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Thread: Black swan events / CHF Peg

  1. #1

    Black swan events / CHF Peg

    Hello guys, my trading better and is getting better, and ive began to consider risk so eleminate the possibility to get burned.

    I just trade FX and dax, and when iam right, the largest move in history was the eur/chf peg event?

    I wonder if anyone here was around that time? Whether there are any website or youtube movie which reveals just how big the slippage was from peoples, and also what happend stoplosses. The more I read on internet, the more different answers I get...

    And my final question, what might lead to a movement big or close as big today, if you hit me up with your worst possible situation, but ONLY on maiors FX pairs. Trying to understand the worst situations, and maybe its impossible to prepere for this, but just wish to learn what match Iam in

  2. #2
    Quote Originally Posted by ;
    Hello guys, my trading is becoming better and better, and ive started to consider risk so eleminate the option to become burned. I only trade forex and dax, and if iam right, the largest move in history was the eur/chf peg occasion? If anybody here was around that time, I wonder? Whether there are any website or youtube movie that shows what happend, and also how big the slippage was from peoples stoplosses. The more I read on internet, the more different replies I buy... And my last question, what might lead to some movement big or near as big now, if you...
    It's Ideal to avoid pegged pairs at all cost, like CHF, HKD

  3. #3
    Prob the question that never gets asked, so good work for cottoning on so quick.

    THEN
    Between Reuters composite (interbank traded prices) and retail brokers the low was 12% higher (.8592 vs 0.9652 using FXCM MT4 demo)

    On a broker degree, here's what happened. They disposed of their own losing positions immediately, No transactions were opened or closed until the favorable positions left up for the reduction (net flat). Then they saw this tremendous potential profit and so trimmed the downside too to pay by locking platforms to prevent everyone out from taking profits.

    If you were on the wrong side, you got out in the worse possible price (and owed that money to the broker). If you were positive that you could not get your trade out until they'd made up for any losses. You won't find a definitive answer of slippage- is dependent upon the broker and whether you were daily.

    Gets worse still - FXCM are alleged to have millions disappear from their books daily, and are currently in court exercising the gap between gross negligence and fraud.

    I was trading that day and remember it well. Months prior due to the SNB manipulations, I had decided to not exchange the pair due to the danger. While there was obvious downside on eurchf the SNB actions meant you had a buffer of several hundred pips to withstand their obstacles.

    Most brokers followed suit and decreased leverage on the swissy weeks before the event too.

    NOW
    To today. These potential events keep me awake at nighttime, and have been considering buying alternative straddles just as a safety, even though these have their own downside. Here's my read on the market risks and other people.

    Three key risks to be on the lookout for : govt intervention, event risk (natural disasters like Fukushima) and event risk (political/ economic).
    While interest rates are crucial, the authentic big multi-sigma goes come in interventions or natural disasters (eg Japan's Fukushima). Combine these with lean liquidity (Asian sessions) and may reestablish any difficulty.
    My principles:
    - No positions over the weekend, reduce leverage overnight.
    - Central bank statements We will not interfere - imply nothing. They lie, deliberately.
    - Current at risk currencies: GBP has a Brexit risk - watch for collecting momentum for instant referendum. JPY, which are usually the ones to see and weaker CHF are both in exports' interests, and are welcome.

  4. #4
    Quote Originally Posted by ;
    Prob the most crucial question that never gets asked, so very good work for cottoning on this quick. THEN Between Reuters composite (interbank traded prices) and retail brokers the low was 12% greater (.8592 vs 0.9652 with FXCM MT4 demonion) On a broker level, here's exactly what happened. They disposed of their losing positions immediately, No trades were opened or closed until the positive places created up for the loss (net flat). They then saw this enormous potential gain for the positive positions and so trimmed the disadvantage too to pay for the topside by bending...
    WOW, what a response!!!

    Thanks a lot for this info sir, rly appriciate it!

  5. #5
    Quote Originally Posted by ;
    quote There have been some market flash crashes in recent decades, but I'm not sure how significant they really were.
    Yes there were some nasty ones however they seem to be more because of market mechanisms (computers triggering stops without a thought or common sense) and some chicanery thrown in. You can wager with FX on the chicanery part

    The thing to do is study the price action. In most of them, if not all, the price action leading to the flash crash was really horrible, price looking sick and wounded. Any buyer before the actual crash was trying to decide on a low. That's how traders can get CONFIDENCE in not being positioned the wrong way, study the price action of any huge dump because there are generally many clues as to additional weakness. I'm not saying if you study you'll have the ability to pick up to a flash crash before it happens (we only get 0.5-1 annually I guess and those are of different magnitudes), only that the price action ahead of the event suggests additional weakness whether another 30 ticks or 300.

    Obviously with a proper Black Swan there'll be zero indiions in the price action because nobody saw it coming. So it is possible for any market to be at all-time highs and looking very good and then BAM. However, in such an occasion the market probably won't create its actual transfer until the event is suitably broadcast. 9-11 was a good example, it probably took 20 mins on its market to realise what had just happened and if everybody knew the actual moves could happen. But in the 5-10 mins following the event prices did get struck but maybe not enough for anybody to endure a devastating loss because nobody needed the proper facts. So yes, a very bad fill on your stop but you're still in the match...

  6. #6
    Quote Originally Posted by ;
    The Swiss massacre was only that, not a Black Swan. Study your financial foundation since when there is a currency peg in activity it's normally only a matter of time before its broken as with the Swiss. Everybody who lost, lost because they didn't know their financial foundation or did but were stupid and choose to ignore it. .
    Kidding right? It had been the swanniest of black swans the planet has ever seen. It was the *largest* lone move in FX history. Ever. Dozens of businesses went bankrupt, several hundred investment providers, thousands of traders and not to mention a whole overhaul of risk analysis in each major western central bank thereafter.

    Several years of defending the peg before the day revealed that the SNB, that had plenty of reserves to keep on protecting it had been likely to do so again. The buffer was so wide it supposed even if you had been on side, shorting the pair was wildly dangerous.

    However, your eccentric confidence made me look again at the chart carefully and I seen a timing trigger so bloody amazing, I can't thank you enough. So you understand, horses for courses

  7. #7
    Quote Originally Posted by ;
    The Swiss massacre was just that, not even a Black Swan.
    Well said ! Anybody who disagrees needs to be on heavy drugs or emotionally ill.

  8. #8
    Can Not argue with your logic that is astute there son

  9. #9
    Quote Originally Posted by ;
    Can Not argue with your astute logic there Boy
    simple logic: That the peg can be removed at any time... SURPRISE you Are IGNORED

  10. #10
    Quote Originally Posted by ;
    quote simple logic: that the peg could be removed anytime... SURPRISE you're IGNORED
    You made my night gumbo, truly. Enjoy

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