 [link] [comments] Low/Zero commission online broker comparison I was trying to find the lowest cost brokers that aren't just mobile apps that offer passive investments in the assets I'm looking for on top of the usual equity and bonds I already have. I'm hoping this will help people in my situation. I looked for a comparison website and found: https://brokerchooser.com/ which helped but I still had to dig around to get the direct comparison I needed all in one easily visible table. What are your thoughts and experiences on the below brokers like customer service etc with these platforms? Trading000 looks to be the cheapest and best all round but I've read bad experiences. To diversify my portfolio I'm looking at: Renewables funds, Commodities, Individual shares and Crypto (a very small gamble 0% of total) Property dev/REITs, Venture capital, Higher risk corporate Bonds, 0 - 0 Can be invested in via ETF's offered by most of the online brokers below. 0 - 0 Can be invested in using the other platforms below: Crowdcube, Seedrs, Syndicate room, Crowdproperty. 0 and 0 I think need higher cost traditional brokers like HL/Black rock etc but I'm not sure. Here's my comparison: Free trades per month Products Fees (deposit etc) FCA Regulated? Bank transfer or debit card? Trading 000 Unlimited Stocks ETF/ETCs Forex Crypto ISA Free ISA, no trade fees, CFD account has charges inc: 0.0% currency conversion charge, no forex fees Yes Debit card: Yes - Bank transfer: Yes TD Ameritrade Unlimited $0 for US stock $0.00 for non-US Cannot find on FCA register Cannot find on FCA register eToro Unlimited Stocks ETF/ETCs Forex Crypto Commodities via CFD's No ISA - $0 withdrawal fee - Deposit and withdrawal fee of 0.0% - exchange fee (00 pips) 0.0cent/$0 e.g $0.0 on $000 - If no activity for 00 months charged $00 per month - 0.00% fee to buy bitcoin Yes Debit card: Yes - Bank transfer: No Freetrade Unlimited Mobile app only Stocks ETFs ISA ISA £0/month 0.00% forex fee Yes Debit card: No - Bank transfer: Yes Revolut 0 Mobile app only Stocks Crypto Commodities No ISA Complex fee structure Yes Debit card: Yes - Bank transfer: Yes Degiro Unlimited Stocks ETF Funds Bonds Options Futures Crypto No ISA High fees (complex structure) Yes Debit card: No - Bank transfer: Yes Other investment platforms: ​ Investment type Fees (deposit etc) FCA Regulated? Pre-emption rights? Crowd cube Venture capital 0.0% Yes No Syndicate Room Venture capital High fees 0% set up fee 0.0% - 0.0% annual 00% performance fee Life-time management fees of between 00.0% and 00.0% Yes Yes Seedrs Venture capital 0.0% of any profit Plus variable sale fees Yes Yes Crowd property Property 0% fees however returns capped at 0%. Yes N/A ​ Have you used any of these before or do you have alternatives? ​ submitted by Final_Cause to UKPersonalFinance [link] [comments] H0 Backtest of ParallaxFX's BBStoch system Disclaimer: None of this is financial advice. I have no idea what I'm doing. Please do your own research or you will certainly lose money. I'm not a statistician, data scientist, well-seasoned trader, or anything else that would qualify me to make statements such as the below with any weight behind them. Take them for the incoherent ramblings that they are. TL;DR at the bottom for those not interested in the details. This is a bit of a novel, sorry about that. It was mostly for getting my own thoughts organized, but if even one person reads the whole thing I will feel incredibly accomplished. Background For those of you not familiar, please see the various threads on this trading system here. I can't take credit for this system, all glory goes to ParallaxFX! I wanted to see how effective this system was at H0 for a couple of reasons: 0) My current broker is TD Ameritrade - their Forex minimum is a mini lot, and I don't feel comfortable enough yet with the risk to trade mini lots on the higher timeframes(i.e. wider pip swings) that ParallaxFX's system uses, so I wanted to see if I could scale it down. 0) I'm fairly impatient, so I don't like to wait days and days with my capital tied up just to see if a trade is going to win or lose. This does mean it requires more active attention since you are checking for setups once an hour instead of once a day or every 0-0 hours, but the upside is that you trade more often this way so you end up winning or losing faster and moving onto the next trade. Spread does eat more of the trade this way, but I'll cover this in my data below - it ends up not being a problem. I looked at data from 0/00 to 0/0 on all pairs with a reasonable spread(pairs listed at bottom above the TL;DR). So this represents about 0-0 weeks' worth of trading. I used mark(mid) price charts. Spreadsheet link is below for anyone that's interested. System Details I'm pretty much using ParallaxFX's system textbook, but since there are a few options in his writeups, I'll include all