Has the latest event with CHF affected your outlook on forex? | Forex Factory

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Has the latest event with CHF affected your outlook on forex?

  • #1
  • First Post: Jan 18, 2015 7:49am Jan 18, 2015 7:49am
I took a step back from Forex for a while however planning on starting a new live account next week. Now, I believe the CHF situation has affected a lot of people, people who were buying it will be rolling in money now, however a great deal of people have lost all of their accounts being on the wrongside of a trade. Has this affected you in anyway? Is it a normal trading week next week for you? or are you rethinking your trading/investing in forex?
  • #2
  • Jan 18, 2015 8:39am Jan 18, 2015 8:39am
Yes it has. If central banks are allowed to drop bombs like this without warning leaving no liquidity in the market, stops mean nothing and you will lose your tail. I am seriously considering abandoning forex and going back to commodities futures where you will have less likelihood of a 30% drop in minutes. I don't want to. This is my favorite market. I will wait before I leave altogether to see if there are any repercussions on the SNB on how they handled this. I was trading in the futures market during the flash crash and it was not even close to this event in size.
  • #3
  • Jan 18, 2015 8:58am Jan 18, 2015 8:58am
Which product have you trade in the future market?
  • #4
  • Edited 9:20am Jan 18, 2015 9:08am | Edited 9:20am
Quoting sonata95
Which product have you trade in the future market?
Mostly CL (light sweet crude). I liked NQ (nasdaq), and TF (Russell 2000) alot too. I have been looking into agricultural commodities for a while but I have not felt I knew enough about the fundamentals of them. I have been actively studying before I trade the ag futures. I should mention that I traded GC (gold) too. But I could never get a hold on it intraday. It was to whippy for my taste.
  • #5
  • Jan 18, 2015 9:45am Jan 18, 2015 9:45am
Quoting grin
{quote} True, but folks were known to be locked into their losing positions for days due to limit moves. I think, currency is more flexible to stay competitive with interbank, but there are still intraday-day no trade breakers.
Yeah grin I am aware of some of those locked in positions that couldn't get out. I was being rather general in my statement.

Could you elaborate on what you said in your last sentence; "I think, currency is more flexible to stay competitive with interbank, but there are still intraday-day no trade breakers"?

Thanks grin
  • #6
  • Jan 18, 2015 9:57am Jan 18, 2015 9:57am
Quoting grin
{quote} Check CME rules. I think, they stop trading after preset limit moves, but only for a few minutes.
Oh you were speaking of the CME. Ok. Yes I have been watching the market during those times (fortunately not in a trade though). Everything just seems to lock up. But like you said only for a few minutes. And if there is any change in price when things get rolling again it is no where near as drastic of what we saw last week.
  • #7
  • Jan 18, 2015 10:55am Jan 18, 2015 10:55am
Quoting ReyesWhite
I took a step back from Forex for a while however planning on starting a new live account next week. Now, I believe the CHF situation has affected a lot of people, people who were buying it will be rolling in money now, however a great deal of people have lost all of their accounts being on the wrongside of a trade. Has this affected you in anyway? Is it a normal trading week next week for you? or are you rethinking your trading/investing in forex?
Such news is part of the Forex game!
Trading is the hardest way to make easy money...
  • #8
  • Jan 18, 2015 11:18am Jan 18, 2015 11:18am
Quoting ReyesWhite
Is it a normal trading week next week for you? or are you rethinking your trading/investing in forex?
It is a normal trading week. The truth is, news (being good or bad is just a matter of the side you're on) can kill any business but in a "real" business you have to pay in the full amount, no leverage on your side and the brokers taking the risk in extreme cases like this. The FX market is my main income, I have another one from a QA system I'm renting to food producers mainly and I see a lot of similarities and still FX seems to be a lot less risk to me than doing ordinary businesses. Maybe employees or workers see that different, but I'm self employed since a long time now, so I don't have that socialist pillow many people got used to.

