NFA regulations, we will no longer be offering accounts with more than 100:1 leverage

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If your broker is in the US, what are your thoughts on the upcoming NFA regulation concerning leverage. I just received the following email.

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Dear Valued Customer,

In compliance with the upcoming NFA regulations, we will no longer be offering

accounts with more than 100:1 leverage. We are also required to alter the leverage

levels on our existing accounts. We want our customers to be aware of these new

requirements to determine in advance how this may affect their trading plans and

decisions.

We are writing you because this affects your live account with Interbank FX.

As of market open on November 29, 2009, all currency pairs will have a maximum

leverage of 100:1, with the exception of the USD/SGD and the USD/ZAR which will have

a maximum leverage of 25:1.

Please be aware that this change will impact your margin requirement for any open or

future positions. For example, if you?re trading in a mini contract worth $10,000

at 100:1, you will need to post a $100 margin to open that mini lot trade. For a

nano lot, which is 0.01 of a mini contract, you will be required to post $1.

The margin call and stop levels on your 100:1 account will be: Margin Call - 65%,

Stop Out - 50%. As a contrast, if your account was 400:1 your levels would have

been: Margin Call - 125%, Stop Out - 100%. Or Margin Call - 100% and Stop Out - 50%

for a 200:1 account. We also want you to understand how leverage can work both for

and against you.

Please consider your account balance and how the new margin requirements will affect

you. If you need to deposit funds, simply click on the link below and remember, we

now offer no fee credit card deposits.

 
 

Good NFA move. It will prevent lot of troubles. But it's a shame NFA will force traders to go to sense way.

Again and again "why 98% of traders fails" rule

My trading during years never was with something more than 100:1, mostly 50:1 and I'm alive.

 

I agree with Linuxser that too much leverage (overleveraging) can be one of the contributing factors why a trader may lose.

I'm sure we've all had trades move against us and get stopped out or receive a margin call, and then the market turned back around and went in our favor. Most likely the trade position was too large or the account was undercapitalized, and overleveraged in both cases.

In any event, traders will still have the option to use higher leverage if they want with FXCM UK or stay in the US with a maximum of 100:1.

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