NFA screwing over traders!

First the no hedging thing. I didn’t hedge, but I can see how if you are good at it, it would work out well.

Now I just read a message at IBFX and then spoke to a customer rep. The NFA is imposing a, “first in first out, FIFO,” regulation on my broker IBFX, and I guess everyone else.

What I was told is this:

"Client Services 30: Hello, this is Mick. How may I help you?
: I just saw the new FIFO rule the NFA is imposing on IBFX. What does that mean, when entering and exiting trades, whoever enters first and hits the exit button first is supposed to get serverd first?

Client Services 30: It applies only to trades with the same lot size…

Client Services 30: The only time this is going to effect the client is when they have the same lot size on the same currency pair. When they do have two identical orders they will only be able to place a stop loss/take profit on the order that was placed first. [B]The second order will not be able to be closed or have a stop loss/take profit until the first order is closed. [/B] (holy ballz!!)

Client Services 30: Now, if the client closes 0.01 of the order that was placed first they may close the second order or add a stop loss/take profit because the lot sizes are no longer the same, allowing them to close out whichever order they want.

: Ok, so it will only effect a trade if it’s a duplicate trade placed on the same pair with a trade already open?
Client Services 30: Yes, correct

: so if I’m trading two different currencies at the same time I can put a sl and tp on both of them with no problem?
Client Services 30: Yes, correct.
6002215: ok thank you.
Client Services 30: You’re welcome"

I can see this making problems for multiple lot stratagies where you let one ride further than the other (to try and catch the trend) and both have SL and TP that are different.

Sure you can just make different lot sizes, but WTF is with the NFA, it seems like every rule they make is to make it harder for traders.

What asshat is telling them hedging and multiple lot stratagies is bad for the market and economy?

The fun never ends huh.

Maybe the stock market people were jealous what with their uptick rule, so they made sure that forex traders get some crappy rules as well :wink:

The bottom line is that this is an accounting rule that doesn’t change your P&L one iota. Do the math and you’ll see that no matter which lots you close in what order it all comes out the same. This rule basically aligns the forex market with other and also with IRS regulations which require FIFO accounting for tax purposes.

That said, I’m not suggesting it doesn’t alter the way traders may need to handle some thing with their exit orders and such. I wrote about that a while ago on my blog.

I agree it’s annoying, but it shouldn’t cause too much of a problem. Instead of opening two orders for 1 lot each just open one for 1 lot and another for 1.01 lots. Problem solved! :slight_smile:

Why can’t they just leave a good thing alone?.. :rolleyes::mad:

Pick a broker that’s not regulated by US Standards. Problem solved. UK and those aussie blokes have plenty of reputable brokers to align yourself with.