Comment Text:
i0-001
COIMMENT
CL-03666
From:
Sent:
To:
Subject:
Sara L Ames
Monday, January 25, 2010 12:35 AM
secretary < secretary@ C FTC. g ov >
Regulation of Retail Forex -RIN 3038-AC61
As I read it, the CFTC 1:10 Forex Leverage Proposal in somewhere between
MISGUIDED and outright LUDICROUS. It appears to me that the CFCT does NOT
understand Retail Forex market trading and where money management 'Risk' can
become hazardous to Retail Forex trading. If they DO understand the forex
market then the proposal is disingenuous at best.
The stated intent of the CFTC proposal is to protect retail traders from RISK.
However, what the CFTC is proposing 'INCREASES' the retail traders 'RISK' by a
factor of '10 TIMES'.
The math goes this way:
At the current 1:100 leverage, for each $100.00 of his/her out of pocket Capital
Investment RISK EXPOSURE the trader is entitled to trade $10,000.00 worth of
currencies.
At the proposed 1:10 leverage, the trader is entitled to trade THE SAME
$10,000.00 worth of currencies but his/her out of pocket Capital Investment RISK
EXPOSURE is $1,000.00 as opposed to $100.00.
The CRTC proposal 'INCREASES' out of pocket Capital Investment RISK EXPOSURE
by '10 TIMES MORE RISK'
Clearly something is wrong with the proposal; it is either terribly misguided or
wo rse.
How would the retail trader's EXPOSURE TO RISK be REDUCED?
What is the common sense answer that is being overlooked?
Reducing LEVERAGE from 1:100 to 1:10 is NOT the answer. The proposal as it
stands as a disaster-in- waiting for retail traders.
In order to protect the new/naive/self destructive and or otherwise uneducated
trader from him or herself, ACCOUNT MARGIN LIMITATIONS should be Revised so
that the trader's out of pocket Capital Investment RISK EXPOSURE is never any
greater than 5% or 10% or his/her trading account at any time.
Leave leverage alone. 'LEVERAGE IS NEITHER THE PROBLEM NOR THE SOLUTION.'
The answer to RISK EXPOSURE is NOT LEVERAGE CONTROL. In fact LEVERAGE
CONTROL would have the exact OPPOSITE Effect by INCREASING RISK - 'TEN
FOLD'...
The answer is 'MARGIN CONTROL'.
Apart from that, I would call on the CFTC to use whatever pro-active and
aggressive steps necessary to keep unscrupulous brokers/operators and get-rich-i0-001
COIMMENT
CL-03666
quick-and-easy 'fantasy' educational scams OUT OF BUSINESS.
You need to police RISK through Margin and Not Through Leverage.
Please do not pass this rule.
Sara Ames
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