Francesc Riverola,
Hi everyone
FXstreet’s Compliance Officer Mr. John Putman forwarded this link to me this morning
http://www.nfa.futures.org/compliance/ComplianceRule-2-43QA.asp
with the following note:
Francesc,
This link seems to clarify some of the confusion regarding stops and limits associated with open Forex positions. There have been some reports that stops and limits will not be allowed under the new rule; this may not be accurate. It sounds as if the new rule will allow them but it will force stops and limits to be applied to the oldest open position or upon the customers request, the oldest “same-size” transaction. The latter part of this would appear to be in place to prevent a stop or limit of say 100k being applied in a partial way against a position of 500k (unless that is the intention).
John
Thanks John!
Francesc
Francesc
The most important aspect in this story is the FIFO rule. If I read this Q & A correctly, together with the initial announcement, the implication is that after 31 July you will not be able to have same sized positions closed in any other way / order than FIFO.
In other words if you have say three different tickets
#1 BUY 10K EURUSD @ 1.3000, target (Limit order 1.3500)
#2 BUY 10K EURUSD @ 1.2800, Target (limit order 1.3000)
#3 BUY 10K EURUSD @ 1.2700, Target (limit order 1.2800)
you will not be able to close #3 with the limit order once 1.2800 is reached, but instead #1 will be closed.
AND
Even if you change your mind to close it with a market order manually at say, 1.2750, “the clients direction to offset” is going to be applied to the first 10K position.
Can you confirm if this is a correct interpretation?
This doesn’t clarify too much :(. For example, what happens if I place a stop order to enter the market? Is there any restriction to do that? Or what if I want to close half the position using a stop order, can’t do that?
It would be great if John or you could contact NFA representatives to get some practical examples.
Regards,
FXWizard
Hi Dirk
Our Compliance Officer Mr. John Putman thinks that you are correct in your interpretation
Francesc