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12 Comments

  1. Chris Winslow-Reply
    December 6, 2016 at 10:13 pm

    I think this is simply dreadful news and maybe an end to my very short lived F/X trading career. Who the hell do the FCA think they are to tell fully grown adults we can’t trade on a 400:1 leverage? I’ve started on a £2,500 account and have doubled it thanks to leverage. I’ve withdrawn half of the account and was intending to continue trading with them profits, using various lot sizes and also changing the leverage size anyway if and when I see fit as my brokers allow it to be changed instantly online. If 86% of people are losing money than they should reduce their account leverage.

    With a 25:1 – 50:1 leveraged account it is going to take a very long time to get the profits I intended to gain and eventually give up my job one day, it looks like I’ll now be working indefinitely. Who would want to-do all that technical / fundamental analysis for £20.00 per day?

    I’m so angry and upset with this news. All my dreams I had for me and my partner have just been taken away. I knew FX was way too good to be true. I’ll have to continue working and paying high taxes just so I can afford to live in my rubbish 0 bedroom council studio flat and go on holiday once a decade. Cheers FCA all the best.

    • Charlie Burton-Reply
      December 6, 2016 at 10:20 pm

      Chris you’re wrong. At 50 times leverage you can still trade huge relative to the size of your account. I traded the 10k challenge in less than 10 times and that still grew quickly. I think you need to do your numbers again as this is still huge leverage available

      • Chris Winslow-Reply
        December 7, 2016 at 2:45 pm

        Something else I fear is that if this ever comes in to effect it could mean that many regulated brokers may discontinue there retail trading services and only offer trading accounts to clients who can fund £50K+ accounts. I’ve now looked to brokers based overseas to continue leveraged trading just in case these worse case scenarios play out.

        Leverage is leverage whether you use 10:1 or 400:1, people have different risk tolerances and people should have the option to choose freely the leverage there brokers are able to offer, without being nannied by the FCA. If people trade 5 lot sizes with only a £3K account then that is there fault and the FCA should not punish everybody else who have taken the time to learn when to use high leverage levels.

      • Tim Smith-Reply
        December 7, 2016 at 4:52 pm

        I agree with Charlie – I don’t think there’s a trader on the planet who could trade successfully at 400:1 leverage. That would mean with a $1000 account, you could trade 4 standard lots – $40 per pip. So you have 25 pips to play with. Even with a stupidly small stop loss of 5 pips, after 5 losses you’re gone. There’s not a system in existence that won’t have 5 losses in a row at some point – it’s pretty much statistical certainty. People sometimes need to be protected from themselves!

        • Johnny Wishbone-Reply
          June 24, 2017 at 5:30 pm

          I totally with you! Many people dont understand or can do the simple maths! early gains will just add the greed and ultimately they will lose of their money!

  2. chris houston-Reply
    December 7, 2016 at 7:59 am

    I liked your point about the responsibility of educators Charlie. Taking that further if the FCA want to help the industry retail clients, they should do things that tempt retail traders away from unregulated brokers not entice us towards them by just constraining regulated brokers. I’m sure if we are creative we could think of some benefits that could be available only via regulated brokers that the FCA could sanction?

    Basically try the ‘carrot’ rather than the ‘stick’ as the stick only pushes clients into more choppy waters.

  3. Andrew-Reply
    December 7, 2016 at 8:15 am

    Frankly, I think 50 times leverage is plenty. I believe my broker offers up to 500 times but I would never go anywhere near that level. I think of trading as a business and I don’t think there is a business on the planet would leverage that far. Certainly not a business that I would invest in.

  4. Richard Taylor-Reply
    December 7, 2016 at 11:15 am

    Chris Winslow, I’d be interested to know how are you trading and why you think it’ll be an issue? The only time I could see 25x leverage being a problem is if you’re taking on huge amounts of risk? If that’s the case, in the short term you could potentially make very rapid gains, but probability dictates they’ll also get wiped out given some time. Are you scalping? Good luck to you anyway. But as Charlie says, it shouldn’t over the long term present much of an issue to your trading career if you’re looking for longevity. Cheers!

  5. Crispy Duck-Reply
    December 7, 2016 at 12:35 pm

    I’ve bought some IG shares today as Indontbthink long term this will stop the gamblers or effect the serious traders

  6. Doug Dailey-Reply
    December 7, 2016 at 1:01 pm

    In the USA leverage in Forex is capped at 50:1 and that is all the leverage any one needs. Rather than trying to grow an account fast with higher risk the better method is slow and steady growth with an upward sloping equity curve. Risk control and limiting risk should be the most important factor in your trading.

  7. Jonathan-Reply
    December 7, 2016 at 1:24 pm

    Thanks Charlie for the video. I agree with the FCA’S ruling, up to 50:1 leverage is ample for more experienced traders. The ruling will save the average beginner a lot of financial pain – it is there to protect us retail traders.

  8. Michael-Reply
    December 12, 2016 at 6:30 pm

    Hi All,

    Anyone wanting to have there say about this proposal to the FCA can do so via this link. The decision hasn’t been made on this so far, so there is still time to have your say if you are not in agreement with there proposed changes. You can also offer suggestions and alternatives around this .

    https://www.fca.org.uk/cp16-40-response-form

    Hope that helps!

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