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ESMA and its implication

NottsBlade
Jun 17 2018 at 14:21
posts 75
We at FXBook and on other forums can take action and make our feelings known by contacting ESMA. So please if you disagree with the introduction of these new leverage restrictions please contact them.
NottsBlade
Jun 17 2018 at 14:21
posts 75
Info ESMA <[email protected]>
Sat 16/06/2018, 09:06
You;


Dear sir or Madam,
Thank you for your message.
We value your input and question raised on this issue. As with all relevant questions that are submitted to us by external sources, we have taken note of the points raised and are consulting internally as well as with the relevant ESMA committees to assess whether further public guidance is needed. Please refer to https://www.esma.europa.eu/questions-and-answers
Questions and Answers - ESMA
This page contains an overview of all Q&As developed by ESMA per legislative act and instructions on submitting new questions to ESMA.
www.esma.europa.eu
for information on criteria followed by ESMA to accept and prioritise questions.
Please note that ESMA endeavours to reply within two months to factual questions received and within four to six months to policy questions that raise new points of interpretation.
Please also note that a question is much more useful when submitted together with a proposed answer. We would therefore be grateful if you could suggest possible answers should you need guidance on other issues in the future.

Finally, please note that this inbox only handles general enquiries. If you are contacting us to make a complaint, you should first refer to the complaints section of the ESMA website. There you will find information on how ESMA can help and who you should contact to make your complaint.
Regards,
Mackiveki
Jun 17 2018 at 14:23
posts 8
500k wow that is a huge account. I can't believe it is so much for a pro account. I thought it would be more like 20k. It must be so difficult to make the move from amateur to pro
MicF
Jun 18 2018 at 05:49
posts 95
Not at all.

We have the General Data Protection Directive in place, and even before, no employer is allowed to tell somebody about his employes.
Not to mention bank secret.
NottsBlade
Jun 18 2018 at 06:05
posts 75
Just realised a lot of brokers have already got Negative Balance Protection so why the restrictions on Leverage? My opinion is because the few, the rich and the privileged eg: banks, brokers etc are starting to realise that small traders are starting to wise up and learning stuff that they themselves don't teach or don't know about. Furthermore, only an idiot would trade their life saving or their house!!! I wouldn't trade with more than I can afford to lose, I certainly wouldn't risk everything. That's why for several years I've been learning to trade with an opening balance of £100 and achieve consistency in my trading.
vontogr (togr)
Jun 18 2018 at 09:45
posts 4862
They are simply fixing something that ain't broken.
FxMasterGuru (FxMasterGuru)
Jun 18 2018 at 09:46
posts 1608
It is pretty obvious that IT IS NOT about protecting retail traders' (from themselves), because with the same logic the EU should ban ALL online and brick-and-mortar casinos, horse race betting and even lottery.

Since retail traders - as a group - lose more than earn from trading (incl. spreads and commissions), there will be a huge income loss for brokers and tax loss for the EU, while traders will find a way to continue trading with high leverage outside the EU. So the logic - the hidden motive - is still unclear.
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Tiffany (TiffanyK)
Jun 20 2018 at 08:36
posts 427
Unfortunately many people trade with much more than they can afford to lose, they think that with Forex they can become rich , they mortgage their houses, estates and etc... this is illness. .. I personally know such people.... So I think the end purpose of ESMAs restrictions may come to defend the small players

NottsBlade posted:
Just realised a lot of brokers have already got Negative Balance Protection so why the restrictions on Leverage? My opinion is because the few, the rich and the privileged eg: banks, brokers etc are starting to realise that small traders are starting to wise up and learning stuff that they themselves don't teach or don't know about. Furthermore, only an idiot would trade their life saving or their house!!! I wouldn't trade with more than I can afford to lose, I certainly wouldn't risk everything. That's why for several years I've been learning to trade with an opening balance of £100 and achieve consistency in my trading.
Accept the loss as experience
vontogr (togr)
Jun 20 2018 at 10:14
posts 4862
TiffanyK posted:
Unfortunately many people trade with much more than they can afford to lose, they think that with Forex they can become rich , they mortgage their houses, estates and etc... this is illness. .. I personally know such people.... So I think the end purpose of ESMAs restrictions may come to defend the small players

