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#469294 - 11/10/17 15:50 Clarify: NFA-Forex-account vs. other USA accounts
AndrewAMD Online
Senior Member

Registered: 02/21/17
Posts: 310
Loc: Chicago
What is an "NFA account"? If one reads the Zorro manual, one might think it simply means any account in the USA. I do not think this is so.

* FINRA regulates the (USA) stock market.
* CFTC regulates the (USA) commodity market.
* And finally, NFA regulates the (USA) futures and forex markets.

NFA stands for National Futures Association. Participating organizations are:
* (USA) futures brokers
* (USA) futures options brokers
* (USA) forex brokers

The Zorro manual says all NFA accounts have to observe NFA Compliance Rule 2-43(b).

Actually, all NFA-regulated forex brokers must observe this rule.

Therefore:
* USA stocks & options, etc.
* USA futures & futures-options,

... are traded simply with orders to change a net position. In other words, "trades" are not a real thing, FIFO does not apply, and partial-closing is allowed because trades are irrelevant. And, technically, any order that puts my net position closer to or equal to zero is an order to close, regardless of how a "trade" ended.

**And**, depending on the broker, you can sometimes change the net position of an asset from net positive (long) to net negative (short) with a single trade.

Can the manual be modified to:
* Clarify the distinction between NFA-forex regulations and other USA-style regulations?
* Clarify how to handle the USA net-position style accounts, both from a Broker API and User-end perspective? (I assume I need virtual hedging with partial closing allowed, but I'm not sure.)

Thanks.

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#469299 - 11/10/17 17:29 Re: Clarify: NFA-Forex-account vs. other USA accounts [Re: AndrewAMD]
jcl Offline

Chief Engineer

Registered: 07/22/00
Posts: 26363
Loc: Frankfurt
No, explaining regulations is beyond the scope of the manual. The term "NFA account" is purely technical and unrelated to real regulations.

A NFA account has several technical distinctions to a non-NFA account, but it is not necessarily a US Forex account. Many US Forex brokers don't need the NFA flag. Examples are Oanda or most MT4 brokers.

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#469300 - 11/10/17 17:36 Re: Clarify: NFA-Forex-account vs. other USA accounts [Re: jcl]
AndrewAMD Online
Senior Member

Registered: 02/21/17
Posts: 310
Loc: Chicago
My main issue is this: If I set the NFA flag, what happens?

* Is FIFO enabled?
* Is partial closing disabled?
* Is virtual hedging disallowed?

If any of these answers are "yes", then the NFA flag only relates to NFA forex and **not** to everything else. That is my conundrum.

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#469302 - 11/10/17 17:40 Re: Clarify: NFA-Forex-account vs. other USA accounts [Re: AndrewAMD]
jcl Offline

Chief Engineer

Registered: 07/22/00
Posts: 26363
Loc: Frankfurt
FIFO is internally dealt with, partial closing is enabled for phantom trades, and virtual hedging is allowed. Real hedging is not allowed.

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#470615 - 01/25/18 01:01 Re: Clarify: NFA-Forex-account vs. other USA accounts [Re: jcl]
AndrewAMD Online
Senior Member

Registered: 02/21/17
Posts: 310
Loc: Chicago
Originally Posted By: jcl
partial closing is enabled for phantom trades
But what about pool trades?

Back to blaming the manual wink

Here is Hedge:
http://www.zorro-trader.com/manual/en/hedge.htm
Quote:
If NFA is set, trades are not partially closed in Hedge = 5 mode, but are always fully closed.

I sure hope this is incorrect, because this is odd. Why would partial closing be disallowed in Zorro's NFA mode?

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#470619 - 01/25/18 11:33 Re: Clarify: NFA-Forex-account vs. other USA accounts [Re: AndrewAMD]
jcl Offline

Chief Engineer

Registered: 07/22/00
Posts: 26363
Loc: Frankfurt
I don't know, but since it is in the manual, I fear it is most likely true. NFA switches off anything including partial closes.

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#470632 - 01/25/18 18:41 Re: Clarify: NFA-Forex-account vs. other USA accounts [Re: jcl]
AndrewAMD Online
Senior Member

Registered: 02/21/17
Posts: 310
Loc: Chicago
Originally Posted By: jcl
I don't know, but since it is in the manual, I fear it is most likely true. NFA switches off anything including partial closes.
Do you agree that Zorro's NFA mode should not require this constraint, especially since this does not apply to all order-only (no-trade) accounts? I really would like this removed.

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#470633 - 01/25/18 19:09 Re: Clarify: NFA-Forex-account vs. other USA accounts [Re: AndrewAMD]
jcl Offline

Chief Engineer

Registered: 07/22/00
Posts: 26363
Loc: Frankfurt
I must agree. This will be put on the Todo list.

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#470634 - 01/25/18 19:17 Re: Clarify: NFA-Forex-account vs. other USA accounts [Re: jcl]
AndrewAMD Online
Senior Member

Registered: 02/21/17
Posts: 310
Loc: Chicago
Thanks!

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