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14 Comments

  1. david anderson-Reply
    March 30, 2018 at 10:15 am

    Hi Charlie
    What is your view on what will happen after we leave Europe. ESMA only have jurisdiction within the European Union.
    Happy Easter.

    • Charlie Burton-Reply
      March 30, 2018 at 11:25 am

      Once the ruling is in it’s unlikely it would be reversed. Globally regulators are all looking at leverage so I suspect ultimately everyone will have similar rules. Anyway it’s not really a problem for traders using normal risk anyway…
      Charlie

  2. val-Reply
    March 30, 2018 at 9:40 pm

    thank for info, very helpfull

  3. Marco-Reply
    March 31, 2018 at 8:25 am

    I think ESMA want to extremely reduce day trading, you took 50 pips stop loss as an example but day trading we don’t use such larger stop losses and you don’t use those either if not for swings.
    With tight SL (15-20 pips) and risking only 1% of equity, you can open only 3 positions at the same time because this requires more than 90% of balance for margin.
    If you want to open 2 positions, 15-20 pips SL and risking 2% each (to me still a manageable thing), you simply CANNOT because it requires 110% of your equity to do so.
    That’s a bit exaggerated.

    • Charlie Burton-Reply
      March 31, 2018 at 9:00 am

      Hi Marco, I’m not sure your figures are correct…

      Charlie

      • Marco-Reply
        March 31, 2018 at 11:47 am

        YOUR EXAMPLE
        10.000 USD account
        risk 1%= 100 USD
        stop loss 50 pips -> position size required 2 mini (2 USD a pip)
        MARGIN 3.33%*2*10.000= 666 USD (>5% of your equity)

        EXAMPLE 1)
        5.000 USD account.
        risk 2% = 100 USD
        stop loss 15 pips -> position size required 7 mini (about 7 USD a pip)
        MARGIN 3.33%*7*10.000= 2.330 USD (>50% of your equity)

        EXAMPLE 2)
        100.000 USD account
        risk 2%= 2000 USD
        stop loss 10 pips -> position size required 20 standard (200 USD a pip)
        MARGIN 3.33%*20*100.0000=66.600 (>60% of your equity)

        • Charlie Burton-Reply
          April 1, 2018 at 6:57 am

          Yes I see what you’re saying Marco but people shouldn’t be trading at 2% risk on a 100k account with a 10 pip stop so that’s very unrealistic. Most intraday stops are 15 pips minimum and most traders are trading at 1% risk plus most take one day trade at a time so would be fine even if they were trading at 2%. but yes for a few who trade at that risk level but want to be in more than one position then it would be.

          But maybe its a good thing to have the majority trading closer to 1% than 2% anyway…

          • Marco-
            April 1, 2018 at 9:13 am

            That’s true, I was just noticing that the margin requirements exploded if you compare them to actual ones for those who love higher risks.
            If you stick to a more conservative money management policy with no more than 3-4% at risk at the same time and/or not in too speculative trades (less than 15 pips stop loss), then yeah, you’ll be fine even with new 1:30 leverage.
            One thing is sure: pure aggressive scalpers are going to disappear.

          • Charlie Burton-
            April 1, 2018 at 5:17 pm

            Yes but they were the reason this came in!

            Yes most traders will be ok…

  4. Tim-Reply
    March 31, 2018 at 9:17 am

    That’s great Charlie, thanks. That explains margin requirements perfectly. But what about leverage? Doesn’t the reduction in leverage mean it’ll be harder to make money? Won’t each suddesful trade yield much less profit from July?

    • Charlie Burton-Reply
      March 31, 2018 at 10:10 am

      No as if you only risk 1-2% per trade you still have more than enough leverage so you wont see any difference…

  5. Dai-Reply
    March 31, 2018 at 10:08 am

    Morning Charlie,

    This has been a long time coming,I’ve lost a lot of money over the years on my path to becoming a profitable trader,the fact that brokerages just let people pour money into they’re pockets time after time has been absolutely disgusting…I was doing it for years and almost reached breaking point,brokerages should have a breaking mechanism in place to recognise people are just simply failing and put a stop to it..one thing is for sure,had these margin requirements been in place when I first started I would have a lot more money to trade with because it would have slowed my trading right down and forced me into staying in positions,the regulator is simply not effecting real traders here,it is only gonna help the “learning trader”.

    This will certainly slow the poor “learner traders” from chucking they’re weekly wages down the shoot unless they have a 3rd party to give them capital. …….It could be time to short the likes of IG,I will apply my strategy haha!!

    Thanks to you and Kym,I’ve formulated a strategy that’s high probability and good risk reward,I’ve combined elements of the power of 3 to work with elements of MBT.

    Now I just need to find a way of getting some money back from my brokerage.

    Thanks Charlie and Kym.

    P.S.

    I’m not sharing my trading strategy,you will have to pay £1,350 for it haha!!

  6. Kolan Wilson-Reply
    March 31, 2018 at 11:27 pm

    Thanks Charlie your insights are always greatly appreciated and provide much to learn from

  7. Brian-Reply
    April 2, 2018 at 10:20 am

    Hello Charlie

    The dealers have themselves to blame, with irresponsible advertising aimed at gamblers and novices eg ” you could be trading FX in 5 minutes from now”, ads on football shirts and so on, Also, low margins are included in the ads, I have one on screen right now from on of the large SB companies ( not IG!), these will attract the £500 new traders who will lose their money.

    Short IG shares ?

    Thanks for explaining this during your Easter break, hope your family do not mind !

    Regards,, Brian

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