NottsBlade posted:
Just realised a lot of brokers have already got Negative Balance Protection so why the restrictions on Leverage? My opinion is because the few, the rich and the privileged eg: banks, brokers etc are starting to realise that small traders are starting to wise up and learning stuff that they themselves don't teach or don't know about. Furthermore, only an idiot would trade their life saving or their house!!! I wouldn't trade with more than I can afford to lose, I certainly wouldn't risk everything. That's why for several years I've been learning to trade with an opening balance of £100 and achieve consistency in my trading.

Well to be able to trade they will need to deposit much more now compared to high leverage.
Even to trade 1 lot EURUSD you will need 100,000 EUR /30 = 3,333 EUR. Just to cover margin...
And potentially loose it as well
So at the end they will loose more
That is the danger of low leverage.
FxMasterGuru (FxMasterGuru)
Jun 20 2018 at 10:19
posts 1608
@TiffanyK

You are right, trading can be a socially more acceptable disguised gambling addiction. A friend of mine has committed suicide due to trading related losses and threats from loan sharks. It was pretty sad. Nevertheless, ESMA regulations will be easily bypassed by traders with addiction problems, i.e. by those who feel the irresistible urge to trade/gamble with funds they cannot afford to lose simply by moving their accounts to ASIC regulated or off-shore brokers. It is simple as that.

So what will the ESMA regulations achieve finally in this regard...? Seriously... My guess is that it is just a symbolic act, so they can ''wash their hands'' as Pontius Pilate did according to the Bible...
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Greenwood
Jun 20 2018 at 10:27
posts 13
I think 1:50 is enough leverage for most people. If you are good then you can still make money. If you then this will help you minimise losses
MicF
Jun 20 2018 at 10:34
posts 95
TiffanyK posted:
Unfortunately many people trade with much more than they can afford to lose, they think that with Forex they can become rich , they mortgage their houses, estates and etc... this is illness. .. I personally know such people.... So I think the end purpose of ESMAs restrictions may come to defend the small players

Do you think, this would help small players?
If this would be the objective, then they had to kill margin accounts for retail.

But how could anybody prevent mortgage a house to trade?
At least they have a house to mortgage? ;-)

NottsBlade
Jun 20 2018 at 12:07
posts 75
My personal opinion is that the focus of regulatory bodies like ESMA, FCA & SEC should be on the brokers, banks & market makers etc. These are the power brokers, these are the ones that move the market, these are the ones responsible for wild swings capable of stopping out small traders like ourselves. Furthermore I feel that they should especially focus their attention on algorithms. This is my personal opinion, but I honestly believe that brokers have algorithms programmed to stop out small clients. I don't want to believe this anymore than anybody else, but I feel it's a possibility. Trading @ 30:1 leverage I could be stuck in a trade for weeks before making any profit if any. Not only that with my pitiful £100 it would not be worth my while trading at all.


Algorithms have an unfair advantage over small traders in that they are able to process information much quicker than we can. The forex market is a Trillion $ industry and my personal opinion is that they want to keep it in the hands of the few.


NottsBlade
Jun 20 2018 at 12:09
posts 75
At least @ 500:1 leverage with my £100 I can take my profit at the end of the day and I know I'm capable of quadrupling my account in minutes/hours. I know because I've done it many times!!! Again all I'm looking for is consistency in my trading before trading live. I'm still learning, this morning alone I've learnt so much, learnt new techniques and I'm continuing to make massive breakthroughs in my technical analysis.


Technical Analysis is a profession and a skill, but it will soon be lost if algorithms have their way, with many highly skilled analysts and traders losing their jobs in the City. The City of London will be like a ghost town and all those fancy office blocks will be turned into apartment blocks!!!

