Quote:
Originally Posted by Ken Long  Please correct me if I'm wrong, but this only seems to affect a trade based platfrom such as MetaTrader. Most manual trading platforms are position based and a counter trade would automaticaly be applied to the main position. This is an interesting feature of MetaTrader, which appears to be designed to benefit the brokers and promote single trade based transactions.
Under normal circumstances every Forex transaction should be applied to a central position, therebye building or reducing the overall exposure. This ruling seems targeted towards MetaTraders proliferation in the marketplace, and its trade based platform. It should in no way affect us as traders or our ability to open counter trades. We just have to acknowlege that every trade opened on an individual platform affects the position we are holding on that pair. Intentional hedges being no different. They mearly subtract from, or add to, a central position.
This is not necessarily a bad ruling. It simply states that the MetaTrader platform does not conform to NFA standards. It decieves its users, especialy novice users, into holding larger positons than they realize and holding useless positons. With the intention of driving up broker revenues through unnecessary and duplicate transactions.
For example:
If I have a position in a currency pair and wish to sell a partial positon. On MetaTrader I cant do that. I would have to open a new position, counter to the original, thereby creating an entire round trip charge.
Hedging, as I see it, is a redundant procedure in the Forex market. Unlike the stock or derivatives markets where you have a legitamate financial reason to want to hold an open position and simultaneously hedge it, in the Forex market it is a redundant or duplicate procedure, only creating round trip revenue for the brokers. Any Forex hedge position could be applied directly to the core position, with no difference in the outcome and an overall lower transaction cost.
It is not US this ruling is fighting against, it is the MetaTrader platform, and with good reason. |
I completely disagree. See my other post. What happens if you have 2 or 3 good systems that trade the EURUSD? Guess what...you won't be able to trade them on the same account any more. Long and short trades from different systems offset each other--or some just won't execute at all. (I'm not clear on that part yet).
This removes one of the biggest edges we have in FX: strategic diversification. An example would be trading a scalping EA along with a long-term trend-followingsystem
on the same pair. This is just as advantegeous as diversifying assets in a long-term portfolio (stocks, bonds, gold, etc.) and we're about to lose it.