Where is the risk in going long CHF?

Especially with the greek vote coming up.

The way I see it:

1. eurchf is right now only still at >1.20 because the snb pushes against the market.
2. There should be many groups that invest their money into the chf, out of the euro (not necessary with leverage!)
3. Without leverage, there is almost zero risk because: You can hold a position for longer times if you are wrong, and since chf is considered "save", and the swiss economy is ok, there is no reason to believe that it should get weak any time soon
4. This would mean in conclusion that more and more forces are pushing against the SNB
5. We know from history that a central bank can not work against the market without limits (and it is my understanding that if a central bank would do this, mainly by printing more money, in the long term, after economics change, this would lead to way to much money in the market, and would increase inflation a lot - thats why a central bank has to stop at some point)
6. This means... the maximum risk would be that the eurchf gains a little, while the possibility that the 1.20 break downwards, massively, after the snb cant hold it at that mark anymore increase with the time the euro crisis stays the way it is.
7. If Greece votes to get out of the euro by not complying to previous agreements... then this would create additional massive pressure on the SNB, maybe enough for it to give in.
8. The eurchf chart shows almost no volatility at the 1.20 mark, indicating that the forces of the market and the SNB are now almost equal.
9. If Greece gets out of the euro the effect on other euro countries might be worse then expected, making the chf an even more appreciated save currency.

So... in the end, shorting and holding eurchf at about 1.20 *might* be low risk. Even if we expect a volatility of 400-500 pips against us, it "should" at least come back so we can get out only with a minus in interest rates over the time period of holding (and spread of course), as long as chf is considered save, and the euro zone is in trouble.

This is my understanding of the current situation and the possible chance in shorting eurchf.
I know my fundamental knowledge is quite weak... so feel free to point me to my errors.

So what do you guys think?

Well we all know the SNB has put its reputation on the line to defend 1.2 and has the fire power to do it.

Look at May 24th. The spike was caused by low liquidity trade, or possibly intervention, which within hours had reversed to previous levels. Presumably the spike was exacerbated by stop (buy) orders triggered and held in check by close (sell) orders higher up. But it's a mugs game because we don't know how high it will spike and so there is no probability of a profit. In a nutshell it's not a high probability trade in either direction and that explains the 2 pip range leading up to 24th.

You make a lot of valid points, but some are bullish and some are bearish. You/we may have a firm view of the longer term outlook, but at the moment we (the market) are using our liquidity more productively...

How's that?

I think you are asking to get your ripped off.

The SNB has put it all on the line, removed the kitchen sink, and is getting ready to throw it.

My main point is - every national bank has its limits - and given greece votes agains the euro... this will put huge stress on the snb.

The question is, what are the limits of a national bank in supporting its currency in a case like this? I know that the UK lost against Sorros. But I am sure as hell not aware of the details, and if it even compares to this situation...

Or, well, if in this case there even are limits.

Duh. I gotta have to get better at fundamentals...

Another example I can think of is Japan. They are in a deflation since... decades now? And I would say well, nothing easier then that: Simply print more money to devalue the yen. But they don't. Why? Did they reach their limits? Or is it on purpose?

I mean those two examples are the reason I think about this "national banks got limits"...

Japan has no natural resources and is an major export economy. While it seems to reason that they would devalue the yen for the reason of their exports, the question is could they devalue enough to make it worth the rising cost of imports, such as oil? I don't know that answer as I am sure no one does, but is worth pondering over.

For the SNB, the limit is what? The amount of 0's and 1's they can input, or the amount of paper and ink they can acquire? Assuming we are near the limit based off what historical precedent?

The SNB's reputation is on the line. To let the floor cave without doing what they said in their own words, "at all costs", would mean their future dialogue would hold no weight.

I'll play with them and not against. Could the floor snap? Of course it could. But when? In trading, that is always the question. For now, I think they can and will hold. They have to, otherwise the rep is done for.

How do you know the SNB is pushing against the market?

What tells you that the SNB can't keep doing this?

-The majority of retail traders are long Eur/Chf which is helping out the SNB hold the peg.

-The SNB's Euro reserves have actually dropped since introducing the peg. ie; they have more firepower than before to buy Euros and sell their Francs.

The Soros vs BoE situation is very different so it can't really compare. I like your analysis and hard work. Keep up learning the fundies and you'll have a better understanding on what's going on here.

The risk is in the fact that there is a guy on Forex Factory telling me to do this.

In other words... Likely "everyone" is doing this, which makes it profitable for someone with the buying power to do the opposite.

But good luck.

all you can do is to put pending orders on both sides with a tight trailing stop and hope you will not get slippage of 100pips or more.