Robotics Technology

Up until recently, forex trading had been fairly unregulated, specially when compared to asset classes like stocks, alternatives and commodities. And certainly there isn’t much in the way of regulation as it pertains to forex robots, but that might be changing and not for the better.

Unfortunately, US regulators that oversee financial typically don’t have direct experience as traders and even worse, they tend to come up with ideas that favor institutions and hamper retail traders. Their newest concoction from the laboratory of bad ideas is a plan that was recently instituted that forbids only retail traders from being long and short the same currency pair at the exact same time. Obviously, this is bad news to start with, but this a fairly well-known strategy among users of forex robots because a forex robot can be effortlessly programmed to trade from both the lengthy and short sides in the exact same pair at the exact same time.

There’s a lot more bad news for US-based traders and we’ll take a look at why some of these traders could want to think about moving their accounts offshore.

Declining Competition

The National Futures Association (NFA) is the regulatory agency that oversees currency brokers in the States, though the Commodities Futures Trading Commission (CFTC) does have a heavy footprint when it comes to forex trading in the U.S. The NFA genuinely began dropping the regulatory hammer in 2008 and that has helped lead to a steep decline in the number of forex brokers operating in the U.S. In late 2008, there had been nearly 30 forex brokers US traders could choose from, but by March 2009, that number had fallen to 14 as numerous brokerage firms found it too pricey and cumbersome to comply with all the new rules US regulators had set forth.

This lack of choice is going to force traders and forex robot users to either move their accounts offshore or trade with an unregulated broker, though if the NFA has its way, US-based traders won’t be able to do that either. The techniques things are searching, there may only be a couple of dominant players, like FXCM, left in the US market before too long.

Much more Absurd Regulations

As if every thing else we’ve mentioned here isn’t bad sufficient, US regulators have discovered another way to impair forex robot users. A new regulation now forbids the use of stop-loss orders, but this only applies to retail traders. This is a precarious situation for forex robots as so significantly of their efficiency lies in being able to use stop-loss orders. The way the new regulation looks, it’s going to be tough to leave your forex robots on autopilot and that makes us wonder if offshore is the best place to be US traders.