I’ve learned that the CFTC is limiting the amount of leverage an American broker is allowed to offer to no more than 50:1. This is disturbing since some of the strategies I’m learning involve using 100:1 or even 200:1 while using very careful risk management.
If I go live with FXCM, am I limited to 50:1 thanks to this new rule? I live in a border state and also have the option of living in Canada. If I were in Canada, would I be limited to 50:1?
If you’re a US citizen living in the US, your leverage is limited to 1:50, no matter which US broker you choose.
There are however several non-US brokers who still accept US clients … have a look at Clint’s thread ‘[I]Going Offshore to escape the CFTC[/I]’, which is located in the [I]Newbie Island[/I] section of this forum.
If you were in Canada, the situation would be similar, even worse in some respects.
Cheers,
P.
Hi Holden,
As a US resident you would have to open with a US broker. If you can prove residence in Canada (excluding British Columbia), then you could open through FXCM UK which offers 200:1 leverage. A proof of residence such as a utility bill or bank statement showing your residential address in Canada would be required. I mentioned the exclusion of British Columbia since BC residents have to open through FXCM Canada due to BC regulations.
I know the point of overseas brokers accepting US residents has been discussed at length on the forum; however, you should carefully check the regulatory requirements of any broker you are trading with to make sure there is financial and business oversight. You need to make sure there is some form of legitimate dispute resolution if a dispute between you and the broker occurs. Back in 2010 when Dodd-Frank was first passed, many overseas brokers not regulated by the CFTC and NFA continued to accept US residents, and we are now seeing a wave of legal action brought against them by the CFTC.
Jason
You mean “illegal action” right? Nothing about it is legal in any way, shape, or form. They are making it legal through illegal trade agreements. “I will MAKE it legal.” Who spoke that quote? Oh yeah! It was Emperor Palpatine (Darth Sidious) in Star Wars: the Phantom Menace. That sounds a lot like the current U.S. administration.
Slight correction: that thread is in the [I][B]Rate My Broker[/B][/I] section of the forum.
Here’s a direct link — 301 Moved Permanently
(By the way, since you changed your Screen Name, what should we call you? Oliver? Paladin?)
I could not agree more.
I have repeatedly hammered away at the need for due diligence in evaluating and selecting a broker,[B] especially[/B] an offshore broker. See this post, for example — 301 Moved Permanently