And please don't forget: the SNB decision affects a lot of other markets, too. Including real companies. A friend of mine just cancelled his switzerland trip in favor of austria, he'll probably not the only one (hotels, airlines, trains, restaurants, shops ...).
  • #9
  • Jan 18, 2015 11:18am Jan 18, 2015 11:18am
Quoting ReyesWhite
I took a step back from Forex for a while however planning on starting a new live account next week. Now, I believe the CHF situation has affected a lot of people, people who were buying it will be rolling in money now, however a great deal of people have lost all of their accounts being on the wrongside of a trade. Has this affected you in anyway? Is it a normal trading week next week for you? or are you rethinking your trading/investing in forex?
Indeed a lot of people lost their accounts during the unexpected CHF move on Thursday but in my opinion this is a bad time to take a step back from trading forex. Why?
1. The volatility is back - this means money.
2. Not so long before new regulations will be implemented, first of them probably being reduced leverage. So, if a trader is to succeed with a rather small account this would be a very good moment.
Of course that the ones that know how to trade profitable already, will trade as before, and those that do not have a winning strategy/system will not matter as they will lose no matter the leverage or account size.

For one, I wasn't affected by the CHF as I was in a short on EU. But I know the feeling of being in a large losing trade from back in 2008, when I haven't lost my entire account but a large percent of it.
  • #10
  • Jan 18, 2015 1:09pm Jan 18, 2015 1:09pm
Quoting pinktrade
{quote} Indeed a lot of people lost their accounts during the unexpected CHF move on Thursday but in my opinion this is a bad time to take a step back from trading forex. Why? 1. The volatility is back - this means money. 2. Not so long before new regulations will be implemented, first of them probably being reduced leverage. So, if a trader is to succeed with a rather small account this would be a very good moment. Of course that the ones that know how to trade profitable already, will trade as before, and those that do not have a winning strategy/system...
A lot of traders with small accounts including myself would struggle with little to no leverage.
  • #11
  • Jan 18, 2015 2:55pm Jan 18, 2015 2:55pm
Quoting grin
{quote} The government wants you to take shovel and do real work instead of fancying yourself with all these get rich schemes. :nerd:
They just want your tax money. They don't care how you make it.

@pinktrade: new regulations just because a few brokers went bust is a bit unlikely. Its different to banks bankrupting and taking the whole economy with them. Bad companies die, better ones stay or emerge. Nothing new, nothing bad. Quite a few brokers succeeded in managing their risks.

The impact on swiss businesses is probably much higher than on brokerage businesses, they're just the first in line.
  • #12
  • Jan 18, 2015 3:29pm Jan 18, 2015 3:29pm
My account got wiped out by the smart move of swiss. Fortunately it was a small account where i was testing live different strategies. I can consider myself lucky. I am not giving up forex because i invested too much time and money.
  • #13
  • Jan 18, 2015 6:09pm Jan 18, 2015 6:09pm
Moves like this affirm my belief that scalping the FX market is the best way to protect yourself from the systemic risks of trading retail forex. Like most of us here, I've traded all different time frames, but the longer you have your money in the market the larger the chance is for an unpredicted major event to destroy your account.

