top of page

ESMA ruling - April Fools ?

The link below shows the ESMA ruling on leverage that will come into force for brokers in early summer 2018 .....(soon)

The Good news

they have clobbered Brokers by reducing dramatically the leverage allowed to retail traders on various instruments

The Bad news

they have clobbered Brokers by reducing dramatically the leverage allowed to retail traders on various instruments

despite huge amounts of protests from experienced Traders (we were providing more moderate and considered solutions to managing novice trader exploitation by brokerages) ESMA decided to use a sledgehammer to fix the problem ...

permitted Leverage on Major Forex pairs will fall to a max of 30:1

other instruments have had even lower leverage Caps and some markets have been now banned ......but that does'nt help us experienced Forex traders now ...we are held to 30:1 unless we decide to go with a broker house that sits outside europe ...and naturally they will have no govenance or regulatory control with how your money is handled ....or indeed never returned if they decide to keep it or go bankrupt (not advisable then to go unregulated route guys)

for those of you unfamilar with leverage (learn immediately !!!) .........30:1 gives us a 3.33% margin requirement for deposits with Brokerages for example if you want to trade Cable you need to deposit $5,000 (£3,333) with a broker to buy just $150,000 of currency (@ 1.50 ex rate)

compare that to the 500:1 leverage offered by many brokers where $150,000 of currency costs you just $300 of deposit .....

and by the way a 1 pip price movement on $150,000 of currency is worth a dollar either way

if you are happy at $1 a pip trading cable then not an issue if you have $5,000 you can deposit with a broker .....

if you are an experienced trader and looking for multiples of $10 a pip we are talking $50-100k deposits per broker to make a decent daily living

and i hate putting excess money with brokers .....regulated or not ....Brokers can still fail guys ...believe me

i'm still talking to my brokers and what they will allow me ..........but i'm not hopeful

ok a lot of foolhardy traders are now "protected from themselves" and they wont lose the stupid amounts previously (despite efforts and warnings from experienced traders and trainers like myself) ....

but they will now go OFFSHORE to unregulated brokers who will still cheat them like before ....nothing changes sadly

leaving the experienced and responsible traders now having to pay hundreds of thousands of dollars to still trade at levels they are already comfortable and successful with

oh well lets see what happens .........


43 views0 comments

Recent Posts

See All

FXCorrelator - Adieu ! (?)

hey all ....with my last blog Post nearly a year ago here - its pretty damn clear that my other projects and ventures have taken me far away from posting and teaching the Core FXCorrelator indicator m

bottom of page