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The One Nobody Talks About

  • #41
  • Feb 15, 2009 2:24am Feb 15, 2009 2:24am
Have you all forgoten that it can happen in your favour also? Now that would be a nice day,like winning a lotery.
  • #42
  • Edited 4:31am Feb 15, 2009 4:30am | Edited 4:31am
Quoting happy camper
Have you all forgoten that it can happen in your favour also? Now that would be a nice day,like winning a lotery.
Yes, but if you are looking to play the lottery you can get a better value lottery ticket. If you are wanting to cash in a disaster, buy very out of the money options. Calls on gold and oil, Puts on equity indexes. Even if you not trying to "cash in on bad news", the above strategy can be used to protect your portfolio from disaster.
In trading you are only as smart as your dumbest mistake. - Ralph Vince
  • #43
  • Feb 15, 2009 6:15am Feb 15, 2009 6:15am
Quoting happy camper
Have you all forgoten that it can happen in your favour also? Now that would be a nice day,like winning a lotery.
unfortunately if price gaps above your profit limit your broker will fill you at your limit price regardless. If they cant fill you at your price on a losing position then you cop the extra losses but if they cant exit on a winning position they will pay you out at your limit price and pocket the rest. funny how it always works in there favour
BTC Return This Year: na
  • #44
  • Feb 16, 2009 7:56am Feb 16, 2009 7:56am
Quoting M.A.C.Doug
unfortunately if price gaps above your profit limit your broker will fill you at your limit price regardless. If they cant fill you at your price on a losing position then you cop the extra losses but if they cant exit on a winning position they will pay you out at your limit price and pocket the rest. funny how it always works in there favour
Yes,but only if you use profit targets,which i personaly do not. I do not gamble on this option or concider trade it. All i am sayin is that if you can have such a bad luck that you loose money on something like that,you can also have such a good luck to profit from it,if you do not use profit limits offcourse.Either way,it is a surprise.
  • #45
  • Feb 16, 2009 9:17am Feb 16, 2009 9:17am
I think that if something like that happened on the forex market, your fx account would be one of your least concerns.
  • #46
  • Feb 16, 2009 9:35am Feb 16, 2009 9:35am
Well the problem is being highly leveraged. Skip that part, and the rest takes care of itself.
  • #47
  • Feb 16, 2009 12:38pm Feb 16, 2009 12:38pm
It this tdion:
You have account in euro, open short [email protected]
Price falls 15000 pips. You close position with 15000 USD profit, and change them to deposit currency what gives you minus 7500EUR.
What would you do?
  • #48
  • Feb 24, 2009 5:27pm Feb 24, 2009 5:27pm
in response to post 17, I asked FXCM directly... and this was the response:

me:
"so, say, if a trade was open, but a stop loss could not be filled due to a sudden massive shift in price, the trader would not be liable, even then, for a potentially negative account balance if the price was eventually filled 100's of pips beyond the stop loss."


fxcm:
"correct"
"Discipline is the key ingredient to Personal Freedom"
  • #49
  • Feb 25, 2009 11:47pm Feb 25, 2009 11:47pm
Quoting Takisd
Account can't go below 0. Because theoretically, you are only trading the money that you have.
if only it was that easy.

Tidion makes a great point here, most brokers have a close out level say 75% of the deposit.....

if it ticked up 1000 there would be minimal chance for the auto stop to fill u also is there a price?? technically no not till the next tick comes and u have a new traded price if this is 900 over your stop well you could owe your broker a lot of money depending on the position and your free cash.

remember your trading margin fx.... I stress MARGIN

cheers
  • #50
  • Feb 25, 2009 11:52pm Feb 25, 2009 11:52pm
Quoting blacksun1
nope. anything that can go to zero has limited risk. thats why long options are limited. if you buy, the farthest it can go down is 0. if you sell, it can go up infinitely. in forex, a currency pair can never reach zero, because currency prices are relative.
sorry....

if u buy a put or a call the only risk u face is the loss of the premium.

if you write an option, calls have unlimited risk. Puts risk, is to zero on the underlying.

cheers
  • #51
  • Feb 26, 2009 8:19am Feb 26, 2009 8:19am
Quoting >Apocalypto<
sorry....

if u buy a put or a call the only risk u face is the loss of the premium.

if you write an option, calls have unlimited risk. Puts risk, is to zero on the underlying.

cheers

well yeah, but you havent done anything. buying a put or call isnt going to make you any money. not until you exercise it, at which point you do start taking risk. but when you havent done anything, of course there isnt any risk. and youre right, when you buy the option, the only risk is the premium, but again, an option isnt an investment tool until you actually exercise it. until you do that, it is pretty much doing nothing. now, if your planning to sell the option to someone else for money, thats entirely diferent, but most people dont buy options with the hope of selling them for profit.
  • #52
  • Feb 26, 2009 10:15am Feb 26, 2009 10:15am
Quoting pipsalot
I think that if something like that happened on the forex market, your fx account would be one of your least concerns.
Yup.

