I recieved an email just now regarding the possible change of forex leverage to 10:1. I am not sure how much truth ther eis to this but it seems legit. Just wondering if anyone else has heard the same and what their thoughts are on the matter?
email recieved from: email@example.com
"On January 13th, the CFTC (the regulatory body of the Futures market in the US) proposed new rules to help fight retail Forex trading fraud.
In this lengthy document are various new suggestions for rules and regulations regarding how Forex companies should conduct their business. They should have a certain amount of liquid funds handy to be able to actually pay up if clients decide to withdraw their money or maintain a certain percentage of their liabilities handy.
But the suggestion that got the entire Forex world in an uproar is the suggestion that leverage to firms and individuals in the retail currency trading world (that's YOU) will be limited to 10:1 at the most. This means that you will need to have a lot more money in your broker's account to be able to trade large sums of money.
This will change the way traders work with US brokers as a lot of brokers offer up to a 400:1 leverage and it seems that the 100:1 leverage is very popular among traders.
Naturally, US brokers are frightened of this as it gives their foreign competitors an "unfair" advantage. This is something I agree with, this rule may cause a lot of traders to work with foreign brokers, something which is easy to do in today's ultra-connected world.
As these rules have not been approved yet, there is an effort by brokers and traders alike to influence the final outcome. However, I feel that the leverage will be limited, perhaps not at 10:1 but there will be some limitation.
I'm not too worried about these new rules and I think you shouldn't be too. For one thing, I don't mind a low leverage. To me the main thing is never allow yourself to suffer huge losses. Working with a 50:1 or a 100:1 leverage raises the risk you're facing and I thing that's foolish.
I believe that a 5:1 or a 10:1 leverage should be the highest you go anyway. I just don't want the risk. Therefore, if you're a trader I don't think you have anything to worry about. However, brokers may lose a lot of their customers once these rules get approved.