Thread: Fxcm micro contest is unfair to US residents

The FXCM micro contest is unfair to US residents because the US residents get a leverage of 50 compared to 100 for residents of other countries like Canada, China, and Italy. To be fair, the percntage gain fo US residents should be doubled for comparison. No wonder why US residents are not in the winner's list.

Hi fxcadyar,

I appreciate your post and your idea. Unfortunately, this is not possible because the trader's using higher leverage would be forced to risk more funds in order to win a the same prize as a US trader risking less money. For example, a UK trader using 400:1 leverage and profiting 900% in the first 2-3 weeks of the contest, his account equity is at $5000. In order to increase his percentage gain, he is risking $5000 of his own dollars at that point. If a U.S. account had 112.50% gain in 2-3 weeks, the account would then be equal to the 900% gain of the UK account (because we multiplied 112.50% by 8), except the US account holder's equity would be substantially less (around $1000-$1100). For the U.S. account to increase his percentage gain, he is only having to risk $1000-$1100 of his own money, while the UK account holder is having to risk $5000 of theirs.

If you have any questions, feel free to contact me, rob@fxcm.com

Rob

Originally Posted by Fxvadyar

The FXCM micro contest is unfair to US residents because the US residents get a leverage of 50 compared to 100 for residents of other countries like Canada, China, and Italy. To be fair, the percntage gain fo US residents should be doubled for comparison. No wonder why US residents are not in the winner's list.

The bottom line is, both traders started the month with the required minimum of $500. So in reality both are only risking $500 of their own money. If the 400:1 trader grows his account to $5000, it's his decision to risk it to win one of the top three money prizes. Which is the reason he entered the contest in the first place. Also, the US trader is limited to FIFO when liquidating positions which diminishes his wiggle room and decreases his time factor. He cannot hedge if his trade goes against him. And most of all, he pays a higher premium to establish a position which takes away his buying power to successfully compete against the 400:1 trader. i can go on and on on why the 400:1 trader has a big advantage over the 50:1 trader. Been there, done that.

Yeah, you cannot possibly defend the advantage of 400:1 vs 50:1 as a fair fight in a contest that is all about going on a hot streak lol. it's fun.....it shows how some pepole do have skills.....and if you can return 1000% a month, you can surely scale back your risk and make 50-100% a year no problem with lower drawdowns, so it's a good contest.

But please don't try and defend the fairness, US residents are at a HUGE disadvantage in a contest like this.....the math example you cited of leverage/margin and return was oversimplified to an extreme. If you guys could somehow measure the ability to hedge, the unrealized drawdown at any particular moment, FIFO vs LIFO, and other factors.

point is.......stop trying to defend it..........it's not a fair fight at all

I totally agree. Last months's KOM winner turned $5000 into over $230,000 dollars. No way is this possible without a high degree of leverage. Which has been my argument all along against the CFTC sticking their noses where it doesn't belong. When you add the FIFO rule and no hedging rules trying to win this contest is like boxing with one arm behind your back. Don't misunderstand I know the dangers of leverage, atypical results, unsustainable month over month, blah, blah, blah. But I am also an adult who doesn't believe in the Nanny state trying to save me from myself. Long story short, how many US residents do you see at the top of the KOM rankings? The CFTC in my opinion has unrighteously rigged the game to keep US residents from seeing these types of gains. I'm just trying to figure out why. Bottom line is if the US is supposed to be the most free country in the world why on earth do the chinese have less regulations regarding Forex?

Funny how everyone is so concerned about leverage. I never use more than 20-1 anyway.


I as a US trader can't stand the fact that I can't trade the indexes, or the commodities. Don't want to be stuck trading just one type of instrument.
I am thinking of opening a Futures account and closing this one down.

Can an administrator help me out here? what are my options?