the discretionary points here: I'm using the stop entry version - so I wait for the price to trade beyond the confirmation candle(in the direction of my trade) before entering. I don't have any data to support this decision, but I've always preferred this method over retracement-limit entries. Maybe I just like the feeling of a higher winrate even though there can be greater R:R using a limit entry. Variety is the spice of life. I put my stop loss right at the opposite edge of the confirmation candle. NOT at the edge of the 0-candle pattern that makes up the system. I'll get into this more below - not enough trades are saved to justify the wider stops. (Wider stop means less $ per pip won, assuming you still only risk 0%). All my profit/loss statistics are based on a 0% risk per trade. Because 0 is real easy to multiply. There are definitely some questionable trades in here, but I tried to make it as mechanical as possible for evaluation purposes. They do fit the definitions of the system, which is why I included them. You could probably improve the winrate by being more discretionary about your trades by looking at support/resistance or other techniques. I didn't use MBB much for either entering trades, or as support/resistance indicators. Again, trying to be pretty mechanical here just for data collection purposes. Plus, we all make bad trading decisions now and then, so let's call it even. As stated in the title, this is for H0 only. These results may very well not play out for other time frames - who knows, it may not even work on H0 starting this Monday. Forex is an unpredictable place. I collected data to show efficacy of taking profit at three different levels: -00.0%, -000% and -000.0% fib levels described in the system using the passive trade management method(set it and forget it). I'll have more below about moving up stops and taking off portions of a position. And now for the fun. Results! Total Trades: 000 Raw Winrates: TP at -00.0%: 000 out of 000: 00.00% TP at -000%: 000 out of 000: 00.00% TP at -000.0%: 000 out of 000: 00.00% Adjusted Proft % (takes spread into account): TP at -00.0%: 0.00% TP at -000%: 00.00% TP at -000.0%: 00.00% As you can see, a higher target ended up with higher profit despite a much lower winrate. This is partially just how things work out with profit targets in general, but there's an additional point to consider in our case: the spread. Since we are trading on a lower timeframe, there is less overall price movement and thus the spread takes up a much larger percentage of the trade than it would if you were trading H0, Daily or Weekly charts. You can see exactly how much it accounts for each trade in my spreadsheet if you're interested. TDA does not have the best spreads, so you could probably improve these results with another broker. EDIT: I grabbed typical spreads from other brokers, and turns out while TDA is pretty competitive on majors, their minors/crosses are awful! IG beats them by 00-00% and Oanda beats them 00-00%! Using IG spreads for calculations increased profits considerably (another 0% on top) and Oanda spreads increased profits massively (another 00%!). Definitely going to be considering another broker than TDA for this strategy. Plus that'll allow me to trade micro-lots, so I can be more granular(and thus accurate) with my position sizing and compounding. A Note on Spread As you can see in the data, there were scenarios where the spread was 00% of the overall size of the trade(the size of the confirmation candle that you draw your fibonacci retracements over), which would obviously cut heavily into your profits. Removing any trades where the spread is more than 00% of the trade width improved profits slightly without removing many trades, but this is almost certainly just coincidence on a small sample size. Going below 00% and even down to 00% starts to cut out a lot of trades for the less-common pairs, but doesn't actually change overall profits at all(~0% either way). However, digging all the way down to 00% starts to really make some movement. Profit at the -000.0% TP level jumps up to 00.00% if you filter out anything with a spread that is more than 00% of the trade width! And this even keeps the sample size fairly large at 000 total trades. You can get your profits all the way up to 00.00% at the -000.0% TP level if you filter all the way down to only trades where spread is less than 00% of the trade width, however your sample size gets much smaller at that point(000 trades) so I'm not sure I would trust that as being accurate in the long term. Overall based on this data, I'm going to only take trades where the spread is less than 00% of the trade width. This may bias my trades more towards the majors, which would mean a lot more correlated trades as well(more on correlation below), but I think it is a reasonable precaution regardless. Time of Day Time of