If you haven’t contacted the CFTC yet, today is the last day for them to accept public opinion.  Click here to find out why this is important to retail forex traders.

I posted a pretty long discussion on January 19, 2010 about the new proposed regulations that the CFTC is considering imposing on the retail forex market in the US.  For the most part, I feel that these regulations are necessary to clean up the forex market.  However, the part of the proposal that reduces retail forex leverage to 10:1 will kill the retail forex industry in the US, in my opinion.  If this leverage requirement is put into place, there will be no more of a market to regulate because traders will move their funds offshore.

Anyway, here is a video on what you can do to get your voice heard.  There is also some additional information from Rob Booker on why this is happening, what the effects will be and what you can do about it.  Do NOT delay because the deadline for public opinion is March 22, 2010.  Be sure to email the CFTC or your Congressperson immediately after watching this video because we have to put a stop to this!

Did the recent restrictions on hedging, 100:1 leverage and FIFO affect you as a forex trader?  Probably not.  I saw them as a minor inconvenience and as ridiculous as they were, not enough to limit my trading.  However, the CFTC in the United States has proposed a new set of restrictions on the US Forex market and this is how it can affect you as a retail forex trader.

Just the facts

First of all, here is the official CFTC press release and the actual proposal:

• http://www.cftc.gov/newsroom/generalpressreleases/2010/pr5772-10.html
• http://www.cftc.gov/ucm/groups/public/@newsroom/documents/file/forexrulesproposal.pdf

Here is some great information and a very informational webinar from Rob Booker on these proposals and how they will affect you.  Click here to check it out.

Whew, what did you think?  If you don’t want to read 193 pages, here is what I took away from it.

Click here to continue reading CFTC Proposing 10:1 Leverage Requirement – Here is what you can do >>

The National Futures Association has banned hedging in all forex accounts in the United States. The reason for the ban is unclear at this point.

Hedging is when you are allowed to enter offsetting positions at the same time. In other words, you can be long 1 lot of GBPUSD and short 1 lot of GBPUSD without the second position closing out the first.

I don’t think that this new rule is going to have that much of an impact on most forex traders. The reason being is that most forex traders use a hedge to ‘stop the bleeding’ on a position in the hopes that it will come back.

In my opinion, you are better off just closing the position and reversing instead of having to worry about two bad positions instead of one.

The only reason I could see to hedge is if you were entering on two different setups at the same time. For example maybe you took a breakout trade, but then a MACD divergence trade also sets up in the opposite direction while the breakout trade was on.

Anyway, this new rule doesn’t impact me at all but I’m sure there are traders who use it profitably. I’m sure they will figure out a way to get around it. Can anyone say multiple accounts?

Here it is:

http://www.nfa.futures.org/news/newsNotice.asp?ArticleID=2273