Interactive Brokers and Forex

gaussian · Jan 4, 2019

After the disaster I had with TradeStation I have switched over to Interactive Brokers. I wanted to try to run a small strategy I had for a few Forex pairs just to see how well it did live while the index futures market decides what it wants to do. IB seems to be one of the best places for FX.

The problem is I've read all over here, over at /r/forex, and on some blogs that they are now requiring everyone to have over 10M in assets to trade? This puts a damper on my ideas.

Is this still true? Is there any representative that can chime in for this?

Overnight · Jan 4, 2019

gaussian said:
...
The problem is I've read all over here, over at /r/forex, and on some blogs that they are now requiring everyone to have over 10M in assets to trade? This puts a damper on my ideas.

Is this still true? Is there any representative that can chime in for this?

The minimums seem a bit high, here's what I found..

https://www.interactivebrokers.com/en/index.php?f=4945&p=tradingrequirements

helpme_please · Jan 4, 2019

gaussian said:
After the disaster I had with TradeStation I have switched over to Interactive Brokers. I wanted to try to run a small strategy I had for a few Forex pairs just to see how well it did live while the index futures market decides what it wants to do. IB seems to be one of the best places for FX.

The problem is I've read all over here, over at /r/forex, and on some blogs that they are now requiring everyone to have over 10M in assets to trade? This puts a damper on my ideas.

Is this still true? Is there any representative that can chime in for this?

What disaster did you encounter at TradeStation?

The $10m in assets is a regulatory requirement for U.S citizens to trade spot forex. To work around this requirement, Americans trade forex futures. I'm not American. Correct me if I'm wrong.

Overnight · Jan 4, 2019

helpme_please said:
What disaster did you encounter at TradeStation?

The $10m in assets is a regulatory requirement for U.S citizens to trade spot forex. To work around this requirement, Americans trade forex futures. I'm not American. Correct me if I'm wrong.

I thought spot Forex is not regulated? Hmmm

gaussian · Jan 5, 2019

helpme_please said:
What disaster did you encounter at TradeStation?

The $10m in assets is a regulatory requirement for U.S citizens to trade spot forex. To work around this requirement, Americans trade forex futures. I'm not American. Correct me if I'm wrong.

They don't seem to use normal rule when deciding who is a professional. Very dishonest.

How does Oanda provide spot forex if 10M is the minimum?

Overnight said:
I thought spot Forex is not regulated? Hmmm

This was also my opinion.

Overnight said:
The minimums seem a bit high, here's what I found..

Wow you are right. It's cheaper to trade futures!

bbpp · Jan 5, 2019

Oanda is different from IB as it is specialized in FX.
Brokers who deal with stocks, futures and FX would need 10M in their custmers' FX accounts.

Also the IB requirements provided in above link are not account minimum, but account owners' "Liquid Net Worth".

https://www.investopedia.com/news/interactive-brokers-eliminates-10000-account-minimum/
"But IB has been transforming itself into a kinder, gentler brokerage over the last few years, reaching out to the mass affluent and going out of its way to bring in new customers who aren’t primarily traders. The most recent step in this transformation is the elimination of the $10,000 account minimum. You can now open a cash account at IB with $0, or a margin account with $2,000, the regulatory minimum that all brokers must require. "

bbpp · Jan 5, 2019

https://www.interactivebrokers.com/en/index.php?f=1563&p=fx

U.S. Clients with IBLLC accounts, and Fully Disclosed Broker Clients from the U.S. generally must be Eligible Contract Participants to be eligible to trade Cash Forex. An Eligible Contract Participant is generally an individual or organization with assets of over $10 MM (or $5 MM if trades are hedging).

drm7 · Jan 5, 2019

Interactive Brokers is the most conservative broker of any kind. They don't want the regulatory hassle of retail spot forex for US customers, so they require anyone trading spot forex to be an institutional customer. Problem solved on their end.

OANDA chooses to deal with the regulatory headaches, because that's all they do. They have to abide by CFTC restrictions on leverage and product offerings (i.e. no CFDs, no XAUUSD, etc.)

I've noticed that, since the CFTC tightened up their regulatory policy toward spot forex, many (most?) forex brokers forbid US residents from opening accounts.

Peter10 · Jan 5, 2019

Overnight said:
I thought spot Forex is not regulated? Hmmm

Yes the spot forex market is not regulated but in America, the brokers are over regulated.

eastern_warrior · Jan 6, 2019

drm7 said:
Interactive Brokers is the most conservative broker of any kind. They don't want the regulatory hassle of retail spot forex for US customers, so they require anyone trading spot forex to be an institutional customer. Problem solved on their end.

OANDA chooses to deal with the regulatory headaches, because that's all they do. They have to abide by CFTC restrictions on leverage and product offerings (i.e. no CFDs, no XAUUSD, etc.)

I've noticed that, since the CFTC tightened up their regulatory policy toward spot forex, many (most?) forex brokers forbid US residents from opening accounts.

You're wrong on that I think. As IB is SEC and CFTC licensed and regulated, they fall under those rules and must follow the higher minimum net worth (ditto for any other broker). Oanda isn't beholden to the regulations of the securities and futures regulators and hence doesn't need to have that requirement.