Any other possible "CHF 01/15/15" like events in the future? | Forex Factory

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Any other possible "CHF 01/15/15" like events in the future?

  • #1
  • First Post: Jan 18, 2015 8:55pm Jan 18, 2015 8:55pm
I am just curious but I am sure others have this curiosity as well. I did not have any trades in any CHF pairs but I am curious if any other pairs outside of CHF could possibly do just the same and how so?

For the history buff's, has something similar occurred before? Thanks.
I love forex. One day it will love me back.
  • #2
  • Jan 18, 2015 9:46pm Jan 18, 2015 9:46pm
Quoting Singha83
For the history buff's, has something similar occurred before?
I'm not a history buff but I think most traders will be aware of events such as:

1987 equities crash
2010 flash crash
George Sorros "breaking the bank of England"
Follow me on twitter @FxLester
  • #3
  • Jan 18, 2015 10:29pm Jan 18, 2015 10:29pm
There's always going to be big events in the world that effect the markets. Terrorism, wars, Central banks dropping bombs, etc etc.

It seems worse now because the system is so highly leveraged and interconnected that when one thing goes it takes a whole lot of others with it. Who knows that will happen around the corner.

Just trade smart, use money that you can afford to lose, keep your exposure and leverage as low as you can.
  • #4
  • Jan 18, 2015 10:57pm Jan 18, 2015 10:57pm
Quoting scottik187
There's always going to be big events in the world that effect the markets. Terrorism, wars, Central banks dropping bombs, etc etc. It seems worse now because the system is so highly leveraged and interconnected that when one thing goes it takes a whole lot of others with it. Who knows that will happen around the corner. Just trade smart, use money that you can afford to lose, keep your exposure and leverage as low as you can.
Exactly.

I will also add that these Black Swan moves have happened before (see my last post) and this will happen again.

One of the reasons why it seems so bad now is due to the human tendency of recency bias.

The magnitude of losses in this recent event (anecdotally) seem to pale in comparison to the events I've mentioned above.

Quoting scottik187
Just trade smart, use money that you can afford to lose, keep your exposure and leverage as low as you can.
Wise words. In my opinion, I feel that many should not be trading at all.
Follow me on twitter @FxLester
  • #5
  • Jan 18, 2015 11:25pm Jan 18, 2015 11:25pm
There is a possibility of such event, but it is highly unlikely at the moment. There are few pegged currencies which if suddenly unpegged can jump pretty substantially. Like HK$, SG$ DKK. But there is no evidence that it is going to happen and not many traders trade them. Another highly manipulated by its own government currency is Japanese Yen, it can move violently but given that is not pegged but just heavily influenced by the BOJ it will not just jump without any prices in between.
The uniqueness of CHF is that it was floored from one side only rather than pegged at certain price and that unlike other floored and pegged currencies it was still heavily traded. Truth is that a catastrophic event may happen in any country, but that floor made the whole world of the difference. If, for example, something serious happens in the UK, the pound will drop massively, but because it is two-sided market the drop will be with prices and orders. There are support levels, option levels, bids from banks from the central bank and so on which will smooth the fall. In case of Swiss Frank it was not the case, there were few bids below 1.20, everyone who was long biased thought the price will never go below 1.20, so no point to put bids there. That created a hugely one-sided market. I read a report where it was said that the ratio of longs/shorts positions in EURCHF was 67/1. It is very unhealthy and created risks for both traders and brokers.
To summarize, if you stay away from pegged or manipulated currencies you should be fine. If you want to look at something look at yen. But again, when it unwinds it will move sharply, but I think you will be able to execute your stops at decent prices.
Wookey
  • #6
  • Jan 19, 2015 12:40am Jan 19, 2015 12:40am
Keep an eye on China Yuan peg to USD. If we start to see the value of USD dropping significantly, the Chinese may stop buying USD. Unfortunately there would be nowhere to hide from this event as USD is the world's reserve currency (for now!).

We are in the midst of a currency war, a race to the bottom. You need to pay very careful attention, and not become too focused on 'this line crosses that line' bullshit system you might be using. This is global finance, not an online computer game, and you're swimming in shark infested waters...
"Risk comes from not knowing what you're doing." - Warren Buffett
  • #7
  • Jan 19, 2015 12:35pm Jan 19, 2015 12:35pm
Oh my god antother thread abou CHF .. Every trader should read or call to his broker and ask him abou risk conditions before he opens and accout . ITs just metter of time when this happen again because its just happening . This is what im doing for protection of my money 50% Forex ,, 25% Cfd for stocks , and 25% Cfd Commodities. Using 2 accounts
  • #8
  • Jan 19, 2015 12:47pm Jan 19, 2015 12:47pm
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  • #9
  • Jan 19, 2015 1:21pm Jan 19, 2015 1:21pm
Quoting FxLester
{quote} Exactly. I will also add that these Black Swan moves have happened before (see my last post) and this will happen again. One of the reasons why it seems so bad now is due to the human tendency of recency bias. The magnitude of losses in this recent event (anecdotally) seem to pale in comparison to the events I've mentioned above. {quote} Wise words. In my opinion, I feel that many should not be trading at all.
Nah this really was the big one - the largest EVER move in one day for a currency, at least in the developed world.

