•. ,.1 

secretary 

From: 

Sent: 

To: 

Subject: 

Dennis Jorgenson [dennis.jorgenson@adelphia.net] 

Sunday, Apri119, 2009 8:17PM 

secretary 

Hedging 

Received CFTC 

ReeeFEie &ec&ioA 

~J/o7 COMMENT 

We, the self-directed forex investors at large, have at our disposal only three legitimate strategies: 

1) Gambling on which direction the market will take by opening positions supported by (or foolishly 

not supported by) stop losses and by taking profit at fixed points. 

2) Scalping -which is WIDELY considered deviant practice wherein positions are opened and closed 

rapidly, generally within 5-30 pips, generating unnecessary volume. This behavior has been proven to 

increase market volatility and is widely considered by most broker/dealers as poor practice -to the 

point that this strategy is shunned and only moderately tolerated. 

3) Hedging- wherein, a swing or long term trader will offset loss positions with profitable positions, or 

protect profitable positions by locking in profit with short-term offsetting positions giving ample 

opportunity for the loss positions to mature. 

I have personally developed statistical models at tremendous cost that prove that scalping models are 

the least profitable, whereas the hedging strategy proves most profitable by orders of magnitude. 

Since when does the NFA or the CTFC have the right to define how we, the independent investors, 

trade by limiting our methods? I understand that regulation may be necessary for broker/dealers 

offering managed account products -but why the interference on self-directed accounts? I 

understand the risks and the costs, why punish us by forcing us to limit our strategy to gambling or 

scalping? 

The forced implementation of this ruling is going to turn most legitimate long term currency position 

holders into short term scalpers. This is NOT good for the industry and NOT good for FX trading in 

general. How does this ruling protect the client?! Customer beware- volatility will most likely increase 

as once long term position holders are forced to liquidate and market scalping becomes the modus of 

operandi. 

How are we now expected to weather short term volatility? By closing profitable positions!? The 

hedging mechanism in place that currently offers us protection against short term market swings is 

being eliminated by this ruling. In order to withstand soft dips or short rallies, we're now forced to 

close legitimate, viable long-term holdings only to reengage and forced to pay additional broker 

dealer spreads for the reengagement. How does this ruling protect me, the individual, self-directed 

investor?! 

This ruling is absurd and, in my opinion, constitutes a gross misuse of power and investor tampering. 

This ruling will not only break a substantial number of automated trading systems that rely on this 

technique, but the net effect will ultimately serve to damage clients by increasing costs and 

diminishing equity resulting from forced liquidation. This ruling appears to have been established to 

generate greater profit for broker/dealers by forcing scalping and account churning techiniques on 

experienced, long-term Forex traders. Forex trading is risky enough and in no way does this ruling 

protect the investor. 

1 
I am extremely disappointed and will close this complaint as follows: if any damages are incurred with 

my existing holdings as a result of this ruling, this matter will be brought before a legitimate court of 

law. I may require at least six months to square up my hedged positions. Further, I will pass on to my 

broker/dealer any losses incurred based on the sudden, unexplained, unsupported, unnecessary 

implementation of this ruling or from any tampering with currently open positions with my 

broker/dealer by taking legal action, if necessary. 

2 

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