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Futures Broker Due Diligence Notes post PFG
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Futures Broker Due Diligence Notes post PFG

  #81 (permalink)
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ThatManFromTexas View Post
@Jason Rogers

What I was referring to was .... to trade a full lot of EUR/USA requires a deposit(margin) of $3000 and one pip =$12.50 ... to trade one contract of 6E where one tick = $12.50 requires a deposit of $500 margin

What would be the point of actually using these ultra low margins, rather than having a well funded trading account?
Can anyone realistically expect to trade with any level of sustainable success, a 6E contract currently worth $161k (125k euros x 1.2892) using $500 as margin, at 322:1 leverage? This is rhetorical, as I'm sure TMFT knows this, I'm just curious to hear why he considers it worth mentioning as a benefit to futures vs fx, from a practical standpoint.

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  #82 (permalink)
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Houston,Tx
 
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Futures Operator View Post
What would be the point of actually using these ultra low margins, rather than having a well funded trading account?
Can anyone realistically expect to trade with any level of sustainable success, a 6E contract currently worth $161k (125k euros x 1.2892) using $500 as margin, at 322:1 leverage? This is rhetorical, as I'm sure TMFT knows this, I'm just curious to hear why he considers it worth mentioning as a benefit to futures vs fx, from a practical standpoint.

@Futures Operator

The point ... you missed it....

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #83 (permalink)
Elite Member
New York, NY
 
Futures Experience: Intermediate
Platform: Sierra Chart, thinkorswim
Broker/Data: Amp-Rithmic/TT, IB
Favorite Futures: CL, GC, NQ
 
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ThatManFromTexas View Post
@Futures Operator

The point ... you missed it....

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LMAO. I'm thick sometimes, please help me see the point.

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  #84 (permalink)
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Futures Operator View Post
LMAO. I'm thick sometimes, please help me see the point.

@Futures Operator

The original question was, "In the light of PFG why trade EUR/USD instead of 6E... since with 6E at least you had some protection and regardless of the % of your money you got back... you were still ahead of the retail forex traders.

The reply I got was...Forex is an entirely different animal.

To which I replied ... comparing 6E charts side by side with EUR/USD charts ... they were almost identical, a pip and a tick per both worth $12.50 and the only difference I could see was the difference in margin.

I was asked what I meant by margin ... so I explained the difference in margin ...

and here we are....


I do have a couple of questions for you though....

1. How do I get my broker to raise my margin requirements? I told him you said if he raised them I would make more money trading. He said if he raised them for me .... he would have to raise them for everyone ... so he wouldn't do it.... he said I would just have to learn to deal with low margin requirements.

2. Do I have to give back all the money I made trading with low margin requirements?

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #85 (permalink)
Elite Member
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ThatManFromTexas View Post
@Futures Operator

The original question was, "In the light of PFG why trade EUR/USD instead of 6E... since with 6E at least you had some protection and regardless of the % of your money you got back... you were still ahead of the retail forex traders.

The reply I got was...Forex is an entirely different animal.

To which I replied ... comparing 6E charts side by side with EUR/USD charts ... they were almost identical, a pip and a tick per both worth $12.50 and the only difference I could see was the difference in margin.

I was asked what I meant by margin ... so I explained the difference in margin ...

and here we are....


I do have a couple of questions for you though....

1. How do I get my broker to raise my margin requirements? I told him you said if he raised them I would make more money trading. He said if he raised them for me .... he would have to raise them for everyone ... so he wouldn't do it.... he said I would just have to learn to deal with low margin requirements.

2. Do I have to give back all the money I made trading with low margin requirements?

Nice ones, thanks for showing me the point.

I bet you didn't really use $500 margin/322:1 leverage to make all that money, and likely had closer to at least the 5-6x higher requirements that FX requires, so that the margin comparison as a benefit to futures is pointless, was my point.

I could be wrong though.

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  #86 (permalink)
Market Wizard
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Futures Operator View Post
What would be the point of actually using these ultra low margins, rather than having a well funded trading account?
Can anyone realistically expect to trade with any level of sustainable success, a 6E contract currently worth $161k (125k euros x 1.2892) using $500 as margin, at 322:1 leverage? This is rhetorical, as I'm sure TMFT knows this, I'm just curious to hear why he considers it worth mentioning as a benefit to futures vs fx, from a practical standpoint.

You have a very good point! Over leverage is not in the benefit of the trader.
This allows traders to add money when they lose in the hopes of "averaging"...
It allows them to trade many lots in hopes to grab just a few ticks...
but here is the worst part: having a fixed based amount which is so low does not even notify traders that the exchange raised or lowered margins. This could signal volatility changes, trend changes, etc and is done by the exchange in the benefit of the trader. Having something that is % based could a lot more beneficial.

