Forex FAQ: Are Stop Orders Blocked in Forex Trading?

The following blog post is a response to a question I received from a rapid forex blog reader. This is a question that many forex traders would be curious about, so I'm sharing it as part of the Forex FAQ feature of the rapid forex blog!

Here's the message I received:

"Hi Brian:

I've traded futures but not forex and would like to do some forex trading. I understand that the rules have changed for forex recently and that stop orders can no longer be accepted by forex brokers. If that is correct, how can a small trader like myself protect a trading position without using stops?

Thanks,
George"

That's a great question.  I think you're referring to the US forex regulations that kicked in last year. I've had no problems using stop orders in my forex trading account, but I thought I would also ask my top two favorite Forex Brokers just to make sure using stops is still possible with the most popular brokers.

I asked FXCM about placing stop orders on their platform and their response is below:

Brian Campbell: I understand that the rules have changed for forex recently and that stop orders can no longer be accepted by forex brokers. Is that correct?

FXCM's Response: yes, you can trade using stops

Brian Campbell: Has there been any news regarding stops changing in the forex?

FXCM's Response: yes there has been, the major change that US regulators facilitated is now that all trades must be FIFO compliant.  FIFO stands for first in first out, meaning, if you have a few trades in 1 instrument then you can only choose to close the position that you opened first. That is why no stops on individual tickets are allowed, but you can put a stop on a whole currency pair and then if you have more then on 1 trade on it, the trade opened first will be closed first with that stop.

Alternatively, you can open a FXCM UK account in dollars, where the stop functionality has not changed.

I also asked ACM for their policy on placing stop orders for online forex trading. And got the following:

Brian Campbell: I understand that the rules have changed for forex recently and that stop orders can no longer be accepted by forex brokers. Is that correct?

ACM's Response: Maybe this rules applicable with some brokers but not in ACM, you still can use stop loss orders – even for US clients.

Brian Campbell: Do you offer the option to open an account in the UK like fxcm does?

ACM's Response: No, we don't as we are Swiss based broker. As we are a FINMA member, we don't need to have a rep offices somewhere else to go around the lows. we have enough license to offer the best for our traders and thats what we do with ACM, you will have the option for short selling, leverage and orders in addition to tax free trading in Geneva.

For my current top 3 brokers (I'm currently testing out eToro), you're able to place stop & limit orders. If you're interested in researching other forex brokers, just ask them if you can place stop orders before you create an account with them.

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