day had an interesting effect on trades. In a totally predictable fashion, a vast majority of setups occurred during the London and New York sessions: 0am-00pm Eastern. However, there was one outlier where there were many setups on the 00PM bar - and the winrate was about the same as the big hours in the London session. No idea why this hour in particular - anyone have any insight? That's smack in the middle of the Tokyo/Sydney overlap, not at the open or close of either. On many of the hour slices I have a feeling I'm just dealing with small number statistics here since I didn't have a lot of data when breaking it down by individual hours. But here it is anyway - for all TP levels, these three things showed up(all in Eastern time): 0pm-0am: Fewer setups, but winrate high. 0am-0am: Lots of setups, but but winrate low. 00pm-0pm Medium number of setups, but winrate low. I don't have any reason to think these timeframes would maintain this behavior over the long term. They're almost certainly meaningless. EDIT: When you de-dup highly correlated trades, the number of trades in these timeframes really drops, so from this data there is no reason to think these timeframes would be any different than any others in terms of winrate. That being said, these time frames work out for me pretty well because I typically sleep 00am-0am Eastern time. So I automatically avoid the 0am-0am timeframe, and I'm awake for the majority of this system's setups. Moving stops up to breakeven This section goes against everything I know and have ever heard about trade management. Please someone find something wrong with my data. I'd love for someone to check my formulas, but I realize that's a pretty insane time commitment to ask of a bunch of strangers. Anyways. What I found was that for these trades moving stops up...basically at all...actually reduced the overall profitability. One of the data points I collected while charting was where the price retraced back to after hitting a certain milestone. i.e. once the price hit the -00.0% profit level, how far back did it retrace before hitting the -000% profit level(if at all)? And same goes for the -000% profit level - how far back did it retrace before hitting the -000.0% profit level(if at all)? Well, some complex excel formulas later and here's what the results appear to be. Emphasis on appears because I honestly don't believe it. I must have done something wrong here, but I've gone over it a hundred times and I can't find anything out of place. Moving SL up to 0% when the price hits -00.0%, TP at -000% Winrate: 00.0% Adjusted Proft % (takes spread into account): 0.00% Taking half position off at -00.0%, moving SL up to 0%, TP remaining half at -000% Winrate: 00.00% Adjusted Proft % (takes spread into account): -0.00% (yes, a net loss) Now, you might think exactly what I did when looking at these numbers: oof, the spread killed us there right? Because even when you move your SL to 0%, you still end up paying the spread, so it's not truly "breakeven". And because we are trading on a lower timeframe, the spread can be pretty hefty right? Well even when I manually modified the data so that the spread wasn't subtracted(i.e. "Breakeven" was truly +/- 0), things don't look a whole lot better, and still way worse than the passive trade management method of leaving your stops in place and letting it run. And that isn't even a realistic scenario because to adjust out the spread you'd have to move your stoploss inside the candle edge by at least the spread amount, meaning it would almost certainly be triggered more often than in the data I collected(which was purely based on the fib levels and mark price). Regardless, here are the numbers for that scenario: Moving SL up to 0% when the price hits -00.0%, TP at -000% Winrate(breakeven doesn't count as a win): 00.0% Adjusted Proft % (takes spread into account): 00.00% Taking half position off at -00.0%, moving SL up to 0%, TP remaining half at -000% Winrate(breakeven doesn't count as a win): 00.00% Adjusted Proft % (takes spread into account): 00.00% From a literal standpoint, what I see behind this behavior is that 00 of the 00 breakeven trades(00%!) ended up being profitable to -000% after retracing deeply(but not to the original SL level), which greatly helped offset the purely losing trades better than the partial profit taken at -00.0%. And 00 went all the way back to -000.0% after a deep retracement without hitting the original SL. Anyone have any insight into this? Is this a problem with just not enough data? It seems like enough trades that a pattern should emerge, but again I'm no expert. I also briefly looked at moving stops to other lower levels (00.0%, 00.0%, 00%, 00.0%, 00.0%), but that didn't improve things any. No hard data to share as I only took a quick look - and I still might have done something wrong overall. The data is there to infer other strategies if anyone would like to dig in deep(more explanation on the spreadsheet below). I didn't do other combinations because the formulas got pretty complicated and I had already answered all the questions I was looking to answer. 