Professionals (CTAs,Hedge Funds, Prop Firms..) know that leverage is the Achilles Heel of every trader and that spontaneous reaction to score big that turns into a loss many times. Their risk parameters are so strict that I have seen them trade 1 lot on 40-50K of capital and more at times.

The competition between brokers has become so ridiculous that it's simply painful to see the idea put into a small investor that he could trade like that.
@Futures Operator just to further your example: minimum account $2,500 would be allowed to trade 5 lots of 6E
which is about $800,000. I want to see the success rate of that.

Having said all that...it's the right of every trader to believe/practice/exercise/trade what he thinks is best for him.

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #87 (permalink)
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mattz View Post
You have a very good point! Over leverage is not in the benefit of the trader.
This allows traders to add money when they lose in the hopes of "averaging"...
It allows them to trade many lots in hopes to grab just a few ticks...
but here is the worst part: having a fixed based amount which is so low does not even notify traders that the exchange raised or lowered margins. This could signal volatility changes, trend changes, etc and is done by the exchange in the benefit of the trader. Having something that is % based could a lot more beneficial.

Professionals (CTAs,Hedge Funds, Prop Firms..) know that leverage is the Achilles Heel of every trader and that spontaneous reaction to score big that turns into a loss many times. Their risk parameters are so strict that I have seen them trade 1 lot on 40-50K of capital and more at times.

The competition between brokers has become so ridiculous that it's simply painful to see the idea put into a small investor that he could trade like that.
@Futures Operator just to further your example: minimum account $2,500 would be allowed to trade 5 lots of 6E
which is about $800,000. I want to see the success rate of that.

Having said all that...it's the right of every trader to believe/practice/exercise/trade what he thinks is best for him.


This whole margin discussion has gotten



The point was/is ... considering PFG... futures are safer than forex....

I'm just a simple man trading a simple plan.

My daddy always said, "Every day above ground is a good day!"
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  #88 (permalink)
Market Wizard
Boca Raton
 
Futures Experience: Advanced
Platform: Variety
Broker/Data: Optimus Futures, LLC
Favorite Futures: Futures
 
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Posts: 2,059 since Sep 2010
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ThatManFromTexas View Post
This whole margin discussion has gotten



The point was/is ... considering PFG... futures are safer than forex....

Agreed!

PM with any questions about optimusfutures (800) 771-6748 (561) 367 8686. THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES TRADING.
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  #89 (permalink)
 Vendor: www.fxcm.com 
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PFG Forex Customers to File Suit against Trustee

In yesterday's hearing on Drohan Lee LLP's motion on behalf of PFG's retail forex customers Judge Carol Doyle advised the plaintiffs to file an "adversary" suit against the Trustee to force him to return the funds of PFG's forex customers.

Peregrine Forex, Metals Clients To Sue Over Funds, Atty Says - Law360

That is exactly what they are about to do. Futures Magazine has a good article regarding the new motion:

PFG forex, metals customers want justice


Quoting 
In total, there are 7,000 clients with forex and metals accounts at PFG, but Medley says the impact of the case could be much broader. “We feel like this is a precedent-setting case with respect to the rights of forex and metals account holders, and how it relates to the CFTC regulations.”

A victory for Drohan Lee would indeed be a huge precedent for all retail forex traders in the United States, and a welcome one at that. However, the precedent may not be to the liking of many in the futures industry. This quote from John Roe of the Commodity Customer Coalition is very telling:


Quoting 
Roe says the CCC has not made a decision on how to argue this but says, “The important thing once this is all said and done is that we don’t have a precedent at PFG that once someone steals something out of segregation, it doesn’t matter. That would mean segregation protection is completely meaningless,” he says. “The NFA said in its brief in the MF Global case that the intent of Congress was not to have to trace funds when the music stopped. If they aren’t there and there is a hole, you have to replace those with substitute assets. In this case, the substitute asset is FX customers’ money.”

If FX customer assets are no more than a backstop for futures customers in the event of bankruptcy then retail forex traders need to think long and hard before opening an account with a FCM whose primary business is futures. That is what is at stake in the adversary suit expected to be filed.


Last edited by FCMReform; October 12th, 2012 at 01:54 PM.
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  #90 (permalink)
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CFTC to Hold Open Meeting on Additional Customer Protections


The CFTC has just announced they will be holding an open meeting to consider additional customer protections for the futures industry next Thursday.

CFTC to Hold Open Meeting to Consider a Notice of Proposed Rulemaking on Enhancing Customer Protections

FXCM has been lobbying in Washington to extend such protections to retail forex traders as well. FXCM supports tougher accounting standards, customer insurance and a requirement that all FCM's disclose their fully audited financials to the public. We are encouraging traders to submit their comments to the CFTC at secretary@cftc.gov.

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