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Trade interface to net positions and create a virtual foreign account for those abused by USA NFA Hedging and FIFO rules

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Jim Colton
288
Jim Colton  

Perhaps a large portion of the negative aspects of the NFA hedge and FIFO rules could be mitigated with Back Office record keeping. (or somewhat mitigated with a good dashboard and a reliable VPS.

There would not need to be any creative bookkeeping just strict protocols for interpreting orders.

If the "Broker" or Trading Desk, or whatever we call the trade Facilitator was to interpret any order that was in opposition to an existing position to mean close this number of lots of the existing position and open a reversed position if the new order exceeds the incumbent position such as to net the position change. (and manage SL and TP instructions accordingly) I can easily imagine that the SL and TP on the Facilitator's server might not reflect multiple price points per transaction type. However, with maintaining of SL and TP orders on the Facilitator's books but perhaps .05 or 0.1%  (external variable) farther from the market to mitigate the potential for a computer crash or internet problem I could see a user maintained position netting and dynamic position closing interface that is able to do everything for a US entity that a non US entity can do native in the MT4 platform with exception of Hedging. The result of such a user interface would be all that non US entities using the interface benefit from with a few additional benefits and caveats.
1. Since no Hedging is available the lost interest from potential hedging is no longer lost. I look at this as a plus.
2. The interface would be perhaps 2 or 3 times as complex if the user wanted system reporting that was 100% truthful. Perhaps not so bad if synthetic reporting was acceptable. Perhaps easier without reporting.
3. Added latency to effectively process orders twice.
4. Added risk associated with crashes and outages which might be mitigated with VPS.
5. Stuck with US Margin requirements. This is a good thing for less sophisticated traders. Not so good for those careful enough to limit exposure to individual currencies to a moderate level and using enough strategies to warrant >50:1 leverage due to use of responsible leverage in more than a few pair at a time.

I might pay $10K for code and intellectual rights to such an interface that allows me to trade multiple systems and is something I own. I would definitely pay $250 for a licensed copy that was restricted to my use on one brokerage account. I definitely would open an account with a trade Facilitator who provided such flexibility as long as spreads were reasonable.

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