Stop Loss no longer allowed? NFA

I don�t get it. I’ve just received an e-mail from Gft telling that they`re not getting any change in the way you trade with them. No changes at all with Gft.

this is something from FXCM, maybe other brokers are different. Basically they are saying they won’t allow stoploss due to the new FIFO rule.
I’m still a newbie so I don’t know.

It’s not just FXCM, it’s all US based brokers. The problem is that stoplosses connected to individual orders are now against NFA rules. But…

Brokers like GFT and Oanda don’t really use stoplosses anyway. It looks like a stoploss to you, but it’s actually just an opposite pending order that’s closing your trade. That’s why GFT isn’t making any changes… They are already following the new rules and have been for years!

Say you have a long position open at 1.500 for 1 lot. If you want a 50 pip stoploss then a short pending order will be set at 1.450 for 1 lot. If 1.450 is hit your short order cancels out your long order, effectively acting as a stoploss.

The same is true for takeprofit orders. That’s where the OCO orders everyone is taking about come in. Your SL and TP will officially be “One Cancels Other” orders, meaning if your SL or TP is hit then the other order is canceled automatically.

You’ll still have the protection of “stoplosses” no matter your broker, you’ll just have to hit a different button and the “behind the scenes” accounting of it will be different. :slight_smile:

ok, I’m still new enough that some of these order types are still confusing and I sure wouldnt want to trade without a stoploss.

Let me see if I get it. Do you mean that some brokers had the ability to modify your open positions before?

No, you (not your broker) had the ability to modify your open position by:

(1) clicking a “Close Position” button to close that particular position

(2) changing your stop-loss on that particular position

(3) changing your take-profit on that particular position

Why did I keep repeating “on that particular position”? Because that’s what the NFA is all bent-out-of-shape about. They don’t want you to be able to control your exit on any position EXCEPT the first position entered in that pair. This is what they are calling first-in-first-out (FIFO).

Example: You buy one lot of the GBP/USD at 1.6400. The price rises, and you are still bullish. You buy one more lot at 1.6425.
The price rises to 1.6445, and then retraces.

As the price moves back down below 1.6430, you decide to exit your SECOND position for a small profit, before the price dips below your 1.6425 entry price.

[B]The NFA says, “No, you can’t exit that position. You have to exit your FIRST position FIRST, and then you can exit your SECOND position.”[/B]

The NFA, like regulators everywhere in this country, is running amok. These people think THEY should be in charge of everything. They think THEIR way is the only way, and they are trying to take RULES MADE FOR EXCHANGE-TRADED COMMODITY FUTURES and impose them on the off-exchange spot forex market.

I’d like to say that we need to put a stop to these people now — except that, with the socialists we’ve put in the White House,
we don’t have a prayer.


so they think they know my business better than I do. And I suppose they want to hold my hand crossing the street too. I’m still new at this and don’t know everything that’s going on. But I like calling my own shots and controlling my own destiny and don’t like being dictated to. But we all have to live within the rules so we must adapt.
Good luck to us all…

Hey, Talon

You have another option. You can take your forex business off-shore — to the U.K., Switzerland, or even Australia.

FXCM (in New York) is encouraging their U.S. clients to move their accounts to FXCM in London, to get away from these stupid restrictions.

The U.K. has very good customer protection laws through the Financial Services Authority, which regulates U.K. forex brokers,
and other financial entities.

The NFA and the CFTC in this country have no say over the foreign accounts of U.S. citizens, whether they reside in the U.S.,
or not.

Something to consider. I am seriously considering it.


Thanks Clint, I was thinking about that but didn’t now how safe it was regulation wise. but advanced nations like the UK should be fine.

Having your funds offshore can be benificial aside from not being governed by the CTFC and NFA… how about not paying tax on your earnings?? Something to think about

my US GFT will take your 2nd entry and average it into the 1st entry. The result is a single position with the total size and average price of both entries.

I think it bypasses the FIFO rule because essentially both entries have been made homogenous and deciding which should be closed first is pointless because your whole position is averaged at one price.

If you’re not used to it, you might find it annoying. But now that I’ve been using it for awhile, I think I’d prefer it over separate positions. By the way, I don’t have to exit the whole position at one time, I can sell-off pieces of that position at various prices no problem. And if it’s a huge problem, you can always just mark your entries with a horz. line :slight_smile:


I checked with my broker, GFT here where I live in Australia.

None of this affects me at all.

Yay!! :smiley: :stuck_out_tongue: :smiley: :stuck_out_tongue:

Excellent point!! :slight_smile: :slight_smile: :slight_smile:

The averaging has never been a problem to me - I have even advocated it in my threads!! :slight_smile:

If some of you find the new rules to be a real problem, then I can link you up with GFT thro Jay Pace of Kinetic Securities in Sydney, Australia.

You get the demo indefinitely for starters!! :slight_smile: :smiley: :slight_smile:

Cdawg- I’ve Always Been Curious About That Question. What’s The Tax % On Earnings On Investments? Are There Any? Does It Apply To A “Non-Regulated”/ Non-Centralized Market Like Forex? Also If I Use Off-Shore Brokers Do The U.S. Taxes Apply To My Profits? Lastly, If I’m A Full Time Student Or My Official Job Title Is “Un-Employed” Can I Still Be Taxed? Totally Appreciate You Sharing Your Knowledge.

I don’t want to get into any kind of political discussion here. This is not the time or place. But I thought I’d share my two pips.

After our economic meltdown, everyone agreed that we needed some kind of regulation on Wall Street. Well here it is, and though I don’t agree with restricting small time traders like me. Traders who don’t hedge or open more than one position on the same currrency. I do agree that larger institutions should have to abide by these regulations.

However I do agree that FXCM should follow suite like GFT and still offer a Stop Loss-like function instead of making the trader do some complicated “One cancels other”

I dont think these new rules will effect me much because I’m starting out small, with one micro lot at a time. but I don’t want to trade without some kind of stop loss.

so if I’m a U.S. citizen living in the U.S. I can still go with a broker that is not based in the U.S. ? Which ones would you all recommend? Tymen, you recommend GFT? I’ll have to check them out. What are some other good ones?

I’d like to hear more about the tax issue also. Although it will be quite some time before I have to start worrying about that.

Where does your signal feed come from if you go off shore.

For instance, if you are a US FXCM customer and you transfer to FXCM UK does your signal feed still originate in the US or does it stay with your hosting platform?

Also if you go with GFT Austrailia does your signal feed come from GFT US or is it an Austrailian Feed?

It didn’t affect to us US Customers either. Nothing has changed in Gft USA:)