In comparison, the '87 equities was a 23% drop, the flash crash just over 9% drop, and this one, a whopping 28% drop. Add to the fact that available leverage is higher in currencies than stocks and no wonder everyone's bleating about it.
  • #10
  • Jan 19, 2015 2:04pm Jan 19, 2015 2:04pm
The CHF flash crash seemed worse than the 2010 flash crash. In 2010 it looked like you could have exited with acceptable slippage.

http://www.forexfactory.com/showthre...54#post6365954
  • #11
  • Edited 9:50pm Jan 19, 2015 9:35pm | Edited 9:50pm
Quoting triphop
{quote} Nah this really was the big one - the largest EVER move in one day for a currency, at least in the developed world. In comparison, the '87 equities was a 23% drop, the flash crash just over 9% drop, and this one, a whopping 28% drop. Add to the fact that available leverage is higher in currencies than stocks and no wonder everyone's bleating about it.
1. Where are you getting your numbers?
2. You've completely missed the point of my post.

The EURCHF drop was 19% in a day
Source http://www.bloombergview.com/articles/2015-01-16/no-one-was-supposed-to-lose-this-much-money-on-swiss-francs

The relative move was actually 23%.

What does it matter now whether it was the largest drop or not? You're completely missing the point of my post.

The point I was making was that enormous moves have happened before and will happen again. It is utterly disheartening that only now are inexperienced traders looking to risk management with this event as the catalyst.

To quote Warren Buffet, "it's only when the tide goes out do we really see who is swimming naked".
Follow me on twitter @FxLester
  • #12
  • Jan 19, 2015 9:41pm Jan 19, 2015 9:41pm
The next one will be worse.
  • #13
  • Jan 19, 2015 10:33pm Jan 19, 2015 10:33pm
Quoting Singha83
I am just curious but I am sure others have this curiosity as well. I did not have any trades in any CHF pairs but I am curious if any other pairs outside of CHF could possibly do just the same and how so? For the history buff's, has something similar occurred before? Thanks.
These are the only events that make you money.

Buy usd/chf now, it will go back to from where it fell.

Add one zero to your account, then two more on similar happenings............... keep on hoping that your account does not get caught in any such event until you manage to add three zeros to your account.

See you in six years on your yacht.
The Thief of Wall Street
  • #14
  • Jan 20, 2015 4:38am Jan 20, 2015 4:38am
Quoting FxLester
{quote} 1. Where are you getting your numbers? 2. You've completely missed the point of my post. The EURCHF drop was 19% in a day Source http://www.bloombergview.com/articles/2015-01-16/no-one-was-supposed-to-lose-this-much-money-on-swiss-francs The relative move was actually 23%. What does it matter now whether it was the largest drop or not? You're completely missing the point of my post. The point I was making was that...
If you don't mean ..."One of the reasons why it seems so bad now is due to the human tendency of recency bias.
The magnitude of losses in this recent event (anecdotally) seem to pale in comparison to the events I've mentioned above"

...then don't be surprised when someone calls you out on the figures. As for numbers, just pull up a chart FFS. OHLC.

It wiped out professionals and retail alike because even taking into account prior massive moves, this was truly unprecedented. And the SNB's method of doing it was unheard of. Yes it was a black swan, but it's size made it more like a black Godzilla.

Could it happen again - Danish Krone, same problem, slightly different arrangement but none the less, pegged and suffering, just cut depo rates again.
  • #15
  • Jan 20, 2015 4:47am Jan 20, 2015 4:47am
Quoting triphop
{quote} If you don't mean ..."One of the reasons why it seems so bad now is due to the human tendency of recency bias. The magnitude of losses in this recent event (anecdotally) seem to pale in comparison to the events I've mentioned above" ...then don't be surprised when someone calls you out on the figures. As for numbers, just pull up a chart FFS. OHLC. It wiped out professionals and retail alike because even taking into account prior massive moves, this was truly unprecedented. And the SNB's method of doing it was unheard of. Yes it was a black...
I'm almost speechless! The more you post, the more you reveal your sheer ignorance.

As for the numbers? I quoted a source. I also did the math myself if you bothered to read my last post in full. It is apparent that you failed to do so (read my post or do the math).

Just for you..

Lets do this simple arithmetic.

( 1.20102 - 0.91450 ) / 1.20102

= 0.23856 ...

But because I can see you're struggling... we multiply by 100

= 23.86%


Quoting triphop
{quote}FFS. OHLC.
Take your own advice!
Follow me on twitter @FxLester
  • #16
  • Jan 20, 2015 8:48am Jan 20, 2015 8:48am
Quoting FxLester
{quote} I'm almost speechless! The more you post, the more you reveal your sheer ignorance.
Yep I know nothing at all about anything whatsoever. Ever thought your low might be shaded? Bueller? .85 on EBS & Duka.
  • #17
  • Last Post: Edited 11:01pm Jan 28, 2015 10:43pm | Edited 11:01pm
Quoting Singha83
I am just curious but I am sure others have this curiosity as well. I did not have any trades in any CHF pairs but I am curious if any other pairs outside of CHF could possibly do just the same and how so? For the history buff's, has something similar occurred before? Thanks.
If you're looking for something similar to what CHF did recently, it seems the next best move will be long USD/MXN. I'm already up 1,000 pips on it in a few days (see TE).

And no, I did not get my decimals mixed up.
Please check out my blog at https://from-zero-to-hero . net
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