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Black swan events / CHF Peg

  • #21
  • May 1, 2018 1:55pm May 1, 2018 1:55pm
Quoting tomorton
{quote} There have been some market flash crashes in recent years, but I'm not sure how significant they really were.
Yes there have been some nasty ones but they seem to be more due to market mechanics (computers activating stops with no thought or common sense) plus some chicanery thrown in. You can bet 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 up to the flash crash was really nasty, price looking sick and wounded. Any buyer before the actual crash was attempting to pick a low. That's how traders can get CONFIDENCE in not being positioned the wrong way, study the price action of any big dump because there are normally many clues as to further weakness. I'm not saying if you study you'll be able to pick up on a flash crash before it happens (we only get 0.5-1 a year I reckon and those are of different magnitudes), just that the price action before the event suggests further weakness whether another 30 ticks or 300.

Obviously with a proper Black Swan there will be zero clues in the price action because nobody saw it coming. So it's possible for any market to be at all-time highs and looking really good and then BAM. However, in such an occasion the market probably won't make its real move until the event is properly broadcast. 9-11 was a good example, it probably took 20+ mins for the market to realise what had just happened and when everyone knew the real moves could happen. But in the 5-10 mins after the event prices did get hit but not enough for anyone to suffer a catastrophic loss because nobody had the proper facts. So yes, a really bad fill on your stop but you're still in the game...
Road To Wisdom? To err and err and err again, but less and less and less...
  • #22
  • May 1, 2018 4:48pm May 1, 2018 4:48pm
Quoting Calculus
The Swiss massacre was just that, not a Black Swan. Study your financial history because when there's a currency peg in action it's normally just a matter of time before its busted as with the Swiss. Everyone who lost, lost because they either didn't know their financial history or did but were stupid and choose to ignore it. .
Kidding right? It was the swanniest of black swans the world has ever seen. It was the *biggest* single move in FX history. Ever. Dozens of companies went bankrupt, a few hundred investment companies, thousands of traders and not to mention a total overhaul of risk evaluation in every major western central bank thereafter.

Several years of defending the peg prior to the day showed that the SNB, who had plenty of reserves to continue defending it were likely to do so again. The buffer was so wide it meant even if you were on side, shorting the pair was still wildly dangerous.

However, your outlandish confidence made me look again at the chart carefully and I spotted a timing trigger so bloody beautiful, I can't thank you enough. So you know, horses for courses
  • #23
  • May 1, 2018 5:02pm May 1, 2018 5:02pm
Quoting Calculus
The Swiss massacre was just that, not a Black Swan.

well said ! anyone who disagrees must be on heavy drugs or mentally ill.
  • #24
  • May 1, 2018 5:05pm May 1, 2018 5:05pm
Can't argue with your astute logic there son
  • #25
  • May 1, 2018 5:09pm May 1, 2018 5:09pm
Quoting triphop
Can't argue with your astute logic there son
simple logic: the peg can be removed at any time... SURPRISE you're IGNORED
  • #26
  • May 1, 2018 5:22pm May 1, 2018 5:22pm
Quoting HeyYou
{quote} simple logic: the peg can be removed at any time... SURPRISE you're IGNORED
You made my night gumbo, truly. Enjoy
  • #27
  • May 1, 2018 11:29pm May 1, 2018 11:29pm
Quoting triphop
{quote} Kidding right? It was the swanniest of black swans the world has ever seen. It was the *biggest* single move in FX history. Ever. Dozens of companies went bankrupt, a few hundred investment companies, thousands of traders and not to mention a total overhaul of risk evaluation in every major western central bank thereafter. Several years of defending the peg prior to the day showed that the SNB, who had plenty of reserves to continue defending it were likely to do so again. The buffer was so wide it meant even if you were on side, shorting...