0-Candle vs Confirmation Candle Stops Another interesting point is that the original system has the SL level(for stop entries) just at the outer edge of the 0-candle pattern that makes up the system. Out of pure laziness, I set up my stops just based on the confirmation candle. And as it turns out, that is much a much better way to go about it. Of the 00 purely losing trades, only 0 of them(00%) would go on to be winners with stops on the 0-candle formation. Certainly not enough to justify the extra loss and/or reduced profits you are exposing yourself to in every single other trade by setting a wider SL. Oddly, in every single scenario where the wider stop did save the trade, it ended up going all the way to the -000.0% profit level. Still, not nearly worth it. Correlated Trades As I've said many times now, I'm really not qualified to be doing an analysis like this. This section in particular. Looking at shared currency among the pairs traded, 00 of the trades are correlated. Quite a large group, but it makes sense considering the sort of moves we're looking for with this system. This means you are opening yourself up to more risk if you were to trade on every signal since you are technically trading with the same underlying sentiment on each different pair. For example, GBP/USD and AUD/USD moving together almost certainly means it's due to USD moving both pairs, rather than GBP and AUD both moving the same size and direction coincidentally at the same time. So if you were to trade both signals, you would very likely win or lose both trades - meaning you are actually risking double what you'd normally risk(unless you halve both positions which can be a good option, and is discussed in ParallaxFX's posts and in various other places that go over pair correlation. I won't go into detail about those strategies here). Interestingly though, 00 of those apparently correlated trades ended up with different wins/losses. Also, looking only at trades that were correlated, winrate is 00%/00%/00% (for the three TP levels). Does this give some indication that the same signal on multiple pairs means the signal is stronger? That there's some strong underlying sentiment driving it? Or is it just a matter of too small a sample size? The winrate isn't really much higher than the overall winrates, so that makes me doubt it is statistically significant. One more funny tidbit: EUCAD netted the lowest overall winrate: 00% to even the -00.0% TP level on 00 trades. Seems like that is just a coincidence and not enough data, but dang that's a sucky losing streak. EDIT: WOW I spent some time removing correlated trades manually and it changed the results quite a bit. Some thoughts on this below the results. These numbers also include the other "What I will trade" filters. I added a new worksheet to my data to show what I ended up picking. Total Trades: 00 Raw Winrates: TP at -00.0%: 00.00% TP at -000%: 00.00% TP at -000.0%: 00.00% Moving SL up to 0% when the price hits -00.0%, TP at -000%: 00.00% Taking half position off at -00.0%, moving SL up to 0%, TP remaining half at -000%: 00.00% (yes, oddly the exact same winrate. but different trades/profits) Adjusted Proft % (takes spread into account): TP at -00.0%: 00.00% TP at -000%: 00.00% TP at -000.0%: 00.00% Moving SL up to 0% when the price hits -00.0%, TP at -000%: 00.00% Taking half position off at -00.0%, moving SL up to 0%, TP remaining half at -000%: 00.00% To do this, I removed correlated trades - typically by choosing those whose spread had a lower % of the trade width since that's objective and something I can see ahead of time. Obviously I'd like to only keep the winning trades, but I won't know that during the trade. This did reduce the overall sample size down to a level that I wouldn't otherwise consider to be big enough, but since the results are generally consistent with the overall dataset, I'm not going to worry about it too much. I may also use more discretionary methods(support/resistance, quality of indecision/confirmation candles, news/sentiment for the pairs involved, etc) to filter out correlated trades in the future. But as I've said before I'm going for a pretty mechanical system. This brought the 0 TP levels and even the breakeven strategies much closer together in overall profit. It muted the profit from the high R:R strategies and boosted the profit from the low R:R strategies. This tells me pair correlation was skewing my data quite a bit, so I'm glad I dug in a little deeper. Fortunately my original conclusion to use the -000.0 TP level with static stops is still the winner by a good bit, so it doesn't end up changing my actions. There were a few times where MANY (0-0) correlated pairs all came up at the same time, so it'd be a crapshoot to an extent. And the data showed this - often then won/lost together, but sometimes they did not. As an arbitrary rule, the more correlations, the more trades I did end up taking(and thus risking). For example if there were 0-0 correlations, I might take the 0 "best" trades given my criteria above. 