FIFO - NFA Rule 2-43 (b)

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Hello all,

There has been a ton of confusion about the new NFA Rule 2-43 (b) or FIFO. The official release is even more confusing if you try to read it, lol... Here are some links to "plain language" descriptions. I do NOT endorse any of these sources, but I do agree with their descriptions. Here are a few urls (in no particular order):

Official NFA posting: National Futures Association | News Center

Some (much needed, lol...) plain language translations and on-going updates. Note: some brokers have changed their back office to comply with the new rule, making the transition seamless. Bottom-line: the NFA stepped up to the plate, they took a swing and...???? Only time will tell.

Notice on New NFA Ruling-FIFO|FX Solutions

GFT: Get the Facts

http://www.fxcm.com/lp3-nfa-fifo.jsp

For an endless stream of info, just google: "NFA Rule 2-43 (b)"

Hope this helps...

 
 

Doh! my thread got spammed by a broker! lol...

Most of the MT4 brokers are working towards a seamless transition (which is good news). MT4 is very "malleable". The only brokers that seem to be having issues are brokers that offer "in house" charting (i.e. FXCM: In order to comply with compliance rule 2-43(b), FXCM LLC has changed the functionality of stops and limits. Clients must use entry orders to place stops and limits after July 31st. Be an informed FXCM forex trader and learn how). One more reason to love MT4. However, I'm sure that all of the major brokers will eventually change their back office to make it easier for us (the retail trader).

 
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Slack:
Wow, does this mean IBfx now has an official dealing desk? (my apologies to the OP, but this is pretty funny.. getting spammed by a broker )

Lol... no comment

 

A lot of NFA new rules interpretations at a moment are just "muding the water".

As a response for claims like these :

Placing Stops and Limits. The NFA rule does not permit the attaching of stops and/or limits to an individual trade as is currently allowed. This functionality would contradict FIFO logic.

NFA's statement concerning the above quote :

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mladen:
A lot of NFA new rules interpretations at a moment are just "muding the water".

As a response for claims like these :

NFA's statement concerning the above quote :

Yeah, if you read through the rule, a broker that is "holding" positions in-house, doesn't really have to do anything with there internal order structure. I didn't want to mention that, because it's a very complicated subject and there is enough confusion surrounding this rule.

One thing is clear, some of brokers don't understand the rule completely, lol... (which is telling). The rule is aimed at holding brokers more accountable for each position that they fill (open/close). Trying to make the process more transparent, but..... The original wording of the rule was effective, the newer rewritten rule doesn't have the same "teeth". Personally, I don't think it will help. It will just make it more expensive for brokers to do business, there in making it more expensive for retail traders to trade (i.e. the usual US regulation MO). The only way to effectively regulate forex brokers would be to standardize the whole sale market (and that will never happen).

 
 

FIFO Explanation

I tried to write an in depth article covering this new rule and what the effects are going to be. You can read it here, would love to hear your feedback.

 

at last hedging is out.. professionalism is in...

Hilzfuld:
I tried to write an in depth article covering this new rule and what the effects are going to be. You can read it here, would love to hear your feedback.

i read the article you posted above.. it's very interesting and i gotta say that the example of the "Money Changer" is the most simple way to understand the lack of logic in hedgingin the first place.

I have spent countless hours researching this topic and I would say that the opinions on this ruling are split down the middle. Some people think it is a wonderful thing, since hedging, in reality, is a fictional move. Think about it. Imagine going to a money changer and asking him to sell $100,000, then once he does that, asking him to buy $100,000. I am pretty sure he would think you are nuts. This would obviously leave you at level ground and cancel each other out. The fact that this is an accepted practice in Forex trading does not say good things about the Forex market and its standards.

and that's way i don't like it and never used it. i used it once and i felt like a manipulator who want to "sting" the system.. this is pathetic. and traders who use this so called "hedging" are also pathetic.

and so i can say at last

hedging is out.. professionalism is in..

 
monstrader:
i read the article you posted above.. it's very interesting and i gotta say that the example of the "Money Changer" is the most simple way to understand the lack of logic in hedgingin the first place.

and that's way i don't like it and never used it. i used it once and i felt like a manipulator who want to "sting" the system.. this is pathetic. and traders who use this so called "hedging" are also pathetic.

and so i can say at last

hedging is out.. professionalism is in..

Well, let's be clear, "hedging" still has it's place and you can still hedge with non NFA regulated brokers (most non-US brokers). There are a few successful ways to hedge (i.e. the Martingale as one example), but "the reason" that most retail traders hedge, didn't make sense. So there are 2 sides to this issue. I'm not a hedger, but to say that all hedging is "pathetic" is not a fair or accurate argument. (my 2 cents)

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