I ask this because every time I read what a 'seasoned trader' has to say about anything, it's always about how bad the market is, how no one is making money and how hard it is to make even 5% on your investment per month, how no one is making profitable systems (Manual or EAs). With the US continuing to limit the way we trade it only leads me to think there is no way to really make money in forex unless you have $10000000000 to f*ck off. Despite hearing about these people who actually make a decent living from forex (that a 'seasoned traders' seem to think is not even possible) I have never met one just ones who contently complain every time someone has a new EA to share.
Those who know who to make money with forex will most likely not be affected by the US regulations - they will simply be forced to relocate themselves or do some kind of proxy trading to avoid the regulations.
In any case, I don't think it is going away anytime soon. There are millions to be made by brokers, and this is a very accessible market for retail traders - low fees and abundance of broker choices.
Copied & Pasted. Regulation is a good thing. Forex brokers can go out of business for a variety of reasons (including fraud) and that can result in lost customer funds. As a trader, you're suppose to manage your risk. That includes the risk of your actual account funds!
There are four main reasons traders cite as to why they would prefer to open a forex account outside of the United States. Outside of the United States: 200:1 or more leverage is available, hedging is permitted, FIFO accounting rules are not required, and you can use your domestic currency to fund and trade your account. Let’s address these one at a time:
1. Our argument against the use of excessive leverage is clear: profitable traders don’t need more than 50:1 leverage. Traders using more than 50:1 leverage are susceptible to wild swings in their account balance and will most likely blow up their account.
2. Under our solution, the customer's trading experience in terms of hedging does not change. In order to abide by the CFTC no hedging rule, the counter party offsets the positions as they receive the orders. When orders are placed on the MT 4 platform, the hedging feature remains available. For example, if you buy and sell a contract on the MT4 software, you will notice your positions are hedged on the interface, however, the orders that have been sent to the counter party have been offset with each other. Your net position remains the same on the MT4 and the back office. When you close your hedge positions on the MT4 software, the new buy and sell orders placed will be offset with each other by the counter party and again your net positions on the MT4 and the back office remain the same.
3. In order to abide by the CFTC FIFO rule, the counter party offsets the positions on a First In First Out basis. On the MetaTrader 4 platform you have the ability to close the positions as you see fit. For example, if you buy a contract and buy another contract at a later time and you decide to close your most recent buy position, you can simply close this position on the MT4 interface, however, the order that is sent to the counter party will be offset with the FIFO rule in place. Your net position remains the same on the MT4 and the back office.
4. In the past, if you wanted to trade forex with a U.S. broker, you had to first obtain U.S. dollars to fund your account. The problem is that exchanging your home currency for dollars is essentially a speculative transaction. Fluctuations in the exchange rate may decrease the value of your account relative to the rate at which you originally made the transaction. Now, you don’t need to exchange your country’s currency for dollars. We offer you the choice of funding and trading an account with EUR, GBP, CHF, JPY, AUD, and CAD.
Now, considering that the four cited reasons can be easily addressed, let’s talk about the one main reason in favor of opening your forex account in the United States. This single reason for opening a forex account in the United States overwhelming trumps any reason(s) for not doing so.
Where you deposit your money is incredibly important. You need to know that it’s safe and that the brokers holding it are the most regulated and under the heaviest scrutiny in the forex industry. Trading is hard enough as it is, why expose your funds to unnecessary risk?
The United States is the most heavily regulated Forex industry in the world. All brokers must register with the Commodity Futures Trading Commission and are members of the National Futures Association.
Brokers have daily, monthly, and quarterly operational reporting requirements, detailing customer funds on deposit, # of retail and ECP forex customers that are active, whether they are US or foreign domiciled, and the percentage of non discretionary accounts that were profitable vs non-profitable among other things. Unaudited financial statements are filed monthly and audited financial statements are filed annually. Failure to comply with these NFA requirements can result in severe disciplinary actions as well as substantial fines and penalties.