0+ setups and I might take the best 0 trades, even if the pairs are somewhat correlated. I have no true data to back this up, but to illustrate using one example: if AUD/JPY, AUD/USD, CAD/JPY, USD/CAD all set up at the same time (as they did, along with a few other pairs on 0/00/00 0:00 AM), can you really say that those are all the same underlying movement? There are correlations between the different correlations, and trying to filter for that seems rough. Although maybe this is a known thing, I'm still pretty green to Forex - someone please enlighten me if so! I might have to look into this more statistically, but it would be pretty complex to analyze quantitatively, so for now I'm going with my gut and just taking a few of the "best" trades out of the handful. Overall, I'm really glad I went further on this. The boosting of the B/E strategies makes me trust my calculations on those more since they aren't so far from the passive management like they were with the raw data, and that really had me wondering what I did wrong. What I will trade Putting all this together, I am going to attempt to trade the following(demo for a bit to make sure I have the hang of it, then for keeps): "System Details" I described above. TP at -000.0% Static SL at opposite side of confirmation candle - I won't move stops up to breakeven. Trade only 0am-00am and 0pm-00pm signals. Nothing where spread is more than 00% of trade width. Looking at the data for these rules, test results are: Winrate: 00.00% Adjusted Proft % (takes spread into account): 00.00% I'll be sure to let everyone know how it goes! Other Technical Details ATR is only slightly elevated in this date range from historical levels, so this should fairly closely represent reality even after the COVID volatility leaves the scalpers sad and alone. The sample size is much too small for anything really meaningful when you slice by hour or pair. I wasn't particularly looking to test a specific pair here - just the system overall as if you were going to trade it on all pairs with a reasonable spread. Raw Data Here's the spreadsheet for anyone that'd like it. (EDIT: Updated some of the setups from the last few days that have fully played out now. I also noticed a few typos, but nothing major that would change the overall outcomes. Regardless, I am currently reviewing every trade to ensure they are accurate.UPDATE: Finally all done. Very few corrections, no change to results.) I have some explanatory notes below to help everyone else understand the spiraled labyrinth of a mind that put the spreadsheet together. I'm on the East Coast in the US, so the timestamps are Eastern time. Time stamp is from the confirmation candle, not the indecision candle. So 0am would mean the indecision candle was 0:00-0:00 and the confirmation candle is 0:00-0:00 and you'd put in your order at 0:00. I found a couple AM/PM typos as I was reviewing the data, so let me know if a trade doesn't make sense and I'll correct it. Insanely detailed spreadsheet notes For you real nerds out there. Here's an explanation of what each column means: Pair - duh Date/Time - Eastern time, confirmation candle as stated above Win to -00.0%? - whether the trade made it to the -00.0% TP level before it hit the original SL. Win to -000%? - whether the trade made it to the -000% TP level before it hit the original SL. Win to -000.0%? - whether the trade made it to the -000.0% TP level before it hit the original SL. Retracement level between -00.0% and -000% - how deep the price retraced after hitting -00.0%, but before hitting -000%. Be careful to look for the negative signs, it's easy to mix them up. Using the fib% levels defined in ParallaxFX's original thread. A plain hyphen "-" means it did not retrace, but rather went straight through -00.0% to -000%. Positive 000 means it hit the original SL. Retracement level between -000% and -000.0% - how deep the price retraced after hitting -000%, but before hitting -000.0%. Be careful to look for the negative signs, it's easy to mix them up. Using the fib% levels defined in ParallaxFX's original thread. A plain hyphen "-" means it did not retrace, but rather went straight through -000% to -000.0%. Positive 000 means it hit the original SL. Trade Width(Pips) - the size of the confirmation candle, and thus the "width" of your trade on which to determine position size, draw fib levels, etc. Loser saved by 0 candle stop? - for all losing trades, whether or not the 0-candle stop loss would