Insane question of the day.

Discussion in 'Forex' started by IShopAtPublix, May 13, 2009.

  1. a)I was wondering what would be the maximum position you can enter on EUR/USD without causing the underlying instrument to move by 0.001 or more?

    b)what would be the impact of someone trying to open a position of $8 billion on EUR/USD?
     
  2. I wish I had to worry about those kind of things...:)

    Anyways, I was reading a section of The New Market Wizards the other day about Bill Lipschutz. If I remember correctly, he said something like: with an $80 billion position, you could move the market 4%. (I could be wrong though)
     
  3. Ok I read his biography and he was a forex trader. Is it 4% or is it 0.04 USD points?
     
  4. I know for sure he was talking about 4%, but I am not completely sure about the $ amount.
    Also, the book I'm referring to was published in 1994.
     
  5. Oxy

    Oxy

    It depends on the liquidity of the price you are trading at, but 8 billion would move the market a ridiculous amount at any time during the day. At most times 100million would easily move the market.

    The impact of an 8 billion dollar order would cause a gigantic spike in the direction of the order, followed by an imediate retrace as the liquidity vacuum is filled after the block trade.
     
  6. 1 billion can move about 50 pips, I read it from somewhere.

    Central bank usually put good chuck of money to slap its currency rate at "quote of day" time.

    FYI; Prime Minister of New Zealand, John Key was a currency trader.
     
  7. that is a pretty insance question

    dang! i'm just trying to get to a position where I can **safely** trade 20 lots at a clip......

    in due time i guess - only been trading fx for a week now and i certainly like it a lot better than index futures and leveraged ETFs
     
  8. aceholic

    aceholic

    Depending on the time of the day, €50 million won't move the market more than 0.0005.

    €8 billion? Depends on how you execute it. If you just hit the market... I wouldn't expect to get completely filled (I could be wrong, never tried that much, and I don't know how much size sits far off the market). If you get that much in the market intelligently, you won't necessarily move the market too badly.

    I would also caution against taking too much from The (New) Market Wizards, those books are quite old and the market has changed considerably. In one interview, a guy said that he'll throw 100million at the market and it'll usually take the starch out of a move. These days, I'll regularly see €20million orders in the market and they don't move the market at all.
     

  9. a)$3 billions (USD)

    b)You can move the EUR/USD market by 0.3% immediately. Certainly you can dominate the market with that for couple minutes, but it probably will not last for long.
     
  10. Where did you get the $3 billion number?
     
    #10     May 14, 2009