Entered 2 lots short. Come at me bro.
- #73,743
- Mar 4, 2014 11:46pm Mar 4, 2014 11:46pm
- Joined Jan 2010 | Status: The Voodoo Boodoo Club | 42,070 Posts
- #73,747
- Mar 5, 2014 12:12am Mar 5, 2014 12:12am
- | Commercial User | Joined Sep 2010 | 1,472 Posts
{quote} Emerald, I was referring to this and blew it all out of context, threw in a bit of poetic license and well just sprewed verbal diarrhea to tell the truth.
so Aussie GDP good, AU goes up. Large banks (not central banks, but the evil ones that employ aggressive traders) buy & sell derivatives of price known as exotic options (called Double-No-touch, No-touch, "Barriers") to other banks(which pass them off to make a little), hedge funds, stuff over our retailer heads. **These are not traditional vanilla options.
There are a dozen scenarios, but all you need to know is there's a side that wants the a level hit, and one that doesn't. The one with the biggest market force & wind(sentiment) at their back wins. If you're a trader for one of these large banks, you'd want to either protect the option from being hit, or you'd want to push price up to it bc you've sold No-touches to your clients and they'll expire worthless if hit. Whatever entity/group of entities was protecting the 9000 level succeeded and was able to push price far enough away to trigger bulls sell stops which pushed price away even further w/o them having to spend the $$$ to do so themselves.
Here's a scenario: Your bank sells a total of $20mil worth of payouts for 0.900 KO options on AU yesterday. if hit, you'll have to pay that out to clients. Either you can hedge by buying a lot at a lower price, but that starts moving the market higher & higher as others follow, costs to buy rise along with it. And/Or you can defend the level by shorting/Selling your longs right before the barrier. If price moves up too fast, like today, then sometimes the only option is to deploy a barrier defense, putting massive offers to cap price. A byproduct of all this is how the defender(s) will exit once the barrier is breached. To lose the least amount as possible, buy stops will be place just above the barrier during an active defense and will move price further if tripped. On the other side are the ones trying to tip price higher by market 'buy' orders, then on a failed breach, these traders need to exit as well (big retrace we saw in AU post-8995 run)
This is a lot to take in. It's market manipulation, but all orders are manipulation, and not illegal to do, no insider info req'd.. but think why would Goldman Sach's give trade recommendations in a certain direction??
There's some resources on the web that further explain 'order flow trading' and analysis to trade with/against these big traders.Recent examples: March 2/3rd: Eur/Chf 1.2100, successful defense. Feb28: Eur/Usd 1.3800, failed defense, successful breach(big wick above first 1.38 breach were from defender's buy stops tripping)
- #73,748
- Mar 5, 2014 12:20am Mar 5, 2014 12:20am
- Joined Jan 2010 | Status: The Voodoo Boodoo Club | 42,070 Posts
{quote} About 2 to 10 seconds..made a whopping $3 after commission. woohoo
- #73,749
- Mar 5, 2014 12:24am Mar 5, 2014 12:24am
- Joined Jan 2010 | Status: The Voodoo Boodoo Club | 42,070 Posts
{quote} I'll allow it.. only bc its FF. lol so Aussie GDP good, AU goes up. Large banks (not central banks, but the evil ones that employ aggressive traders) buy & sell derivatives of price known as exotic options (called Double-No-touch, No-touch, "Barriers") to other banks(which pass them off to make a little), hedge funds, stuff over our retailer heads. **These are not traditional vanilla options. There are a dozen scenarios, but all you need to know is there's a side that wants the a level hit, and one that doesn't. The one with the biggest...
- #73,750
- Mar 5, 2014 12:27am Mar 5, 2014 12:27am
- | Commercial User | Joined Sep 2010 | 1,472 Posts
{quote} Lol, don't spend it all in one place ha. Was just going to say if this happens to squeak through the option barrier alluded to earlier at 9000, this has some room to run a bit and it could do it in a hurry. Sure is interesting watching the big boys duke it out tho. Makes one wonder how much money it takes to thump a market down like that.
A break of 9000 will not only trip remaining defender's stops but all the other market participants (FFers that are reading this!) with their stops above that high.
