NFA Approves Prohibition of Credit Cards to Fund Retail FX
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thread: NFA Approves Prohibition of Credit Cards to Fund Retail FX

  1. #1

    NFA Approves Prohibition of Credit Cards to Fund Retail FX

    Http://www.businesswire.com/news/hom...d#.U6kYCrHyCM9

    CHICAGO--(http://www.businesswire.com/)--National Futures Association (NFA) announced that its Board accepted a ban on the use of credit cards to fund retail forex and futures accounts. This http://cts.businesswire.com/ct/CT?id...cda28f45c8c10d is subject to acceptance by the Commodity Futures Trading Commission. Although NFA's proposed rule prohibits the use of credit cards to fund both futures and retail forex accounts, NFA determined through its analysis that futures commission merchants currently don't permit this practice.

    Since our inception, NFA was committed to protecting shareholders, states NFA President and CEO Dan Roth. Forex and futures markets are equally high-risk and volatile, and individuals who would like to participate should use only risk capital to fund their own accounts. Allowing clients to fund accounts with credit cards encourages them to trade with borrowed money.

    This prohibition is a direct outcome of an extensive study by NFA of forex dealer members' business practices. NFA looked at more than 15,000 retail forex accounts also noted that an overwhelming amount of those accounts were financed by small retail clients utilizing a credit card or borrowed capital, and the majority of those accounts were unprofitable.

    Over the last ten years, NFA has made significant strides in its regulation of the retail forex markets, Roth says. From the increase in capital requirements to mandating content demands so that all clients could get comprehensive and accurate account info, this suggestion is merely one other very important step to satisfy our mission to protect clients.

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    Junior Member Izan's Avatar
    19
    Silly. People today use cards, because it's convenient.

    If a person wants to exchange with borrowed cash they'll do it no matter of financing practices. This has been case the with futures traders well before place FX trading became popular. Money is transferred from credit card to checking account first, then to some broker. If the cards really are that bad, ban their use in malls.

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    Junior Member Paulirmcf's Avatar
    17
    Oh, by the way, my unregulated offshore broker took every one of 46 minutes to process my withdrawal.

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    Junior Member Paulirmcf's Avatar
    17
    To take it one step further, why is it that anybody may withdrawal their lifetime savingsgo to Vegas, and place it all on black? There is nobody at the doorway to the casino saying what % of the net worth are you bringing in? Where did the funds come from? Etc, etc.. Oh wait, the authorities BENEFITS from Vegas. How come people can take their whole paycheck and go buy lottery tickets? However, it is considered more risky for me to take my $40 and parlay it into $840 in a matter of 15 hours, half of that while I slept. I don't have more than $100 on deposit at any broker, with 500:1 leverage, there is no need.

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    Junior Member Paulirmcf's Avatar
    17
    I've got something to say that may come as a revaluation to a number of you... If you trade forex- you're trading borrowed money no matter. It is called leverage. Thanks NFA for telling us how we can and cant spend/borrow our own money. Hopefully another rule all I have to do is hand them my money and they will trade it for me personally. Ridiculous.
    Surely, I keep saying it over and over- trade offshore, keep your account in your bank and just transfer what you need to trade. Last night I moved $40 to my offshore broker to market two mini lots of nzdjpy, I added two more once in profit and 3 more this morning. I simply withdrew $840. You simply can't do this at the united states.

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    Junior Member pohe05's Avatar
    12
    quote I think its quite relevant the majority were investing with borrowed cash. Can't afford to lose, snowballs to poor decisions and MM.
    Or, it snowballs in the Trader quitting all trading, more self-discipline, more study, more research, more learning and eventually trading skills that may give rise to a flight of funds out of a retail bucket shop, over to a prime broker on an institutional platform.

    It really all depends on the individual. Personally, I don't enjoy the idea of funding an FX account to get a novice or beginning Trader via a credit card. But a debit card could be an acceptable way to establish a small test account. That is what I do and it has worked for years. While I want to test something away from my creation platform and I want a true money environment, I roll over to a very small evaluation account financed with a debit card - quick and simple deposits.

    Finally, people have to take responsibility for their own trading outcomes - that's the most important thing. Government will attempt to regulate any type of human behaviour it could get its hands on - if The people today let it and too frequently, that's just what the People do.

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    Junior Member ferri8's Avatar
    23
    I have got something to say that may come as a revaluation to some of you...

    When you trade Currency Market - you are trading borrowed money regardless. It's called leverage.

    Thanks again NFA for telling us the way we can and spend/borrow our very own money. Hopefully another rule all I must do is hand them my cash and they will trade it for me personally. Ridiculous.

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    Hi Jason, Is the commission (percent ) the same for all currency pairs or does it change?
    Hello Fugly,

    You will find http://bit.ly/1v4cEOf*: 4 pennies (a 1k micro lot per side) for the most popular currency pairs, and 6 pennies for the rest.

    By way of instance, if you trade a 1k micro lot of EUR/USD, then with a 0.2 pip spread you would pay 2 cents in spread cost plus 8 cents in round turn commission (4 pennies per side). That is 10 cents in total transaction cost or one pip on a trade.

    On the other hand, if you trade a 1k micro lot of ZAR/JPY, then with a 0.5 pip spread you would pay 5 cents in spread cost plus 12 pennies in round turn commission (6 cents per side). That is 17 cents in total transaction cost or less than two pips on a 1k trade.


    * Listed commissions will not apply to some customer accounts because of their relationship with specific intermediaries.

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    Member Pan's Avatar
    52
    Hi Jason,

    Is the commission (percent ) the same for all currency pairs or does it vary?

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    before you know it there'll be one RFED left in the united states, FXCM and they will be charging astronomically substantial spreads to all customers.
    FXCM US currently offers http://bit.ly/1shNooZ and the mark-ups previously included in the distribute have been substituted with low commissions. These super tight new spreads are perfect for scalping and supply increased execution benefits to prevent and limit orders.


    * In some cases, accounts for clients of particular intermediaries are subject to a markup.

    Meaning when trading 10k of EUR/USD, you would pay 0.2 pips in spread price plus 80 cents in round turn commission (40 cents each facet ). That's $1 in total trade cost or one pip on a 10k trade, compared to our previous distribute of 2.5 pips. That's a 60% decrease in price.


    1 Recorded spreads and commissions will not apply to some customer accounts because of their relationship with specific intermediaries.

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