I heard that Oanda honored stops that people had placed. Can anyone verify ? I'm with IB but I was not in a CHF pair. Yesterday may have changed forever the way I think about trading. There is literally nothing a person who just so happened to be on the wrong end of that trade could have done to protect themselves. Even if you had placed a stop and used good money management, your entire account was done. Period. If that stop was not honored Don't even mention anything about excessive leverage being an issue. Even if you had used leverage as low as 4X it would have blown your account.
yes, they honored stops but sometimes you would get a msg that your order had been capped then they would ask if you want to cancel or continue you worry too much learn how to manage your money and you will not be blown out I got on the right side, I made a lot of money but if I was on the wrong side I would have lost a lot of money but it is not a life changing event just because they give you 40 to one doesn't mean you must use it You don't have to go all in every time, or for that matter all out on just one trade I like that short eur.chf and plan to stay with it for a long time. After a fantastic two days, I go into the weekend with a minimum position, no stop. It can go to infinity, I have 4 other pairs I am working on, so it is just about 1/5th. But it sure was nice while it lasted.
That's unlikely. If the stops were honoured, then they wouldn't be in a situation where they had to forgive people's negative balances. The negative balance could only have arisen if there had been no stops or no execution of stops.
There are some situations where nothing is going to protect you except some deep out of the money options. It's not cheap probably but there are just some situations where nothing else is going to protect your account.
jaygould. I was weeks away from firing off my autotrading from ib demo to real account and at first I did not believe your orig post. I then went back and calculated if I had been long a measly 1 lot - 100k usd/chf trade on . I now agree with you. It would've wiped out trader's capital if he was leveraged 10:1 ie 10k account would've been gone after the announcement EVEN if he had stops. A 5:1 trader would've lost 50% of his 20k account. My question is-- could a trader take certain steps to make this very remote possibility even MORE remote? For example. dont' take any trade signals from 1-2AM EST and 8-9AM EST when most big announcements happen. Most importantly- totally avoid any pairs where 1 fx has some form of artificial peg which if removed would create extreme volatility vs a free flowing currency pair, which while not immune to volatile moves wouldn't be at a magnitude such as CHF? Insights anyone?
I don't trade currency so I might not be giving the correct answer, but holding a 4x margin position overnight does not sound like good money management. That seems super high risk.
For a while I thought having a ticker trade 24hour per day eliminates gap risk. I guess I was dead wrong. I still think if there are fx pairs that don't have artificial pegs, you eliminate a big cause of extreme gap event.
Fx pros, please chime in. How many 20% +- GAP moves happen in the Fx space on currencies that trade w/o artificial pegs? Thanks.
Who told you you could cancel the cap ? When I tried the Platform froze, and I had to start again on a new computer. it happened twice. Trying to hedge a eurchf future position when there were no quotes on the futures, I put the first eurchf order when the euro was still above 1.05 but when the first order went through euro was already below 1 chf. If IB is owed 120million on the chf, mess, that means customers SL were not hit smoothly. Must have been some very nasty slippage and liquidation. Worth of note is as long as there were no quotes in the futures, the account didn't show a loss even though the euro was crashing, which at least might have avoided some traders instant liquidation, before the price of the spot stabilized and there were quotes again on the futures.
Gabby, in the history of currency markets, no peg has ever not ended in disaster. They all fail. While this announcement was completely out of the blue, most FX traders knew the peg could not be sustained. Trading the Swissy under these conditions is a high risk situation. In 2008 during the credit crisis we saw many crazy moves, but not gaps like this. There have been a few other gaps like this in history. One was when the US went off the Gold standard in the 1970's. Most of the currencies of the world were pegged to the dollar while the dollar was pegged to Gold. Pegs are not sustainable because eventually all countries run out of reserves to defend them when inflation arises and it usually does when a peg is kept artificially low.