Comment Text:
i0-001
COMMENT
CL-03732
From:
Sent:
To:
Subject:
Attach:
Roy Halpin
secretary
'Regulation of Retail Forex' Leave leverage alone
Roy Halpin.vcf
David Stawick, Secretary Commodity
Futu res Trading Commission 1155 21 st Street, N .W.,
Washington, DC 20581
Re: CFTC 1:10 Forex Leverage Proposal.
As I read it, the CFTC 1:10 Forex Leverage Proposal in MISGU IDED. 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.
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 Investm ent RIS K EXPOSU RE the trader is entitled to trade $10,000.00 worth of currencies.
At the proposed 1:10 leverage, the trader is entitled to trade TH E SAME $10,000.00 worth of currencies but his/her out of pocket Capital Investment RISK EXPOSU RE is increased $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 terdbly misguided or worse.
How would the retail trader's EXPOSU RE 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 EXPOSU RE 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'.
Report t
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