Forex Facts

Updates - Forex Facts

This December CNBC Magazine has described Instaforex broker as “European contender – Asian champion”. According to the CNBC article, “ Instaforex is a leading broker in Asian region and it ranks amoung the leading European brokers, is proved not only by the facts expressed in quantity indexes, but also by different awards, which the company has got during 2009.”

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Updates - Forex Facts

Due to latest regulatory changes in forex, to keep forex traders informed about the latest highlights, FXCM forex broker has launched a newsletter Washington Watch for the Forex Industry. In the latest issue, Washington Watch for the Forex Industry discusses the coming transformation of retail forex.

“Last year, Congress passed the Commodity Futures Trading Commission (CFTC) Reauthorization Act of 2008 which clarified the CFTC’s authority to create rules and regulations for the retail forex industry in the United States.

The new law has far ranging implications for all retail forex referring brokers. For the first time, Referring Brokers and managers will be subject to licensing requirements by the CFTC and will have to operate in accordance with government rules and regulations.”

Updates - Forex Facts

The controversial forex industry in Israel is about to face some serious changes. Israel Securities Authority (ISA) proposed a new law for regulating the market. Once accepted, the law will enforce maximum regulation over forex brokers, which have been so far operated, based on their own rules, making millions of dollars a year.

Under the supervision of the new legislation the companies will have to obtain permissions and licenses to engage in forex trading. In order to obtain the license, the companies will have to follow the strict requirements and insure the capital.

The ISA also plans to regulate the shareholders.  For example, an individual with a financial fraud history will no longer be able to be a shareholder of a forex company.

Here are some of the issues associated with the forex activities listed by ISA:

1.     Sophisticated financial instruments available for to customers with limited financial understanding. This leads to large amount of losses.

2.     Customers’ account funds are completely controlled by the broker.

3.     High leverage (for example 1:100). This provides large potential profit, but at the same time during high market volatility can clean the trading account to the last cent.

4.     Currency rates offered to investors are not up-to-date.

5.     Customers’ orders never get to the actual market – the broker assumes the risk.

The implementation of the law will require a costly budget to insure complex systems and computer supervision, along with additional manpower.

What does this all mean to Israeli Forex industry, the largest forex center in the world with almost no regulatory environment until now? It sure is a punch below the waist: most brokers will probably not accept Israeli traders; others will most likely close down or sell out.  It will sure take some time for the legislation to start functioning properly, however the word is out – “The party is over”.

Updates - Forex Facts

New Compliance Rule 2-43(b) becomes active on 31 July 2009. Traders with US-based forex brokers will be able to use entry orders to place stops and limits. Entry orders help to minimize the losses and provide the ability to profit.

 In order to use entry orders for stop-loss and limits:

For Buy Positions

Placing an entry order to sell below the price where you got into the position protects you from additional losses. Placing an entry order to sell above the price where you got in locks in profits.

For example, if you have a BUY EUR/USD position at 1.3900, you could place:

• a stop-loss using a sell entry order (Stop Entry, SE) at 1.3800

or 

• a limit using a sell entry order (Limit Entry, LE) at 1.4000

For Sell Positions

Placing an entry order to buy above the price where you got in protects you from additional losses. Placing an entry order to buy below the price where you got in locks in profits.

For example, if you have a SELL EUR/USD position at 1.3900, you could place:

• a stop-loss by using a buy entry order (Stop Entry, SE) at 1.4000

or 

• a limit using a buy entry order (Limit Entry, LE) at 1.3800

The National Futures Association (NFA), our industry's self regulatory organization in the United States, has informed all Forex Dealer Members, which includes FXCM, that it has adopted new Compliance Rule 2-43(b) regarding forex trading. Read Compliance Rule 2-43(b).

Updates - Forex Facts

National Futures Association (NFA), forex industry self regulatory organization in United States, announced that it is now following the new Compliance Rule 2-43 regarding forex trading.

·         This rule requires that orders be executed First In, First Out (FIFO). FIFO requires that when multiple positions are held in the same currency pair, the position which was first opened will be the first to be closed. Stop loss and limit orders do not comply with FIFO.

·         The NFA's stance is that FIFO provides more transparency to customers, offering a more accurate picture of the P/L than viewing the results of individual positions. This brings the forex market more in line with the practices of the futures and equities markets.

What impact does the new rule have on traders?

Traders who trade via forex brokers regulated by NFA will no longer be able to place stop-loss or limit orders. The ability to modify or close trades from “Open Positions” window is also no longer available. This major new rule will go into effect after July 31, 2009.

Read Compliance Rule 2-43(b)

Updates - Forex Facts

NFA Commodity Futures Trading Commission has passed the new NFA Compliance Rules 2-43 regarding forex orders. Forex traders will no longer be able to carry offsetting transactions for any positions opened after May 15, 2009. Price adjustment requirements become effective to all forex traders orders executed after June 12, 2009.

For more information, click here

Updates - Forex Facts

Since forex trading is an online investment, traders seem to be barely noticeable and few in comparison to other market investors. The truth is that forex trading is catching more and more attention these days and “full-time trader” becomes an acceptable and recognized profession.

ForexExplore.com brings us the results of last month poll – “Do you trade forex full-time”. The results are posted below:

Full-time Traders – 59.4%

Part-time traders, who hold other full-time jobs – 25%

Unemployed, but chooses to trade part-time – 12.5%

Traders who haven’t decided yet – 3.1%

Updates - Forex Facts

Updates - Forex Facts

Have you ever wondered how much you need to invest in forex trading to begin? What is the average deposit among other traders? Well, the guessing game is over because we have statistical data for an answer! 

Thanks for forexexplore.com, the results from monthly poll have been gathered together and processed into a lovely pie-graph for your review. Here is what other forex traders deposit:

Provided by ForexExplore.com

11.1% of traders choose to make a deposit between $1 to $5

8.3 % of traders deposit between $6 to $50

13.9% of traders make a deposit between $51 to $100

22.2% of forex traders deposit between $101 to $500

30.6% of traders choose to deposit between $501 to $1,000

5.6% of traders, last but not least, deposit more than $1,001 each time