No long-term TA traders should have been long EUR/CHF when this event occurred. The charts had been saying for weeks that only further falls were to be expected from price. The simple principle of trading what you see rather than what you think very definitely applied, let alone not trading what some Swiss suit says he thinks.
  • #28
  • May 2, 2018 1:40am May 2, 2018 1:40am
Quoting triphop
{quote} Kidding right? It was the swanniest of black swans the world has ever seen. It was the *biggest* single move in FX history. Ever. Dozens of companies went bankrupt, a few hundred investment companies, thousands of traders and not to mention a total overhaul of risk evaluation in every major western central bank thereafter. Several years of defending the peg prior to the day showed that the SNB, who had plenty of reserves to continue defending it were likely to do so again. The buffer was so wide it meant even if you were on side, shorting...
Trip, this is where we disagree because as I said in my first post, financial history says whenever there's a currency peg there's always a risk it will break in the future, either by the market attacking it, or the Central Bank abandoning it. A Black Swan is by definition totally unforecastable (9-11, Tokyo earth quake etc) whereas past history with the Swiss currency said 'beware' which is exactly why so many stayed away from the cross.

Yes, the SNB had been defending it and had lots of money but that doesn't prove anything apart from the peg had held in the past and they had lots of money. The risk on the downside was always there.

I agree, shorting the pair was very dangerous which is again why many choose to stay well clear of the cross and trade something less hard with far less risk.

No I didn't trade it, there was no trigger in the charts as you suggest, but what there was, was a really nasty looking intraday, day and weekly chart that very clearly said - DO NOT GO LONG.
Road To Wisdom? To err and err and err again, but less and less and less...
  • #29
  • May 2, 2018 2:35am May 2, 2018 2:35am
It will remain the regret of my trading career for a long time that I was not short EUR/CHF for this event. There were repeated bearish signals and shorting opportunities throughout 2014. Hey ho..........
  • #30
  • May 2, 2018 3:12am May 2, 2018 3:12am
Quoting Calculus
{quote} Trip, this is where we disagree because as I said in my first post, financial history says whenever there's a currency peg there's always a risk it will break in the future, either by the market attacking it, or the Central Bank abandoning it. A Black Swan is by definition totally unforecastable (9-11, Tokyo earth quake etc) whereas past history with the Swiss currency said 'beware' which is exactly why so many stayed away from the cross. Yes, the SNB had been defending it and had lots of money but that doesn't prove anything apart from...
Fair enough Calculus, you've clearly thought this through. My definition though is any out of the ordinary event unforeseen by the majority, and the time and scale of this places it in that category. It sounds like splitting hairs but every effect has its cause so it's about numbers. To a tsunami specialist, they'd have avoided the yen for example. To the family of the retards flying the planes into WTC, they'd have shorted the stock market presumably. To a technical long term trader ignoring the danger of SNB intervention, it's a perfect short (Tom!). But these are on the margins. All of us have blind spots, myself included and my point is something like this could happen to anyone. And like a black swan just because we've never seen one, doesn't mean they don't exist.
  • #31
  • May 2, 2018 3:51am May 2, 2018 3:51am
Quoting triphop
{quote} All of us have blind spots, myself included and my point is something like this could happen to anyone. And like a black swan just because we've never seen one, doesn't mean they don't exist.
You got that right buddy. EVERY ONE of us is at risk of the most crazy event hitting us hard. And anyone who thinks otherwise is not thinking right.
Road To Wisdom? To err and err and err again, but less and less and less...
  • #32
  • Last Post: May 7, 2018 4:50pm May 7, 2018 4:50pm
Quoting Rgrg
Hello guys, my trading is getting better and better, and ive started to think about risk so eleminate the possibility to get burned. I only trade forex and dax, and if iam correct, the biggest move in history was the eur/chf peg event? I wonder if anyone here was around that time? IF there are any site or youtube video that shows what happend, and how big the slippage was from peoples stoplosses. The more I read on internet, the more different answers I get... And my last question, what could lead to a movement big or close as big today, if you...
it is best to avoid pegged pairs at all cost, such as CHF, HKD
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