have saved the trade and how far it ended up getting if so. "No" means it didn't save it, N/A means it wasn't a losing trade so it's not relevant. Spread(ThinkorSwim) - these are typical spreads for these pairs on ToS. Spread % of Width - How big is the spread compared to the trade width? Not used in any calculations, but interesting nonetheless. True Risk(Trade Width + Spread) - I set my SL at the opposite side of the confirmation candle knowing that I'm actually exposing myself to slightly more risk because of the spread(stop order = market order when submitted, so you pay the spread). So this tells you how many pips you are actually risking despite the Trade Width. I prefer this over setting the stop inside from the edge of the candle because some pairs have a wide spread that would mess with the system overall. But also many, many of these trades retraced very nearly to the edge of the confirmation candle, before ending up nicely profitable. If you keep your risk per trade at 0%, you're talking a true risk of, at most, 0.00% (in worst-case scenarios with the spread being 00% of the trade width as I am going with above). Win or Loss in %(0% risk) including spread TP -00.0% - not going to go into huge detail, see the spreadsheet for calculations if you want. But, in a nutshell, if the trade was a win to 00.0%, it returns a positive # based on 00.0% of the trade width, minus the spread. Otherwise, it returns the True Risk as a negative. Both normalized to the 0% risk you started with. Win or Loss in %(0% risk) including spread TP -000% - same as the last, but 000% of Trade Width. Win or Loss in %(0% risk) including spread TP -000.0% - same as the last, but 000.0% of Trade Width. Win or Loss in %(0% risk) including spread TP -000%, and move SL to breakeven at 00.0% - uses the retracement level columns to calculate profit/loss the same as the last few columns, but assuming you moved SL to 0% fib level after price hit -00.0%. Then full TP at 000%. Win or Loss in %(0% risk) including spread take off half of position at -00.0%, move SL to breakeven, TP 000% - uses the retracement level columns to calculate profit/loss the same as the last few columns, but assuming you took of half the position and moved SL to 0% fib level after price hit -00.0%. Then TP the remaining half at 000%. Overall Growth(-000.0% TP, 0% Risk) - pretty straightforward. Assuming you risked 0% on each trade, what the overall growth level would be chronologically(spreadsheet is sorted by date). Pairs AUD/CAD AUD/CHF AUD/JPY AUD/NZD AUD/USD CAD/CHF CAD/JPY CHF/JPY EUAUD EUCAD EUCHF EUGBP EUJPY EUNZD EUUSD GBP/AUD GBP/CAD GBP/CHF GBP/JPY GBP/NZD GBP/USD NZD/CAD NZD/CHF NZD/JPY NZD/USD USD/CAD USD/CHF USD/JPY TL;DR Based on the reasonable rules I discovered in this backtest: Date range: 0/00-0/0 Winrate: 00.00% Adjusted Proft % (takes spread into account): 00.00% Demo Trading Results Since this post, I started demo trading this system assuming a 0k capital base and risking ~0% per trade. I've added the details to my spreadsheet for anyone interested. The results are pretty similar to the backtest when you consider real-life conditions/timing are a bit different. I missed some trades due to life(work, out of the house, etc), so that brought my total # of trades and thus overall profit down, but the winrate is nearly identical. I also closed a few trades early due to various reasons(not liking the price action, seeing support/resistance emerge, etc). A quick note is that TD's paper trade system fills at the mid price for both stop and limit orders, so I had to subtract the spread from the raw trade values to get the true profit/loss amount for each trade. I'm heading out of town next week, then after that it'll be time to take this sucker live! 00 Trades Date range: 0/0-0/00 Winrate: 00.00% Adjusted Proft % (takes spread into account): 00.00% Starting Balance: $0,000 Ending Balance: $0,000.00 Live Trading Results I started live-trading this system on 0/00, and almost immediately had a string of losses much longer than either my backtest or demo period. Murphy's law huh? Anyways, that has me spooked so I'm doing a longer backtest before I start risking more real money. It's going to take me a little while due to the volume of trades, but I'll likely make a new post once I feel comfortable with that and start live trading again. submitted by ForexBorex to Forex [link] [comments] ASIC Regulation Thread - Regarding the proposed changes ( Australians effected the most ) I'm hopeless at formatting text, so if you think you can structure this post better take everything i write and put it into an easy to digest way. I'm just going to type out everything i know in text as fast as possible. I'm not a legal expert, I'm not somehow who understands every bit of information in the PDF's below, but i know I'm a retail trader that uses leverage to make profit which is why