Simple Forex System Trading

I am a long time customer of InterbankFX and Oanda.  I recently received an email from InterbankFX regarding the margin rules changes.

In compliance with the upcoming NFA regulations, we will no longer be offering accounts with more than 100:1 leverage.  We are also required to alter the leverage levels on our existing accounts.   We want our customers to be aware of these new requirements to determine in advance how this may affect their trading plans and decisions.

As of market open on November 29, 2009, all currency pairs will have a maximum leverage of 100:1, with the exception of the USD/SGD and the USD/ZAR which will have a maximum leverage of 25:1.

I don’t think it affects my accounts in Oanda because it is using 2% margin.

The new rules probably only affect the US Forex brokers if they are registered with NFA.

I received an email from my broker regarding the changes in forex trading.  I personally don’t use Hedging as a strategy, but wondered if this change had something to do with the recent economy down turn.

Dear Customers:

Interbank FX, along with all FCM’s, has received information from the NFA that we wanted to pass along to our customers. All registered FCM’s have received a new Compliance Rule 2-43 regarding forex trading. On May 15, 2009, forex customers will no longer be allowed open “hedged” positions in their accounts. Please see an excerpt from the new NFA rule below. If you are currently using Hedging as a trading strategy, we would encourage you to use the Interbank FX Demo accounts over the next month to help modify your trading strategy. Also, for those of you who utilize hedging strategy with your “Expert Advisors”, we would encourage you modify your code and test your advisor on the Interbank FX Demo servers as well. In order to assure a smooth transition for our customers to the new NFA Compliance Rule, Interbank FX has set May 8, 2009 as the last date that customers will be able to Hedge open positions.

Crown Forex has been under investigation since December of 2008.  Some traders had filed complaints against the broker about having difficulty withdrawing their funds.

In its investigation on the activities of Crown Forex, the Swiss Financial Market Supervisory Authority (FINMA) decision is to liquidate it.  Crown Forex has now 30 days to present its allegations against the FINMA decision.  As long as the decision is not effective, the accounts of Crown Forex S.A. are blocked and customer withdrawals are not possible.  The final resolution will be released not later than March 23, 2009.

Unfortunately, the time zone can only be changed from the server side, i.e., the broker.

Time zones used by the MT4 brokers:

Interbank FX:  GMT

FXCM & Forex.com:  EST  (GMT - 5)

MIG:  CET (GMT + 1)

Alpari:  CET (GMT + 1)

FXDD:  GMT + 2

Three brokers I am aware of are the U.S. based:  Interbank FX, FXCM, and Forex.com. 

I thought Interbank FX wasn’t bad as a MT4 platform broker.  Their spreads aren’t the best, not the majors are ok.  The spreads for Euro-Dollar, Dollar-Yen, and Euro-Yen are 2, 2, and 4 pips respectively.  They do widen the spreads during news announcement, but who doesn’t.

FXCM and Forex.com are also offering MT4 in addition to their own proprietary trading platforms.  However, their spreads on MT4 are wider than the ones on their own trading platforms.  In addition, their spreads are not consistent.  I don’t think I like the idea of spreads being changing all the time.  For example, on both MT4 with the two brokers, I have seen Euro-Yen spreads changing from 3 pips to 6 pips during non-news event times.

But the best way for you to find out which MT4 broker suits you is to test your strategy on their demo accounts.

Some traders reported that they were having difficulty withdrawing their funds.  Discussion is on babypips.com.  More details about the investigation are on forexpeacearmy.com.

Again, CFTC is a good resource to review the financial standings of the Forex, Futures, and Options brokers.  The latest filings are October 2008.

Below is a great broker review I stumbled upon.  It all comes down to integrity, ethics, and funding; especially, CFTC now imposes the 10 million dollar rule.  Check on the CFTC site and see if your broker makes the cut. 

What is important to me is honesty and trustworthiness. Oanda is both. Even better out of all Forex Brokers Oanda is the most well funded. Valuation of $1.5 Billion. Backed by JP Morgan. These are the things that are important to me especially during the credit crisis we are experiencing and many more banks will go under.  More on http://forextradinglife.com/forex-reviews

All it takes is some crook in a company to make unauthorized trades and bring the company down.

Oct. 21 (Bloomberg) — Citic Pacific Ltd.tumbled the most in 18 years in Hong Kong trading after predicting HK$15.5 billion ($2 billion) in losses from unauthorized currency bets…  The losses are based on an exchange rate of 70 cents to the Australian dollar, $1.35 to the euro and 6.84 yuan to the dollar, it said. The outstanding Australian contracts have a weighted average strike price of 87 U.S. cents to the Australian dollar, it said.

On bloomberg.com