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Wallace · 20-10-2004, 22:48

The requirement comes from the CFTC the US futures and fx regulators, futures trading, and the need to for traders to understand the inherent risk of futures trading — 'overloss' is the situation where a losing futures trade is losing more money than the trader has in their account, which doesn’t happen when trading fx: http://www.fxcm.com/forex-vs-futures.html

" Margin/Risk Management
For the purpose of risk management, traders must have position limits. This number is set relative to the money in a trader’’s account. Risk is minimized in the Spot FX market because the online capabilities of the trading platform will automatically generate a margin call if the required margin amount exceeds the dollar value of the account as a result of trading losses. All open positions will be closed immediately regardless of the size or the nature of positions held within the account. If the futures market moves against you, your position may be liquidated at a loss and you will be liable for any resulting deficit in the account. "

Brokers need to protect themselves against clients who don’t know what they’re doing and clients need to be protected against unscrupulous brokers who might otherwise 'bucket' their trades – not place the trade on the 'floor' expecting it will be a losing trade thereby collecting the loss plus commission.

20-10-2004, 22:48	#6 (permalink)
Wallace level 3 Join Date: Jan 2003 Posts: 734 Rep Power: 0	The requirement comes from the CFTC the US futures and fx regulators, futures trading, and the need to for traders to understand the inherent risk of futures trading — 'overloss' is the situation where a losing futures trade is losing more money than the trader has in their account, which doesn’t happen when trading fx: http://www.fxcm.com/forex-vs-futures.html " Margin/Risk Management For the purpose of risk management, traders must have position limits. This number is set relative to the money in a trader’’s account. Risk is minimized in the Spot FX market because the online capabilities of the trading platform will automatically generate a margin call if the required margin amount exceeds the dollar value of the account as a result of trading losses. All open positions will be closed immediately regardless of the size or the nature of positions held within the account. If the futures market moves against you, your position may be liquidated at a loss and you will be liable for any resulting deficit in the account. " Brokers need to protect themselves against clients who don’t know what they’re doing and clients need to be protected against unscrupulous brokers who might otherwise 'bucket' their trades – not place the trade on the 'floor' expecting it will be a losing trade thereby collecting the loss plus commission.