RE: Non Farm Payrolls5 Feb 2018 18:01
Last chance chartists, cfd spread betters on this board to lobby ESMA .my lobby below to amend/use deadline 10pm tonight
'Your proposals will limit the retail trader's ability to trade on an equal basis as the merchant banks.
If your main concern is to protect retail traders from incurring large losses it is misguided.
There is a very useful tool available to limit a loss at a very low cost. It's called a straddle. This automatically halts the loss and gives the investor/trader the opportunity to reconsider his/her position WITHOUT crystallizing a loss.
Admittedly, the straddle is not suitable for all markets. E.g. shorting of AIM listed shares, as many if not most brokers/spread betting firms do not allow shorting to open a trade.
HOWEVER, it is available for Indices, forex and FTSE100 shares.
To automatically close out an individual trade once a certain percentage of the margin has been used/lost completely destroys this very useful tool to limit a loss without having to crystallise it especially as it is a known fact that no market goes up or down in a straight line.
There will be dips in a bull trend; there will be retracements in a bear trend. When a market is trading sideways there will be several opportunities for straddles to work effectively while the market is range trading.
Examples of how effective straddles can be are the last two nonfarm payrolls for January and February 2018 but I can show you many more not just related to the forex pair EUR/USD but to FTSE 100
Nonfarm payrolls
On 5 January 2018 it took a mere 30 minutes from 13.30 to 14.00 for price to rise from 12,050 to 12,080 = 30 pips and dip back to 12,050 another 30 pips = 60 pips chart below.
On 2 February 2018 chart below it took a little longer 5 to 5.5 hours for price to drop 80 pips and retrace 79 pips from 12,490 to 12410 and back again to 12,489
Closing out the winning long or short to crystallise the gain and wait for the losing trade to reduce partially or completely before closing it to produce a net gain will not be possible IF your proposal to automatically close out an individual losing trade at a certain percentage margin loss becomes law.
THIS IS NOT FAIR AND VERY RESTRICTIVE AND WILL MAKE THE STRADDLE A VERY USEFULL TOOL TO LIMIT A LOSS REDUNDANT.
FEB CHART
http://content.screencast.com/users/LEFKOSIA/folders/Default/media/b4dcaa73-8e25-465f-865b-266539b1838b/EUR_USD_20180203_10.46.png
JAN CHART
http://content.screencast.com/users/LEFKOSIA/folders/Default/media/abefe004-a110-447c-9918-383f2cf935fc/EUR_USD_20180105_15.06.png '
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
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