TheRegulator
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If you trade with australia broker regulation then leverage is the same 1:500
hmm interesting. I live in UK. I am pretty sure there some restriction for UK residents otherwise that a loop hole.
can you recommend any Aus broker that's offering account for UK residents so I can register. thanks.
Mr. Charts
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Hello Tom
Here's an observation I nicked from another forum. Under the ESMA rules, risk of a negative account balance has been eliminated. However, positive account balance remains unlimited.
Therefore, is it not now possible to play a strategy similar to a long straddle by maxing exposure to a market long on one account and short on another of identical size? Its always been possible to do this, but the downside risk was that the "losing" account could keep depreciating in the absence of NBP to a level below deposited funds. This risk has been eliminated by universal NBP.
I'd just like to understand why this is BS.
Therefore, is it not now possible to play a strategy similar to a long straddle by maxing exposure to a market long on one account and short on another of identical size? Its always been possible to do this, but the downside risk was that the "losing" account could keep depreciating in the absence of NBP to a level below deposited funds. This risk has been eliminated by universal NBP.
I'd just like to understand why this is BS.
barjon
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On the contrary it’s made matters worse since the “losing” account will be closed out when the loss reaches 50% of available margin instead of 5% (or whatever your broker used). This effectively closes the pair trade and just leaves you with the position in the “winning” account which may, or may not, be advantageous. In any event it’s no longer a pair trade.
For the pair trade to be in a winning position the “losing” account must always be losing less than the winning account is winning. Thus, if the “losing” account is down 50% of margin and the “winning” one is up 50% you would be dead flat and annoyed that your pair trade would be brought to a halt when you are net flat.
This is not a pair trade though jon, its a straddle. So the net effect of one trade winning is exactly off-set by the other losing until the loser is closed, leaving the winner free to continue its upward (or downward) price movement.
Yes, in theory the loser should be closed at the 50% margin line, but in practice it must be possible for losing positions to continue "live" beyond that point - I can't see how, maybe only during an event like the SNB decision in 2015 - but the inclusion of NBP in the new ESMA package argues that it can happen in practice. Else why require NBP?
Loss of more than the deposited account would be a significant risk to the aware trader but that risk is now gone. The implication is loss of downside risk must be balanced by gain in upside risk. A long straddle across two accounts is a theoretical route but may there be others?
Yes, in theory the loser should be closed at the 50% margin line, but in practice it must be possible for losing positions to continue "live" beyond that point - I can't see how, maybe only during an event like the SNB decision in 2015 - but the inclusion of NBP in the new ESMA package argues that it can happen in practice. Else why require NBP?
Loss of more than the deposited account would be a significant risk to the aware trader but that risk is now gone. The implication is loss of downside risk must be balanced by gain in upside risk. A long straddle across two accounts is a theoretical route but may there be others?
barjon
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Oh, ok. I was just thinking of pairs. The whole point of the 50% rule is to limit loss. As you say, I guess it can only continue beyond that point on slippage resulting from a fast black swan type event which could conceivably blow you right out of the water.
No, FXX, all you're hoping for is a dramatic movement away from current price, the more dramatic the better. If the move is not enough to cause closure of the losing side of the straddle, you've lost nothing barring the costs of opening two positions. With a simultaneous long and short of equal sizes, the loser is stopped out or closed by a margin call or whatever - but ESMA's NBP rule now means that if all closure mechanisms fail and price continues in its initial direction, you can still only lose your deposited funds from the losing account while the winner grows without restriction.
So is this a way to play an upcoming event that generates extraordinary volatility, like NFPR's?
I won't be doing this but someone will - why won't it work?
So is this a way to play an upcoming event that generates extraordinary volatility, like NFPR's?
I won't be doing this but someone will - why won't it work?
I just think it's one of those strategies that look good on paper but difficult to execute. Assuming you are referring to NFP, like all news the sentiment can change in a blink of an eye where you might have a super employment number but weakening wages. This sort of outcome happens fairly regularly and will whipsaw price to extremes in both directions. So you might just close the losing side only to realise that it would have become the winning side but now it's closed and you have doubled your losses.
counter_violent
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In theory it does work......but with most large directional moves comes increased volatility and it's that increased volatility that could kill both sides.
I contacted my broker and applied for professional status on the grounds that:
a) I spent several years working in the City, on equity funding systems, risk calculation & options.
b) I have made over 600 CFD trades in the previous 4 quarters. Well into 7 figs.
Nevertheless, I have been refused professional status.
Not really a game changer for me as I mainly trade stocks & have sufficient funds in the account, but just curious to know how others got on...
a) I spent several years working in the City, on equity funding systems, risk calculation & options.
b) I have made over 600 CFD trades in the previous 4 quarters. Well into 7 figs.
Nevertheless, I have been refused professional status.
Not really a game changer for me as I mainly trade stocks & have sufficient funds in the account, but just curious to know how others got on...
did they give you a reason why. you meet the 2 required of 3 criteria to become classified as one?
I would raise this with more senior people at the broker.My stupid now ex broker reduced my leverage to 2:1 and cited the first line in the margin breakdown as their proof (from 30:1 to 2:1). After taking it up with the CEO they corrected the mistake and gave me £100 but it was too late for them. Sounds to me like some mudflap doesn't know that you only need 2 of the 3 to be classed as pro.
IG (version)
"Trading experience: You must have placed 40 trades of significant size in the last year. Significant size is £10,000 notional for equity trades and £50,000 for everything else. Buying £10 of FTSE and then closing it counts as one single trade. You do not need to have made the trades with IG. "
https://www.ig.com/uk/help-and-supp...a-professional-client-and-how-do-i-become-one
I'm ineligible for pro status with my SB firm but I'm wondering about forward requirements in order to retain the pro account. These haven't been mentioned yet as far as I know but I wonder if as well as historic records provided on application, you will at some point need to submit more up to date evidence to keep this level of account? Like you still have a £500k portfolio, and you still run frequent significant trades? And what happens when your last involvement in the financial sector was 15 years ago, or 30, or 40?
