Comment Text:
i0-001
COMMENT
CL-00620
From:
Sent:
To:
Subject:
Michael Caplin
Tuesday, January 19, 2010 1:48 PM
secretary
Regulation of Retail Forex RIN 3038-AC61
Dear Sirs;
I have been a small trader in the forex market 6 or 7 years. It is a passion of mine, I make money at it. I am a
union man. Raising the capital requirements by reducing leverage to 10-to-1 will put me and many others out of
business. With jobs so scarce, why would we willing put many small traders who depend on the income from this
opportunity out of business? We have given away so many manufacturing jobs, construction will likely never be
the same again, people like me are counting on making a living at trading. Please don't pull the rug out from
under us. I would hate to have to move to an offshore broker. Really good rules closing registration loopholes
won't matter so much if there aren't any US forex businesses left to register.
Let's do some math. Suppose you have just over $10,000 in your account. Let's ignore spread for a moment to
simplify the math. Under 10:1, you can open only 1 lot. That's $100,000 of an xxxUSD pair. If it goes a few pips
against you, then there's not enough money in your account and your broker could give you a margin call. If it
goes 50 pips in your favor and you move your SL to breakeven (thus, your current risk is only your profit and
nothing else assuming your broker is good at honoring ~) or even to +10 pips (thus locking in $100 profit and
having your only risk be $400 of your profit), you won't have enough money to open a second lot (or even a single
minilot) if you want to scale into a good position.
Using tight risk management as I've described elsewhere (1% of account balance) and a 20 pip stop, you should
be able to place a single trade for 5 minilots in a $10,000 account. Under 10:1, you would be able to open (at
most) a second position. Even if you have profit locked in, you wouldn't be able to open a third position for this
amount..
Please do not implement this 10-1 position.
Regards,
Michael Caplin