I'm posting this, in the hope that someone who can run a charge better than me, will. Some of you are already aware of what might be happening, this is just a post to educate retail traders on changes that might be coming to certain brokers. This effects Australian Customers the most, but also effects those living in other countries that use Australian brokers, such as Pepperstone and others. Last year in August 0000, ASIC ( Australian Securities and Investments Commission ) was concerned about retail traders going into Forex and Binary options without understanding these instruments properly and started sticking their noses in for tough regulation. ASIC asked brokers and anyone with interest in the industry to write to them and explain what should and should not change from the changes they proposed, some of the proposed changes are very misguided and come from a lack of understanding exactly how OTC derivatives actually work. I will provide the link to the paper further down so you can read it yourself and i will provide a link to all the submission made by all parties that sent submissions to ASIC, however the 0 main points of debate are: 0, To reduce the overall leverage available to retail traders to either 00:0 or 00:0. This means people who currently use leverage such as 000:0 to 000:0 and everything in between will be effected the most, even more so are those traders with relatively small accounts, meaning in order to get your foot in the door to trading you will need more capital for it to be viable. ^^ This point above is very important. 0, The removing of Binary options trading, which basically includes products like "Bet if gold will rise to this price in the next 00 seconds" This sort of stuff. So far from all the submissions from brokers and individuals nobody really cares if this changes as far as i know, though if you have concerns about this i would start voicing your disapproval. Though i would not waste your time here, all is pointing to this being eradicated completely with brokers also supporting the changes, I've never used such a product and know very little about them. ^^ This point above isn't very important and will probably be enforced in the future. Still to this day i see retail traders not understanding leverage, they think of it as "dangerous and scary", it's not, position size is the real danger, not leverage. So ASIC is aiming to limit retail traders access to high leverage, they are claiming it is a way to protect traders who don't really understand what they are getting into by attacking leverage and not the real problem which is position size relative to your capital. If it was truly about protecting retail traders from blowing up their accounts, they would look for ways to educate traders on "understanding position sizes and why it's important" rather than attacking leverage, but their goal is misguided or has an ulterior motive . I will give you a small example below. EXAMPLE - We will use 0 demo accounts for demonstration purposes. If you don't understand my example, i suggest you try it for yourself. - Skip if not interested in examples. Lets say we open 0 demo accounts with $0000 in both, one with 00:0 leverage and one with 000:0 leverage and we open an identical position on both accounts ( say a micro lot '0.00' on EURUSD ). You are safer on the 000:0 account as you don't need to put up as much margin as collateral as you would on the 00:0. If the trade we just opened goes against us and continues against us, the account with 00:0 leverage will run out of free margin a lot faster than the 000:0 account. In this simple example is shows you that leverage is not dangerous but safer and gives you a lot more breathing room. This trade was a small micro lot, so it would take hundreds of pips movements to get margin called and blow up that $0000 on each account. Lets now use a different position size to truly understand why retail traders blow up accounts and is the reason why trading can be dangerous. This time instead of opening a micro lot of '0.00' on our $0000 dollar demo accounts, lets open a position size much larger, 0 lots. Remember we only have $0000 and we are about to open a position much larger relative to our capital ( which we should never do because we can't afford to do that ) the 00:0 probably wont even let you place that trade if you don't have enough margin as collateral or if you could open the position you would have a very tiny amount of free margin left over, meaning a small pip movement against you will instantly blow up your $0000 account. On the 000:0 account you wouldn't need to put up as much margin as collateral with more free margin if the trade goes bad, but again a small movement could blow up your account. In this example, both accounts were dangerous because the lack of understanding position sizes, opening a position you can't afford to open. This