Why do (seemingly) so many traders worry about fairness? Someone in Balitmore County, Maryland was the sole winner of last night's $640 million jackpot (mega millions). Is that fair? He/she had the same 1 in 170 million chance as everyone else. Did "God" not hear my prayers? Did I not agree to help enough people, in advance, to sway the odds?
It seems that FXCM is more than fair in it's willingness to add that 8-multiple to U.S. accounts to somewhat equalize the odds, if I am understanding their (FXCM's) position.
Look at what last October's Canandian winner did in his/her trading.
I have started with $800 in my account and at one glorious point I pushed it up to $1200 before ending the month at $975, probably because all of the Chinese traders took all of the good trades. I appreciate the fact that the U.S. margin requirements prevent me from totally decimating my account on any 1 trade. I enjoy trading and work hard to someday be on the right side of a huge trade.

Originally Posted by Spearmintrob

Why do (seemingly) so many traders worry about fairness? Someone in Balitmore County, Maryland was the sole winner of last night's $640 million jackpot (mega millions). Is that fair? He/she had the same 1 in 170 million chance as everyone else. Did "God" not hear my prayers? Did I not agree to help enough people, in advance, to sway the odds?
It seems that FXCM is more than fair in it's willingness to add that 8-multiple to U.S. accounts to somewhat equalize the odds, if I am understanding their (FXCM's) position.
Look at what last October's Canandian winner did in his/her trading.
I have started with $800 in my account and at one glorious point I pushed it up to $1200 before ending the month at $975, probably because all of the Chinese traders took all of the good trades. I appreciate the fact that the U.S. margin requirements prevent me from totally decimating my account on any 1 trade. I enjoy trading and work hard to someday be on the right side of a huge trade.

Winning the Lottery is pure luck and everybody has the same odds of winning. You buy a ticket and pick your numbers. You can buy multiple tickets but you still have to be lucky to choose the correct numbers and your odds of winning on any one ticket is till the same.

FXCM is against using any multiplier so that is out of the question.

You seem to not care about winning the contest which is fine. I have an account and I'm entered at the start of every month. My goal is to make money trading forex now that the "new rules" have all but disqualified me from finishing in the top thirty. There are two things that makes my blood boil: 1) an email from FXCM telling me to get in the contest and win my share of the $40,000 in prizes offered; 2) the "party line", canned responses from the Mods when responding to questions as to the fairness of the contest (see the $5000 risk for the 400:1 trader). I understand where they 're coming from but please, don't oversimplify the explanations by saying the 400:1 trader HAS TO RISK more capital if a multiplier is used. The fact is the 400:1 trader does not have to risk all of his capital in his account to outpace the 50:1 trader. I can go through scenarios where the 50:1 trader is running in place because of the restrictions. I been in those situations many times since Frank/Dodd decided that I cannot manage my own money. Magnify that by the one month time frame of the contest.

Is the contest unfair? Yes it is. Will FXCM do any ting about it? They've shown no willingness to do so since the enactment of Frank/Dodd, so quit wishing and hoping. I know the Chinese traders are happy for Frank/Dodd. That piece of legislation has all but eliminated the competition.

I have asked myself that same question as to WHY the CFTC would blatantly sabotage American traders. I mean FIFO, trading without being able to put your stop in before executing the trade, no hedging, higher leverage? The only end to these actions is to handicap the trader. This defys common sense.

Originally Posted by piphotep

I totally agree. Last months's KOM winner turned $5000 into over $230,000 dollars. No way is this possible without a high degree of leverage. Which has been my argument all along against the CFTC sticking their noses where it doesn't belong. When you add the FIFO rule and no hedging rules trying to win this contest is like boxing with one arm behind your back. Don't misunderstand I know the dangers of leverage, atypical results, unsustainable month over month, blah, blah, blah. But I am also an adult who doesn't believe in the Nanny state trying to save me from myself. Long story short, how many US residents do you see at the top of the KOM rankings? The CFTC in my opinion has unrighteously rigged the game to keep US residents from seeing these types of gains. I'm just trying to figure out why. Bottom line is if the US is supposed to be the most free country in the world why on earth do the chinese have less regulations regarding Forex?

it is because they do not want more rich people or (1 percenter) their party the party of entitlements and welfare will be ruined. george soros funds these people like a hypocrite and as a currency trader an embarassment to us all. they want to be wealthy but not have anyone else join them.

the republican party will remove these regulations but they do not have the power at the moment.