If a nuke goes off, perhaps you should worry more about the millions of lives lost than some money in a trading account.
  • #53
  • Feb 26, 2009 1:29pm Feb 26, 2009 1:29pm
Quoting blacksun1
well yeah, but you havent done anything. buying a put or call isnt going to make you any money. not until you exercise it, at which point you do start taking risk. but when you havent done anything, of course there isnt any risk. and youre right, when you buy the option, the only risk is the premium, but again, an option isnt an investment tool until you actually exercise it. until you do that, it is pretty much doing nothing. now, if your planning to sell the option to someone else for money, thats entirely diferent, but most people dont buy options...
Hi Blacksun1

you can buy puts and calls to make a profit.

You buy a put option at a prenium of 1.45. the underlying prices falls quickly you can then sell that option for a prenium of 1.85. the speed of the decline (volitiity) increases the delta and also adds to the prenium.

Many people do this in Australia on Exchange Traded Options.

Also many people sell options to make a profit. they hedge the option with CFDs and shares to cover incase they get excerised.

I am not an options guru but I have traded and sold option s before trading FX.

Hope that helps.

Cheers,
  • #54
  • Feb 26, 2009 1:40pm Feb 26, 2009 1:40pm
Quoting >Apocalypto<
Hi Blacksun1

you can buy puts and calls to make a profit.

You buy a put option at a prenium of 1.45. the underlying prices falls quickly you can then sell that option for a prenium of 1.85. the speed of the decline (volitiity) increases the delta and also adds to the prenium.

Many people do this in Australia on Exchange Traded Options.

Also many people sell options to make a profit. they hedge the option with CFDs and shares to cover incase they get excerised.

I am not an options guru but I have traded and sold option s before trading FX.

Hope...

yeah, i mentioned that in my previous post. but im pretty sure that's not what the dude meant about options. i think he meant that buying an option as you would buy a stock or a futures contract has no risk. which is true. but it also has no reward. thats all i was saying. but yeah, i agree with the options for profits idea. i even know a guy who used to do it.
  • #55
  • Feb 26, 2009 2:04pm Feb 26, 2009 2:04pm
  •  zykas
  • | Joined Oct 2008 | Status: ... measure thrice, but cut once | 196 Posts
[quote=>Apocalypto<;2565469]if only it was that easy.

Tidion makes a great point here, most brokers have a close out level say 75% of the deposit.....

if it ticked up 1000 there would be minimal chance for the auto stop to fill u also is there a price?? technically no not till the next tick comes and u have a new traded price if this is 900 over your stop well you could owe your broker a lot of money depending on the position and your free cash.


Practically, I wonder how many will continue with a broker they owe after being filled in beyond what they have...That should be bad debt, I suppose.
I like the Big Dogs because I trade like them
  • #56
  • Feb 26, 2009 4:13pm Feb 26, 2009 4:13pm
Quoting clockwork71
Well the problem is being highly leveraged...
How right you are.

Td brings up a valid point, clockwork provides the simple and only answer.

Abuse of leverage is a recipe for disaster.
  • #57
  • Apr 15, 2009 1:17am Apr 15, 2009 1:17am
Howdy. Been quite awhile getting ready for a move to Germany. Oh no, SL and myself will be neighbors. That could be a nuclear reaction in itself.


Now when the 5,000 people lost their lives in 9/11 - and as tragic as it was - we are still left here to live. So - I will always have an eye on my account, because I have responsibility to take of myself and my family.

Quoting smittens4212
Yup.

If a nuke goes off, perhaps you should worry more about the millions of lives lost than some money in a trading account.
The real reason I pulled this thread from the bottom of the sandpile is to stress the importance of a huge slippage. This probably won't happen during trading hours - look at 9/11 prices and you'll see it was a normal day, even though wallstreet shut down and a plane hit the pentagon.

But a nuke going off in a central bank - that would be altering, wouldn't it? A definite concern of mine, as unlikely as it is.

Now, the real issue is the weekend gap. This has been noted when a nuke goes off, and the banks have time to pull orders on one side of the resting price. "Resting" because it isn't actively traded. So you come in Monday, and have your gap against you.


So the real question is, should you buy "out of the money" puts and calls on currency futures - how much would it cost? In the end, it is YOUR money. And if other people didn't get this insurance, at least you had the foresight to protect yourself.
  • #58
  • Last Post: Apr 15, 2009 8:42am Apr 15, 2009 8:42am
Quoting tdion
Howdy. Been quite awhile getting ready for a move to Germany. Oh no, SL and myself will be neighbors. That could be a nuclear reaction in itself.


Now when the 5,000 people lost their lives in 9/11 - and as tragic as it was - we are still left here to live. So - I will always have an eye on my account, because I have responsibility to take of myself and my family.



The real reason I pulled this thread from the bottom of the sandpile is to stress the importance of a huge slippage. This probably won't happen during trading hours - look...
That is one of my greatest worries,I mean the market gapping against me during the weekend so I never have any open positions at friday.
During normal market times a huge gap down ,1000 pips or something like that in a major currency pair ,is not probable as there will always be people willing to take the other side because some people tend to learn news faster than others.
It could eventually move 1000 pips down in a matter of minutes if something of that magnitude occurs...but gap down I dont think so.
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