Offsetting transactions - NFA rule 2-43(b) - page 3
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I think I would be very very careful of a broker that is not a member of the NFA. [...] It's either move to another country or give up on MT4.
That includes at least one broker who's very widely used, according to the frequency of posts about them on this forum. And a couple of hours ago I was talking to an NFA-regulated broker who described to me a plan to move their MT4 business to off-shore parts of the organisation, regulated by entities such as the UK's FSA rather than the NFA, to avoid problems raised by the new NFA rule. You can move your money to another country (or your broker can do it for you).
MadCow wrote >>
So what do we do? We can modify our EA's using something of an accounting nightmare to keep track of our fictional hedge, we can forego all systems that require offsetting trades, or we can lobby [...]
My conversation with the NFA-regulated broker confirmed that this rule-change potentially affects any EA, because two EAs running on the same symbol will have their trades offset against each other if they're in opposite directions. In short: most grid systems break, though can be fixed; and running multiple EAs on the same symbol within the same account also breaks, and is generally much harder to fix.
I'm sure about that too. But what next? If they are let to ban strategies and trading styles, the whole idea of trading becomes a joke.
The basic information that I have at this point is that ALL trades will be required to be executed on a "first-in, first-out" basis. Meaning clients can not manage positions on a per ticket basis. Example: client buys 1 lot EUR/USD, then buys a second lot of EUR/USD. If the client for whatever reason wishes to close out second lot (it's profitable while the first one is not), it will NOT be possible. First lot must be closed out first.
This also means that traders will not be able to place stops and limits on individual tickets and will not be able to close positions from the open positions window. To close a trade, the trader must place a new market order in the opposite direction. Stops and limits will no longer exist, the trader needs to place an entry order to close the trade at a specified price.
From a practical point of view, the banning of hedging, offsetting, taking away stops etc and what have you, are not enforceable unless the MT4 software is modified to check for, and dis-allow those situations. If fact, it's not just MT4 but any other Forex trading software.
Alternatively, individual brokers could retrospectively check for and reverse those trades that violated the rules in which case things gets to be one big ugly mess.
Or maybe we can expect new releases of MT4 and other software soon?
Prior to the rule 2-43, MB Trading never did allow concurrent long and short positions in one account, however they do allow you to have two accounts, where you can go long in one and short in the other.
Possible Solution is to code separate long and short ea's and run on two instances in both accounts. Sounds like a pain in the arse, but it should work. Can't code the changes in time, then run 3 instances of MT (original EA in Demo, then manual entry long and shorts in other two accounts, also a pain in the arse...) oh well...the USA is certainly going straight to hell.
The End of Hedging Strategy History,
Interuption to the Market just make Messier
I DONT SEE THIS AS A PROBLEM TOO, HEDGING TRADERS ARE NOT ABSOLUTELY TRADING IN FULL CONVIDENCE AS SUCH. BECAUSE HEDGING DOES NOT ALLOW FOR LOSS IN CASE THEIR IS TOTAL DEFLECTION FROM ASSUMED PRICE TRENDS WHICH IS BOUND TO HAPPEN TO IN-EXPERIE~CE TRADERS THAT FAIL TO FORCAST MARKET TRENDS AS WELL AS APPROXIMATED EXTEND OF SUCH TRENDS PER TIME. THIS WOULD ALSO IN TURN AFFECT SCALPERS...
I LEAVE THE REST...
THANKS.