MicF
Jun 20 2018 at 14:45
posts 95
NottsBlade posted:
At least @ 500:1 leverage with my £100 I can take my profit at the end of the day and I know I'm capable of quadrupling my account in minutes/hours. I know because I've done it many times!!! Again all I'm looking for is consistency in my trading before trading live. I'm still learning, this morning alone I've learnt so much, learnt new techniques and I'm continuing to make massive breakthroughs in my technical analysis.

There's one essential thing, that ist totally differenent in real trading: Emotions

Your demo trading says nothing about your potential success with real money.
Go ahead and jump, you are on demo much too long.
NottsBlade
Jun 20 2018 at 14:46
posts 75
If we do not understand how complex technologies function then their potential is more easily captured by selfish elites and corporations. The results of this can be seen all around us. There is a causal relationship between the complex opacity of the systems we encounter every day and global issues of inequality, violence, populism and fundamentalism.

Instead of a utopian future in which technological advancement casts a dazzling, emancipatory light on the world, we seem to be entering a new dark age characterised by ever more bizarre and unforeseen events. The Enlightenment ideal of distributing more information ever more widely has not led us to greater understanding and growing peace, but instead seems to be fostering social divisions, distrust, conspiracy theories and post-factual politics. To understand what is happening, it’s necessary to understand how our technologies have come to be, and how we have come to place so much faith in them.

Over the last few decades, trading floors around the world have fallen silent, as people are replaced by banks of computers that trade automatically. Digitisation meant that trades within, as well as between, stock exchangescould happen faster and faster. As trading passed into the hands of machines, it became possible to react almost instantaneously. High-Frequency Trading (HFT) algorithms, designed by former physics PhD students to take advantage of millisecond advantages, entered the market, and traders gave them names such as The Knife. These algorithms were capable of eking out fractions of a cent on every trade, and they could do it millions of times a day.

https://www.msn.com/en-gb/money/technology/rise-of-the-machines-has-technology-evolved-beyond-our-control/ar-AAyI40W?ocid=spartanntp
Adribaasmet
Jun 21 2018 at 05:49
posts 994
MicF posted:
NottsBlade posted:
At least @ 500:1 leverage with my £100 I can take my profit at the end of the day and I know I'm capable of quadrupling my account in minutes/hours. I know because I've done it many times!!! Again all I'm looking for is consistency in my trading before trading live. I'm still learning, this morning alone I've learnt so much, learnt new techniques and I'm continuing to make massive breakthroughs in my technical analysis.

There's one essential thing, that ist totally differenent in real trading: Emotions

Your demo trading says nothing about your potential success with real money.
Go ahead and jump, you are on demo much too long.

That’s why, traders need to practice cent or micro type account before their live trading for couple of weeks (minimum).
SpacePower
Jun 21 2018 at 10:54
posts 8
I went from demo to real and didn't use a cent account. That was a big mistake. Made huge losses got totally stressed out. Had to go back to demo. Hopefully the 1:50 leverage limit will push more people onto cent accounts to start with
vontogr (togr)
Jun 21 2018 at 11:14
posts 4862
Think about it this way. Small trader could trade with high leverage and risking $1,000.
Nowadays he will have to risk 10,000 to trade the same size and get the same profit.
So in fact such trader can lose 10x more.
GENESIS ASSET (TradingtheCloud)
Jun 22 2018 at 07:30
posts 38
togr posted:
Think about it this way. Small trader could trade with high leverage and risking $1,000.
Nowadays he will have to risk 10,000 to trade the same size and get the same profit.
So in fact such trader can lose 10x more.

This is exactly what I meant that the rule works best for brokers/dealing desk in particular as now traders will require a bigger account size to participate and the system shuts off small sized traders altogether. with $100 or less with 1:500 leverage the odds is better with the trader. This rule basically kills small capital trading.
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