I was a little bit shocked and surprised when a customer sent me an email earlier today regarding a new regulation that will be taking effect on July 31, 2009 that forbids the use of Stoploss and other limit orders on US forex broker accounts. After reading a lot more on the subject I realized that apparently only FXCM has issued a warning to their customers telling them that they will be unable to use these type of orders from July 31. What does the regulation exactly do and what can you do to protect yourself and your automated trading system ?
Well, as I said before the regulation prevents you from assigning any stoploss or takeprofit levels to your orders, that is, you cannot issue any pending orders with these values or place these values on existing trades. This means that in order to avoid risk, if you are manually trading, you are required to stay in front of the screen a longer amount of time. Expert advisors can also emulate the stoploss and take profit values simply by closing orders at predetermined price levels calculated by their logic but this is quiet risky and requires you to have an extremely reliable internet connection (that is, you need a very robust vps) because a failure to do so may leave your account opened to terrible loss levels and unmanaged risk.
What options do you have ? You can either migrate to a non-US broker and continue trading in the same fashion, you can simply use expert advisors to manage your stop loss and take profit levels (if you are manually trading) or you can modify your current expert advisors if you are auto trading so that they too can emulate and manage your orders according to the takeprofit and stoploss levels.
As retarted as this regulation may sound, it does provide a safer trading level for traders in that it absolutely prevents the ability of brokers to stop hunt trading positions and thus eliminates whatever influence brokers may be having in price, that is, it eliminates the artificial movements some brokers may be creating in order to make trades reach stop loss levels. This will probably make the market easier to trade on US brokers with the added pain of having to manage your risk in alternative fashions. Nonetheless, these brokers will lose a fairly good amount of their customers to off shore brokerages.
As far as my expert advisors go, I will modify the god's gift ATR to comply with the rule and use an internal mechanism to close orders according to stoploss and takeprofit values. Other expert advisor creators should do the same in order to maintain their systems at a good level. What do you think, will you adapt or migrate ?
If you would like to learn more about the god's gift ATR and other expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article!
Well, as I said before the regulation prevents you from assigning any stoploss or takeprofit levels to your orders, that is, you cannot issue any pending orders with these values or place these values on existing trades. This means that in order to avoid risk, if you are manually trading, you are required to stay in front of the screen a longer amount of time. Expert advisors can also emulate the stoploss and take profit values simply by closing orders at predetermined price levels calculated by their logic but this is quiet risky and requires you to have an extremely reliable internet connection (that is, you need a very robust vps) because a failure to do so may leave your account opened to terrible loss levels and unmanaged risk.
What options do you have ? You can either migrate to a non-US broker and continue trading in the same fashion, you can simply use expert advisors to manage your stop loss and take profit levels (if you are manually trading) or you can modify your current expert advisors if you are auto trading so that they too can emulate and manage your orders according to the takeprofit and stoploss levels.
As retarted as this regulation may sound, it does provide a safer trading level for traders in that it absolutely prevents the ability of brokers to stop hunt trading positions and thus eliminates whatever influence brokers may be having in price, that is, it eliminates the artificial movements some brokers may be creating in order to make trades reach stop loss levels. This will probably make the market easier to trade on US brokers with the added pain of having to manage your risk in alternative fashions. Nonetheless, these brokers will lose a fairly good amount of their customers to off shore brokerages.
As far as my expert advisors go, I will modify the god's gift ATR to comply with the rule and use an internal mechanism to close orders according to stoploss and takeprofit values. Other expert advisor creators should do the same in order to maintain their systems at a good level. What do you think, will you adapt or migrate ?
If you would like to learn more about the god's gift ATR and other expert advisors please consider buying my ebook on automated trading or subscribing to my weekly newsletter to receive updates and check the live and demo accounts I am running with several expert advisors. I hope you enjoyed the article!
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1 comment:
Hi Daniel,
Would you be able to also include your modified version of God's Gift ATR EA in the new version Ebook that will released on the 19th July?
Thanks
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