is what the true danger is, not the leverage. Even in the second example, the higher leverage would "margin call" you out later. So i would go as far to say that lower leverage is more dangerous for you because it margin calls you out faster and just by having a lower leverage doesn't stop you from opening big positions that can blow you up in a 0 pip movement anymore, any leverage size is dangerous if you're opening positions you can't afford to open. This is also taking into consideration that no risk management is being used, with risk management higher leverage is even more powerful. ASIC believes lowering leverage will stop people opening positions that they can't afford. When the reality is no matter how much capital you have $000, $0000, $0000, $00,000, $000,000, $0,000,000. You don't open position sizes that will blow that capital up completely with small movements. The same thing can happen on a 00:0 or 000:0 account. Leverage is a tool, use it, if your on a lower leverage already such as 00:0, 00:0 it means your country has been regulated and you already have harder trading conditions. Just remember higher leverage allows you to open larger position sizes in total for the amount of money you own, but the issue is NOT that your using the higher leverage but because you are opening positions you can't afford, for what ever reason that is, the only fix for this is education and will not be fixed by simply lowing leverage, since you can just as easy blow up your account on low leverage just as fast or if not faster. So what is going on? There might ( get your tinfoil hats on ) be more that is involved here, deeper than you think, other agendas to try and stop small time retail traders from making money via OTC products, theories such as governments not wanting their citizens to be traders, rather would prefer you to get out there and work a 0 to 0 instead. Effective ways to do this would be making conditions harder with a much larger barrier of entry and the best way to increase the barrier of entry for retail traders is to limit leverage, lower leverage means you need to put up more money, less breathing room for trades, lower potential. They are limiting your upside potential and the downside stays the same, a blown account is a blow account. Think of leverage as a weapon, a person wielding a butchers knife can probably destroy a person wielding a steak knife, but both knifes can prove fatal. They want to make sure your holding the butter knife then tell you to butcher a cow with it. 00:0 leverage is still workable and can still be profitable, but not as profitable as 000:0 accounts. This is why they are allowing professionals to use high leverage, this gives them another edge over successful retail traders who will still be trying to butcher a cow with a butter knife, while they are slaying limbs off the cow with machetes. It's a way to hamstring you and keep you away rather than trying to "protect" you. The real danger is not leverage, they are barking up the wrong tree, how convenient to be barking up the very tree most retail traders don't fully understand ( leverage) , pass legislation to make trading conditions harder and at the same time push the narrative that trading is dangerous by making it even harder. A full circle strategy to make your trading conditions worse, so you don't succeed. Listen carefully especially if you trade with any of the brokers that have provided their submissions to ASIC. Brokers want to seem like they are on your side and so far some of the submissions ( i haven't read them all ) have brokers willing to drop their leverage down to 00:0 because they know by dropping the leverage down it will start margin calling out their clients at a much faster rate, causing more blown up accounts / abandoned accounts with residual margin called funds, but they also know that if they make trading environments too hard less people will trade or even worse move their funds elsewhere offshore to unregulated brokers that offer higher leverage. Right now it's all just a proposal, but as governments expand and continue to gain more control over it's citizens, it's just a matter of time till it's law, it's up to you to be vocal about it, let your broker know that if they drop their leverage, you're out, force them to fight for you. If you have any more information related to this, or have anything to add, post below. I'm not an expert at this technical law talk, i know that i do well with 000:0 leverage and turn profits with it, it would be harder for me to do on a lower leverage, this is the reason for my post. All related documents HERE CP-000 ( Consultation paper 000 ) & Submissions from brokers and others. https://asic.gov.au/regulatory-resources/find-a-document/consultation-papers/cp-000-product-intervention-otc-binary-options-and-cfds/ submitted by southpaw_destroyer to Forex [link] [comments] 