Less than 10 days till the anti-hedging NFA regulation is imposed on the forex market, and it seems that many traders will take their money elsewhere in order to avoid the annoying software restrictions that the anti-hedging regulation means.
American forex traders can avoid the new anti hedging regulation by switching to a foreign broker, or a broker that has a subsidiary abroad. This seems to be the best option.
Hillel Fuld took a deep dive into the new regulation, its purpose, pros, cons and consequences in an interesting article in Daily Forex. The online forex world will sure shake. He says that the opinions on this ruling are split down the middle, and brings both sides of the debate:
Some people will claim that hedging is not a legitimate way of trading Forex. Not only that but they will also claim that another benefit of this new ruling is that the Forex market is now at level ground with other markets such as equities, futures and options.
On the other side of the debate are traders who will tell you that with the volatility of the Forex market, they depend on hedging to guarantee minimal losses and use stop losses and take profits as their primary management tools in their day to day Forex trading. These traders are of course highly dissatisfied with this new ruling
I don’t have a strong opinion for or against the ruling. I do have an opinion about the consequences: many traders will switch brokers. When they’ll see restrictions in the software, it might trigger them to search for other options, especially those who weren’t too satisfied anyway. It might be a foreign broker that allows hedging, but it just might be the broker next door.
I wrote about the possibility of switching forex brokers on new NFA regulations. The more I read and think about, I’m sure that there will be big moves of forex traders between brokers.