For one reason or another, the regulators that oversee financial markets in the United States love to get involved in traders’ lives on a more intimate level than is practical. That’s not to say if you trade you’ll be subject to constant monitoring by regulators, but there are some significant hurdles on the horizon for US-based retail traders.

Forex trading has soared in popularity recently and that is due to the proliferation of technology, which has made forex markets much accessible to retail traders. Up until recently, forex trading had been fairly unregulated, especially when compared to asset classes like stocks, options and commodities.

In other words, the regulations now facing US-based retail forex traders are dangerous to their bottom lines, almost to the point that it would appear that regulatory bodies there really aren’t on the side of the little guy. In fact, some of the recent regulations that have come down in the States could have a very adverse impact on the use of forex robots. Many traders have grown to love their forex robots and have used forex robots to grow their accounts, so these regulations could imperil US traders that use forex robots as part of a comprehensive forex trading strategy.

There are options for traders in the States, but are the regulations going to be too much to overcome? Let us have a look.

Regulators Are On The Hunt

One great idea that US regulators have come up with recently, and no we don’t think it’s really a great idea, is to prevent only retail traders from hedging. Meaning retail traders in the U.S. can no longer go long and sell short the same currency pair at the same time. This is rather unfortunate because this is a great strategy to employ because it can keep risk to a minimum while hunting for big moves. Not to mention this strategy is easy to employ with a forex robot, but US regulators have said no to hedging.

The National Futures Association (NFA) is behind this idea and it would appear they simply don’t care about retail traders. It would also appear they have little regard for users of forex robots because the NFA has essentially said that good traders don’t need to hedge.

Unintended Consequences

One unfortunate aspect of the cold regulatory climate in the U.S. has been the disappearing act performed by many forex brokers. A fair amount of forex brokers have left the US market due to the expenses associated with complying with the new regulations. What that has done is give dominant market share to big brokers like FXCM and GFT and left US traders with less choice. That means there are less places to park your forex robot and that’s not a good thing.

At this point, the regulatory environment in the U.S. can’t be considered anything other than hostile for traders and we wish we could say the forecast was rosier for forex robots in the States, but it simply isn’t.

Author Bio: Retired Canadian Economist. My main activity since Winter 2006 is trading Forex. I’ve been trading currencies online with the help of EA’s (BTW, the best source for EAs is Forex Robots) and I currently manage trading accounts at two Forex brokers in the US and in UK respectively

Category: Finances
Keywords: Forex Robots, Day Trading, Forex, Forex Brokers, Finacial Advisors, Expert Advisors