Comment Text:
i0-001
COMMENT
CL-08831
From:
Sent:
To:
Subject:
Talvin Poole
Monday, March 22, 2010 6:31 AM
secretary
Regulation of Retail Forex
To the CFTC in regard to the proposed leverage requirements for forex trading.
RIN 3038-AC61
Hello,
I want to start this email by stating that I have been trading Forex for 5 years now. Prior to that I spent
the preceding 5 years researching, studying, and practicing (via demo accounts) Forex Trading and continue this
practice to the present day. During my 5 years of actual trading I have only had to switch brokers once and that
was due to the failure of RefcoFX. I currently have an account with GFT Forex. I have traded using leverage as low
as 200:1 and as high as 400:1 and have found through my experience that the only difference between the amount
of leverage utilized was the amount of capital I had to put up to enter and maintain a trade. Based on the strategy/
system that I have developed and employ, my risk stayed the same. In essence, my system generates a signal of
when to get in and when to get out. And while it's not perfect, it's my system that protects me from large losses
and allows me to profit, not the use of lower leverage. Last November, my broker informed me that due to new
CFTC requirements, the maximum amount of leverage I would be able to use would be 100: 1. For me, this meant
that I had to put up 4x the amount of money to trade with the potential to earn less profit. However, my risk has
actually increased because I have to put more money at risk to make (at best) less money for the same type of
trade. Although extremely inconvenient, I was able to adjust my system to deal with this disadvantage. With your
latest proposal, traders like myself will have to put up 10x the amount of money (on top of the previous
requirement) just to trade (at best) with even greater risk (more exposure) and even less profit expectation.
Now I understand the need for protection for what I call the casual investor/trader and I believe that is the intent of
the proposal. Instead of reducing leverage for everyone that trades forex, why not give the choice to the individual
investor/trader? Why not require new accounts to have a default setting for leverage at 10: 1, and if a trader feels
confident they can trade using more leverage, have the option to request from their broker a higher ratio up to
100: 1? In this way, there is still the (perceived) protection for the casual (or inexperienced) trader without hurting
the business of the professional (or more experienced) trader? In any case, all I ask is that you not pass a proposal
that will not protect any trader but cause more harm to those traders that are experienced and took the time to
learn how to trade before trading their own money.
Best regards and thank you for your time.
Sincerely,
Talvin E. Poole Jr.
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