At the bottom of this thread, i outlined a possible black swan event in crude oil. some discussion followed: http://www.elitetrader.com/et/index...hould-one-use-in-a-single-trade.206664/page-5
Hi LuisHK, THanks for getting back and shedding more light into your situation. And especially I appreciate someone else who seems to be willing to stick to the truth and is being honest even at times of losses. I guess when I said that LMAX and some others still showed prices and filled orders I should have been more precise: The price gaps were huge, spreads were huge, what I meant was that one could have easily gotten filled north of 0.98. That, to be fair, is still around 20% below the cap level but at least it is far away from the lows around 0.85.
I justy came across this ad in another thread. Hilarious...notice the last legal disclaimer at the bottom (at least they are honest about THAT PART, lol).
You gambled and you lost. That's about all there is. As bucketshops often take the other side of people's bets, some of them may choose to forgive the negative part of the balance. They can do that because your bet was against them directly and they have the option to limit the money grab to just what was in the account and nothing beyond.
Here is a brief explanation: http://sg.saxomarkets.com/about-sax...-faces-classic-trilemma-as-eurchf-floor-nears Honestly, the whole mess in the EU really forced the Swiss to try to maintain the cap. Think of the Swiss as a highly leveraged EU economy. If the EU goes into deep deflation, it hits the Swiss 3X. A lot of countries in Europe opted to try to peg vs joining the EU. Denmark is one example. Britain is another. They were pegged to the DM in the 1990's before the establishment of the EU. Most countries think it's a good idea to peg with active trade partners. It doesn't stop economic shocks but it means they go through the shocks together which most central banks favor over the isolationist route. Honestly it would have worked but the EU turned out to be a total mess. And btw, the EU is itself a peg. And the EU will eventually fail as all pegs do.
THIS IS SOMETHING FEW ARE FOCUSING ON.. THIS DAMN EURO ITSELF IS A PEG AND A DISASTER IN THE HAPPENING.
The problem is not solvable. The solution will likely cost you more than your anticipated profit on the trade. As Maverick has so correctly pointed out pegged (or more accurately rigged) markets at some point unwind and if you are betting on the side of the central bank what you are saying is that unwinding won't happen while I'm in this trade. BTW, I dismiss the commonly held notion that the SNB action was a Black Swan event. Truly Black Swan events are not just unpredictable but widely held to be unimaginable or at least almost unimaginable. Once the ECB was seen to be considering quantitative easing the SNB had to at least consider a decoupling. And for those that want to make the point that they had committed to holding firm @1.20 PLEASE do not make a fool of yourself. What central banks do before throwing in the towel is lie. And sometimes just hours before they turn. It has always been such and shall always remain such!
Yeah, my preliminary calculations appear it be in line with what you're saying. I'm wondering if fx futures options are the only way to go, or will the spreads, slippage commissions on those make that unrealistic as a replacement for forex. I have a trading strategy that has positive expectancy in forex. Got me 15% last year risking 1% per trade. Max DD was about 10% or so. Around 300 trades total for the year. This year, I've been kicking up the risk to 4% per trade. (Drawdown's don't bother me psychologically but I wanted to prove the strategy with smaller risk first.) I've always avoided trading CHF pairs, ironically because it correlated so heavily with the Euro that I didn't see the point. Sticking only to EUR.USD, USD.JPY, GBP.USD and AUD.USD . I'm now starting to have concerns that something similar may happen with AUD.USD and haven't decided whether or not to continue with that pair after this. That being said, after all this the idea that my pockets could be emptied out of the blue because some central banker decides to lie to the world is just not workable. I'm wondering how transferable my strategy would be to FX options.