I to the B… to the NFA

Filed Under (Journal) by Casey on 02-12-2009

Tags: , ,

I guess the NFA has really gotten to IBFX’s skin…

Last week I got a mail from IBFX saying that they are compiling with NFA’s rulling and will be only offering a maximum leverage of 1:100 come 29 November 2009. My first reaction was ‘$hit!!! Gawd Dang!!’ I was just about to request a change in leverage on my IBFX account and IBFX had to do this $hit to me…

The hedging thing was a minor issue for me. As long as I only trade one side per currency I would be fine…. I wasn’t hedging with my Cyborg on IBFX so it was fine.

However… I am using martingale on this account. And leverage is a key to the success of my many days of backtesting… I wasn’t going to sit on this and not say a word!

On a 500 bucks trading 1 nano lot is small… but the leverage of 1:200 helped me make a healthy 5% return per month… that’s good no? I think that’s good if I keep up these figure it would mean 5%*12months would be 60% annual return…

Hell!! If I increase my leverage… wow… it might have been interesting to see how it works out.

Anyway, my intention to increase my leverage was not too see how high my return is going to be but rather to help me reduce my drawdown. From my previous backtesting results, the drawdown was about 20% for one currency pair, and I was trading 3 currency pair which would roughly work out to be 60% drawdown or more on a 1:200 leverage.

If my leverage was increased by say 1:400… my drawdown might be halved. Now I am not certain of the calculations… but this was the logic or understanding that I go by.

So yes… I needed to increase my leverage to reduce my drawdown and thus, would reduce my risk to reward ratio. Meaning more return against my risk…

Again this was the logic I go by….

Then a few days after that, I heard or understood that IBFX was going to open a UK branch… My reaction was “WOW!! That’s great!”

But after I got more detail from their customer support, I found out that it was a plan and there was no further details.

They told me that the branch will be open sometime in the first quarter of next year.

Man… my subsequent reaction to this was “Screw it! I am moving my account”

Sighhh….  it took me quite a while to finally decide to move my account… but hey… my 500 bucks account with IBFX will not be sorely missed by them.

Don’t get me wrong, I really like IBFX… don’t know why… maybe it was because they were my first broker, and thus, it’s hard to break up with ones first broker.

But it has got to be done… until they start treating me right. We have to go our separate ways.

Looking on the bright side. When or if ever IBFX does moves their operation to UK and the NFA don’t bother us there… I might rekindle my relationship with IBFX…

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