As you may or may not be aware the NFA has issued new trading regulations for the Forex market which began taking place on August 3rd. This basically prohibit OCO trades (one cancels the other). This means that if you have 2 or more positions open on the same currency pair that you have to close them in the same order in which you opened them.
This means that if you can’t use Stop Loss and Target orders as you’ve done before, making trading a lot more difficult for traders.
What can you do?
1. If you use a broker which isn’t based in the USA then you have nothing to worry about as these regulations apply only to American brokers.
2. Call your broker and ask them about the new regulations and how they apply to you.
3. Don’t be too quick to make the switch from an American broker to a foreign one. Yes, it will mean that the regulations don’t apply to you. However, using a foreign broker may mean some extra costs, so make sure to ask your broker about all the costs.
4. Don’t worry, you can still trade Forex and make money. You can do it manually and you can use special tools to help you. Tomorrow I’ll write about a new one which can help make you invulnerable to the new regulations.
Let’s say you placed a buy order for the EUR/USD pair at 1.4000 and want to protect your trade with a Stop Loss at 1.3950 but you can’t place a Stop Loss due to the new regulations. What you need to do is place a sell order for the same lot size at 1.3950. You need to keep that trade open until you close the first buy trade.
If the first trade ends up a winner, it means that the EUR/USD is trading about 1.4000 and the sell order you placed will not take place. You will need to cancel it manually. So it is more hassle, but you can still trade with security.
As I said, tomorrow I’ll write about a new tool which will help you do this automatically so make sure to come back and read it.
