Notes for 20070530

Compliance Retail Off-Exchange Foreign Currency (Forex)

Forex Investor Alert - February 2007

NATIONAL FUTURES ASSOCIATION
FOREX INVESTOR ALERT
FEBRUARY 2007

http://www.nfa.futures.org/compliance/forexInvestorAlert_020107.asp
In August 2003 NFA issued an Investor Alert discussing the risks of trading in the retail off-exchange foreign currency (forex) market. Since that time, participation in forex trading by retail investors has increased dramatically. There are current 37 active Forex Dealer Members registered with NFA. These 37 firms hold over $800 million in customer funds.

Unfortunately, the amount of forex fraud has also increased dramatically. Since 2001, the Commodity Futures Trading Commission (CFTC) has filed 93 enforcement actions in federal court against hundreds of firms, owners and employees for defrauding over 25,000 customers who lost over $395 million in forex schemes. In addition, NFA has taken enforcement actions against a number of its Forex Dealer Members.

It is critical, therefore, that individuals who are considering participating in the forex market understand the risks associated with this product and conduct due diligence before making any investment decisions.

• Although forex dealers must be regulated, firms and individuals can solicit retail accounts for forex dealers and manage those accounts without being subject to any regulatory requirements. There are currently more than 2,000 such firms and individuals. If you are contacted by one of them, either through a telephone call, an e-mail message or a Web site, find out if they are regulated. If they are not, you may be exposed to additional risks.   這點對內部人員的違規操作 主要指不被授權在用戶帳戶中操作 營利後提走 損失後跑掉的行為
  
• Be aware of investment schemes that promise significant returns with little risk. Be very cautious and closely monitor any investment you do make.

• Because the forex market is volatile, fluctuations in the foreign exchange rate between the time you place the trade and the time you attempt to liquidate it will affect the price of your forex contract and the potential profit and losses relating to it.

• Only a relatively small amount of money can enable you to hold a forex position for much more than the account value. This is referred to as leverage or gearing. If the price moves in an unfavorable direction, high leverage can produce large losses in relation to your initial deposit. In fact, even a small move against your position may result in a large loss, including the loss of your entire initial deposit and the liability for additional losses.

• Forex transactions are not traded on an exchange. Therefore, under the U.S. Bankruptcy Code, your funds may not receive the same protections as funds used to margin or guarantee exchange-traded futures and options contracts, which receive a priority in bankruptcy.   這點從根本上指明了資金在破產下無保護不安全
  

For additional information on retail forex trading, you should consult NFA's brochure, "Trading in the Retail Off-Exchange Foreign Currency Market: What Investors Need to Know." NFA has also developed a Forex Online Learning Program, an interactive self-directed program explaining how retail forex contracts are traded, the risks inherent in forex trading and steps individuals should take before opening a forex account. Both the brochure and the online learning program are available at no charge to the public in the Investor Learning Center section of NFA's Web site (www.nfa.futures.org).

As mentioned above, retail off-exchange forex trading carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose all of your initial investment and be liable for additional losses. Therefore, you should not invest money that you cannot afford to lose. Be aware of all the risks associated with forex trading and make an informed decision after consulting with your financial advisor and considering your own financial situation and objectives.

NFA and the CFTC encourage members of the public to bring to our attention any suspicious activities involving foreign currency investments or suspicious Internet Web sites. Contact NFA's Information Center at 1-800-621-3570 or file a complaint through NFA's Web site (http://www.nfa.futures.org/basicnet/Complaint.aspx). Contact the CFTC at 1-866-366-2382, visit the CFTC's Customer Protection Web page (www.cftc.gov/cftc/cftccustomer.htm) or fill out the CFTC's Internet Report Form (www.cftc.gov/enf/enfform.htm).

NFA is a self-regulatory organization subject to oversight by the CFTC. NFA's primary mission is to protect investors and maintain market integrity.

I was told that Spot FX trading is the most dangerous because there is no centrual
clearing.  My understanding is it is vulnerable to retrail traders since
there is no regulation on participant and organization will easily make
black box to retail traders.  that is like magician game.

Fortunely, I read article that some exchange is looking forward to building
that kind of centural clearing and regulation.  But now it is still not
available.

two accounts for MF  one add to 10000 hold into free zone and get 4% then out
change another one start 2500 on top  you have chance to averaging down