which are unrelated to the first one… That
should diversify risk over brokers.

hyperscalper