Comment Text:
i0-001
COMMENT
CL-03696
From:
Sent:
To:
Subject:
Andy Chrzaszcz
Monday, January 25, 2010 4:45 AM
secretary
Forex leverage decrease
To whom it may concern,
I have already sent in an email but I would like to add the following.
It seems that the Cftc is trying to reduce the amount that a trader
looses in the volatile forex market. I would like to counter with one
rational example. There are two traders both with $10,000 accounts
trader a is leveraged at 100:1 and trader b is at 200:1. Both traders
target 100pips and both limit there risk to 2% total account size.
Trader a buys 1 lot with a 20 pip stop loss trader b buys 1 lot with a
10 pip stop loss. The position goes against both and they are stopped
out. Trader a at 100:1 with 1 lot lost 20 pips at $10 per pip gives
him $200 of his total account. Trader b leveraged at 200:1 with 1 lot
lost 10 pips at $20 per pip gives him $200 of his total account. Both
traders are thus able to suffer 50 losses prior to there accounts
being at 0.
I would greatly appreciate a response from the cftc in letting me know
how trader b is at a higher risk the. Trader a. Keeping in mind that
many reputable brokers have guaranteed stop losses in place and
liquidate positions prior to account going negative. Also keeping in
mind that to keep it simple I did not include thr spread as the stop
loss can be adjusted to make sure that a set percent of the account is
still risked depending on what the spread is at the time.
Thank you,
Andy
