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1:30 new ESMA max leverage - Trade Copying Websites??

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  • 1:30 new ESMA max leverage - Trade Copying Websites??

    Starting probably early summer the ESMA will impose the max leverage of 1:30 for all retail traders who have accounts with european brokers. In case you have accounts with any european broker, please make sure the Trade Copying is still working properly after the changes take effect at your broker.
    The changes do not affect my Master Account broker at Halifax Investment Services.
    Not sure if anyone knows how Trade Copying websites are going to handle this.... like SimpleTrader, MQL5, SignalStart, FXJunction, HotForex Copy. I surmise that my Max Drawdown of 23%-25% plus a Total Max Open Exposure of 1 standard lot per $10,000 balance would not get a margin call on this... but I admit that I need to do some calculations. Will revert to you once I've made these. Please comment as you feel necessary.

  • #2
    It looks like this is a done deal but so far only Oanda notified me of this change. I don't like 1:30 much but normally I don't run anything that hot so it should not be an issue. But going from 1:100 or even better to 1:30 for majors and worse for exotics takes some getting used to and is even worse than what USA have and I always thought that was bad lol. There is some silver lining if you look hard though. I believe there will be negative balance protection which in my opinion is much more important than better leverage. If shit hits the fan (and that can easily happen and probably will) there is no telling how bad it's going to get and that can ruin your life to a great degree. I was involved in EURCHF crash with a 0.01 position and it was even hedged when that happened yet Alpari managed to make $1300 worth of damage with it. Now imagine a normal sized trade and the damage one of those can make.


    • #3
      Yes ok it looks like our leverage will still cover my Max Total Exposure at any one time EVEN WITH the worse possible scenario of 25% drawdown in an open basket. An open drawdown equal to 25% or more has only happened once, and I can say it never will happen again. Total drawdown from High Water Mark is a different thing and has happened 3 times.
      The issue we are concerned with is Total Open Exposure and Margin Available, which I have calculated will not be jeopardised by these new changes for our Trade Copying.


      • #4
        Also keep in mind that the 1:30 leverage only applies to major pairs. The less popular ones will be reduced to 1:20, commodities - to 1:10 and cryptocurrencies - to 1:2.


        • #5
          It is possible to qualify as a professional investor but I haven't looked into it yet. Professional investors are not targeted with these changes, just retail.


          • #6
            With over 1,000 registered CTA’s within the managed futures industry, investors have a large selection of managers to choose from. However, all 1,000 maybe not be open to all types of investors. Many CTA’s (Commodity Trading Advisors) within the industry may operate under certain exemptions which limit their ability to...Read More

            Seems like the Qualified Eligible Person category might apply to ease normal restrictions.