These "rare" events happen all the time, and no one can predict or stop them. I try and keep the money in my brokerage accounts relatively small, use high leverage, and get in and out as quick as I can. It's far more labor intensive than trading longer term, and it's difficult, but I'd have to be very unlucky to have my entire account wiped out.
  • #14
  • Jan 18, 2015 6:49pm Jan 18, 2015 6:49pm
Quoting scottik187
Moves like this affirm my belief that scalping the FX market is the best way to protect yourself from the systemic risks of trading retail forex. Like most of us here, I've traded all different time frames, but the longer you have your money in the market the larger the chance is for an unpredicted major event to destroy your account. These "rare" events happen all the time, and no one can predict or stop them. I try and keep the money in my brokerage accounts relatively small, use high leverage, and get in and out as quick as I can. It's far more...
I'm mostly with you. But THIS one was extreme. Long term or scalping didn't matter here, your SL was simply "ignored" as there was no price that came even close. The liquidity completely dried up. To be honest: I would not have expected such a behavior without someone starting a bloody war. Luckily I'm scalping/short term trading the markets from 5 to ~9 (GMT), so I didn't had any trades open when the mayhem started. By the way: I'm trading that early because I don't like news events in general.
  • #15
  • Jan 18, 2015 6:57pm Jan 18, 2015 6:57pm
I can't see how anything would change. Forex is risky period. You want to play sometimes you go to pay. :-).
Trade less make more!
  • #16
  • Jan 18, 2015 7:07pm Jan 18, 2015 7:07pm
Quoting scottik187
Moves like this affirm my belief that scalping the FX market is the best way to protect yourself from the systemic risks of trading retail forex. Like most of us here, I've traded all different time frames, but the longer you have your money in the market the larger the chance is for an unpredicted major event to destroy your account. These "rare" events happen all the time, and no one can predict or stop them. I try and keep the money in my brokerage accounts relatively small, use high leverage, and get in and out as quick as I can. It's far more...
I am not so sure. Scalping on the wrong side of the CHF pairs immediately prior to the SNB announcement could have cleaned a trader out, namely due to the enhanced position sizes that scalpers use for the small moves. A long term trend trader trading a diversified bundle of instruments with a low risk per trade would have been hit but not to the same extent. For example, I took an extraordinary hit (despite having a stop at 1R) on USDCHF but with 0.5% trade risk, the blowout was only a 1% drawdown but I was in good profit at that stage. Worst case scenario for me would have been say a 2% blowout. That says a lot about how position sizing acts as a powerful risk management device irrespective of whether stops work or not.

For scalpers prior to an announcement if they are holding a trade, I would suggest a hedge immediately prior to the announcement and wait for the dust to settle before giving away a limb of the hedge. Stops aren't necessarily your friend in these black swan events but at least you have a degree of legal recourse as opposed to no stops. Guaranteed stops are costly but better but are only available through a few MM brokers.

This of course assumes your broker remains in business after the event which renders all tactics mute dependent on how it all plays out.
  • #17
  • Jan 18, 2015 7:10pm Jan 18, 2015 7:10pm
All you people saying that this was anything but a serious major event haven't been trading too long or you don't know your ass from a hole in the ground. This was a major event not just some random normal event. Serous money was lost here and can be lost in an event like this. Get your head out of your ass and realize what has happened here.

JensG, I called this event a financial act of war on another forum but some said that statement was over the top. I agree with you, this was a war like move on the part of the Swiss the supposed neutral country. That wasn't neutral, that was aggressive as hell.
  • #18
  • Jan 18, 2015 7:18pm Jan 18, 2015 7:18pm
You're right, if I was unlucky to be on the wrong side of the event then yes, it wouldn't have been pretty.

However, as I'm spending less total time in the market I think there is less chance of being exposed to such things, especially while I am not at the computer or I'm asleep. It defiantly lets me sleep easier at night since I've changed strategies.
  • #19
  • Edited 8:54pm Jan 18, 2015 7:24pm | Edited 8:54pm
Quoting scottik187
You're right, if I was unlucky to be on the wrong side of the event then yes, it wouldn't have been pretty. However, as I'm spending less total time in the market I think there is less chance of being exposed to such things, especially while I am not at the computer or I'm asleep. It defiantly lets me sleep easier at night since I've changed strategies.
Good to hear scottik. There were a shed load of victims last week in need of a good hug. That friggin.. bank!!!!!!
  • #20
  • Jan 18, 2015 7:33pm Jan 18, 2015 7:33pm
Quoting dnkhoward2
All you people saying that this was anything but a serious major event haven't been trading too long or you don't know your ass from a hole in the ground. This was a major event not just some random normal event. Serous money was lost here and can be lost in an event like this. Get your head out of your ass and realize what has happened here. JensG, I called this event a financial act of war on another forum but some said that statement was over the top. I agree with you, this was a war like move on the part of the Swiss the supposed neutral country....
No doubt it was serious, it was massive, it was selfish, and it was brutal.

But big market moving/game changing events seem to happen with regularity, and will continue to do so as the world realises that the whole game is leveraged to the hilt and a crash is coming.

The announcement last year of Japanese QE was another example of a central bank coming out of the blue and changing the game.

In the words of MacGruber - "The game is changing, but the players are the same".
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