Unfortunately there is no simple conversion to compare a U.S. account with an account outside the U.S. The difference in margin effects the equity for orders to go wrong also known as "wiggle room" . Simply put the U.S. account will get margin called where the non U.S. account will still have a trade. The ability to hedge and trade other markets also makes it impossible to accurately compare the two

Originally Posted by Fxvadyar

No wonder why US residents are not in the winner's list.

It seems that everyone is admitting that it's not fair, except FXCM. As much as I would like for it to be fair, it just seems at this point that it can't reasonably be fair for US residents. I think unless they decided to create a different account type or account differently for our earnings on our accounts, we won't see a US resident for a while.

I'm not really saying they should do this, but they should at least admit that it isn't fair. If they would come out and say something like "We can't make it fair for everyone and realize this puts US residents at a disadvantage. This is the best solution that we have come up with thus far to make it as fair as possible when taking everyone into account."

We're Forex trades, successful traders are smarter than the average public and we are more honest with ourselves. We don't need people lying to us and trying to tell us it's fair when it isn't. We would appreciate some honesty though....So tell us like it is and then let us overcome the hurdles.

I remember growing up and always being told "Life isn't fair..." It wasn't until later in my life I always heard people saying this when they're at a disadvantage. There was one time specifically when I heard a son comment to his father "Why can't I have a brand new car like Jared?" The father said "Well son, life isn't always fair. Be thankful for what you have." I thought about it and realized, that's the kind of attitude where you're accepting defeat and not striving for the better.

Like someone mentioned earlier in this thread "Winning the Lottery is pure luck and everybody has the same odds of winning." You always have to make it fair and have the same odds as everyone else. No one is stopping you from buying more tickets and putting the odds in your favor....although I might choose a situation where I could tip the odds more in my favor than buying a few extra lottery tickets.

I've recently started saying this: Life isn't always fair, but no one ever said the odds had to be against you.

Originally Posted by Rob at FXCM

Hi fxcadyar,

I appreciate your post and your idea. Unfortunately, this is not possible because the trader's using higher leverage would be forced to risk more funds in order to win a the same prize as a US trader risking less money. For example, a UK trader using 400:1 leverage and profiting 900% in the first 2-3 weeks of the contest, his account equity is at $5000. In order to increase his percentage gain, he is risking $5000 of his own dollars at that point. If a U.S. account had 112.50% gain in 2-3 weeks, the account would then be equal to the 900% gain of the UK account (because we multiplied 112.50% by 8), except the US account holder's equity would be substantially less (around $1000-$1100). For the U.S. account to increase his percentage gain, he is only having to risk $1000-$1100 of his own money, while the UK account holder is having to risk $5000 of theirs.

If you have any questions, feel free to contact me, rob@fxcm.com

Rob

You're failing to take into account the US regulations that don't allow the same usable margin on a $1,000 account.

On a US account go try to open a trade that uses $500 in equity on a $1000 account. Then go try to do it on any UK account.

Once you do that, you'll realize the point that everyone here is making.

US Traders - This isn't an FXCM issue, it's an issue with the regulators. There's no algo worth spending $$$ on that will make this "fair" for US traders. Instead of spending time & energy here complaining, head over to the CFTC, NFA and whoever your local & federal politicians are. As often as you're complaining here do it 10 fold with the politicians.

You'll not see anything change here until the regulations are changed and FXCM isn't responsible for the regulations. The rules changed a while ago and with the rhetoric in the USA of "boo hiss bad 1%'s" I honestly don't see any changes in FX unless there's a whole change in the political landscape.

Don't be a complainer, whiner, couch potato - take the time that you'd spend writing here and find out who the people are in your area that can make a difference and contact them. Then do it again and again and again. The USA seems to be a country of "whoever whines loudest gets results" so go where you can actually get the results you want.

Be a part of the solution!!! You can do it........

You have hit the nail on the head. No point in complaining. Spending time and energy to find a remedy is the way. Thank you for your insight and encouragement for positive action.