New NFA Order Rules

[cabletrader]

Quote from sakhter:

+1.

You are working "mini aggregates" for different pairs.

Another example:

EURUSD@10,000 BUY
EURUSD@10,000 BUY
EURUSD@15,000 SELL

You have a EURUSD@5000 Buy position still active.

Sure, but under FIFO shouldn't they be...

1) EURUSD@10,000 BUY
2) EURUSD@10,000 BUY
3) EURUSD@15,000 SELL - closes 1 and half of 2

...or doesn't the order matter?

With Oanda I can close 2 first and leave 1 until later. I can even close 2 and then open another 2 and close it before I close 1 which I didn't think was FIFO compliant.

Also on Oanda I can put a stop and limit on each individual trade (1 and 2), whereas other NFA brokers don't allow that any more, you have to use OCO.

 

[sakhter]

Quote from cabletrader:

Sure, but under FIFO shouldn't they be...

1) EURUSD@10,000 BUY
2) EURUSD@10,000 BUY
3) EURUSD@15,000 SELL - closes 1 and half of 2

...or doesn't the order matter?

With Oanda I can close 2 first and leave 1 until later. I can even close 2 and then open another 2 and close it before I close 1 which I didn't think was FIFO compliant.

Also on Oanda I can put a stop and limit on each individual trade (1 and 2), whereas other NFA brokers don't allow that any more, you have to use OCO.

yes it closes 1 and half of 2, hence you still have a EURUSD@5,000 buy still open. Because you have EURUSD@20,000 buy and you sold your positions (if you decided to SHORT the EURUSD or you want to take profit from prevous buy.. they are treated interchangably).

Also on Oanda I can put a stop and limit on each individual trade (1 and 2), whereas other NFA brokers don't allow that any more, you have to use OCO.

You can still do that with NFA brokers, you just need to open 2 accounts, manage on multi-platform or some PAMM set-up.. you can hedge, trade as you did before the rule... but at the cost of increased margin requirement.


Say your leveraged 100:1.

example before NFA:
You buy standard lot of EURUSD, takes $1,000 in margin.
You sell standard lot of EURUSD, hedged, it gives you that $1,000 BACK. (Free Margin increases, required margin vanishes)

Total Margin Used = $0

example after NFA:
You have multiple accounts.
Account A: Buy standard lot, $1,000 margin

Account B: Sell standard lot, $1,000 margin.

Total margin used = $2,000


Most of it is back-office managed anways.. but it looks and feels the same.

 

[cabletrader]

Quote from sakhter:

yes it closes 1 and half of 2, hence you still have a EURUSD@5,000 buy still open. Because you have EURUSD@20,000 buy and you sold your positions (if you decided to SHORT the EURUSD or you want to take profit from prevous buy.. they are treated interchangably).

On Oanda you can close trades out in any order you wish, ie you can close 2 before you close 1. As far as I know that's not strictly FIFO compliant. The effect on aggregate position is the same obviously, it's just the order in which trades are closed.

FXCM US, for example, seem to use FIFO in it's literal sense "First In, First Out". The first trade opened has to be the first trade closed, you can't close trade 2 first like you can with Oanda, as per FXCM video......

https://admin.acrobat.com/_a205571165/p91063619/

Also with other NFA regulated brokers like FXCM you can't place stops and limits on individual trades (on the same pair on the same account), you have to use an OCO. On Oanda you can place stops and limits on individual trades (on the same pair on the same account).

Bottom line is FIFO seems to mean different things to different brokers by the look of it!

 

[sakhter]

I know it's a bit tricky to understand but.... On oanda, each pair is it's own aggregate. Fifo in regard to the PAIR.

If you buy the eurusd, you cannot short the eurusd without getting rid of your previous buy units of eurusd. hence, FIFO.

The first position you bought in the euro is the first position you have to liquidate in order to take the opposing side of the trade.

You can trade eurusd, eurjpy, gbpjpy, then close the eurjpy trade first, gbpjpy trade 2nd, and eurusd trade 3rd. but when you think of "individualized" aggregates. you are still following fifo.

i make a decent living trading 1 max trade per time. varying the lot size of course. I know people who will trade 1 standard per $50,000+ in equity..

But I think it is also a good thing what fxcm is doing. Traders don't need to place more than 1 trade at a time..unless your skills are uber-flawless, your a master at the carry trade & understand interest rate parity

At the end of the day, fxcm is still a bucketshop, so fuck them. I wouldn't do business with any broker that tells me I have to close in the order I opened.

 

[sakhter]

The funny thing is. It actually might be a good thing. No more stop hunting by the brokers! because there are no stop-loss! lol

 

[cabletrader]

Quote from sakhter:

The first position you bought in the euro is the first position you have to liquidate in order to take the opposing side of the trade.

Not so on Oanda, that's my point. On Oanda you can close your 1st 2nd 3rd 4th 5th.....trade in any order you want. Obviously if you close a position it comes off the aggregate but that's not really the point. Under FIFO in it's literal sense (as FXCM are using it), the first trade opened has to be closed first....but not on Oanda. So, is one broker over-compliant or is one under-compliant, they can't both be right.

Quote from sakhter:
Traders don't need to place more than 1 trade at a time..unless your skills are uber-flawless, your a master at the carry trade & understand interest rate parity

On the contrary, my whole scalping risk management strategy revolves around taking profit on individual positions in a specific order, reducing risk on remaining positions, and reducing exposure, perhaps repeatedly before the final (first) trade is closed. Could I do the same under strict First In, First Out? Yes, and probably just as effectively but not as conveniently as I can do it on Oanda. The point is that multiple entries and exits are an integral part of the strategy, without them it simply wouldn't work.

If you're interested in this here's an example of today's trading, if you compare it with yesterday's blotter you'll begin to see a pattern of multiple entries and exits and their effect on risk and exposure (if you can be bothered, there's an awful lot of trades!! )



28 trades, 23 wins +114 pips, 2 losses -4 pips, 3 b/even, total 110 pips

 

[cabletrader]

Quote from sakhter:

The funny thing is. It actually might be a good thing. No more stop hunting by the brokers! because there are no stop-loss! lol

lol, I thought that at first, they'll only see orders and not know what they're for ie take profit or stop loss......but they probably have algos to analyse what you're doing, they know everything

 

[sakhter]

I don't think it is necessarily over-compliant or under-compliant.

FXCM just decided not to handle the order-flow using a back-office. Saves them money. So you close the first one you open.

On the other hand, there are companies that give a back-office order handling so you can close trades in however order you wish.

So I am guessing your FIFO is probably back-office handled like FXDD or InterbankFX.

 

[sakhter]

BTW.. that is some good scalping.

I bought GBPJPY when it dipped sharply about an hour. 250,000@161.09 holding to 162. already up ~$950. I may trim at 161.69

 

[cabletrader]

Quote from sakhter:

InterbankFX.

lol, interbankfx, they screwed it up right from the start, they weren't even allowing long and short orders on the same pair!

I've never seen such a monumental cockup in all my life, nearly every broker has interpreted the new rule differently