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  • #144,421
  • Oct 24, 2016 2:32pm Oct 24, 2016 2:32pm
Quick question about GBP - if a major panic happens, won't central banks be ready to step in to help keep the situation under control? If it cracks 1.20x, that is? Sorry if this is a dumb question.
  • #144,422
  • Oct 24, 2016 2:52pm Oct 24, 2016 2:52pm
Sisse, pls I also have one Q: about perception of short/mid/long term outlooks.

Short/mid/long term outlook = expectation of short/mid/long term leg/chop.

But we are just talking about time, no? Or is it also the size (price range) of the leg?

I mean under normal conditions the time and price development of the leg is proportional (in short term swing the price make lower range price move, in mid bigger, in long the biggest) BUT..... in some cases.......

e.g.: FTSE leg up after brexit. Its short term leg but it is monster in size - under normal conditions in would take mid/long term leg to get all the way up.

But that means =) if you project short term lvls of short term swing =) the lvls must be proportional to the underlying fundamental driver, no? But would you rationally project that the extension of the post-brexit SHORT term swing is at the ATH??????? I mean that is kind of non-intuitive at all.

Hope its comprihensible
  • #144,423
  • Oct 24, 2016 3:31pm Oct 24, 2016 3:31pm
As over-all investors, shouldn't we be planning on buying up UK equities after all the fallout...I know this is several months in advance if not years....but doubtful UK is just going to disappear into the abyss and never return...

Perhaps it's time to put UK on the back burner (forex trading-wise) until everything plays out and wait for a good time to step in as investors instead of speculators. Maybe I'm way in left field, but every collapse brings with it opportunity...perhaps in the form of buying up real estate, equities, fx...etc

Just thinking out loud...
  • #144,424
  • Oct 24, 2016 3:32pm Oct 24, 2016 3:32pm
Quoting sisse
{quote} Table will close automatically with the bell/opening range...so last few minutes Thanks ad GL all ... IN +++++ TABLE CLOSING for Iteration 20E +++++ Currently Euro trading @ 1.088x "Survival of the fittest | Winners take all" -> LMT BUY 1.081x -> TP1 => 1.091x -> | STP > 1.075x -> LMT SELL 1.091x -> TP1 => 1.081x -> | STP > 1.097x Fadhl CommercialB nutts goosebone...
Sisse - sorry I haven't been around much. But if this iteration is still open I'll take:

-> LMT SELL 1.091x -> TP1 => 1.081x -> | STP > 1.097x
  • #144,425
  • Oct 24, 2016 3:36pm Oct 24, 2016 3:36pm
Quoting Pharm0r
As over-all investors, shouldn't we be planning on buying up UK equities after all the fallout...I know this is several months in advance if not years....but doubtful UK is just going to disappear into the abyss and never return... Perhaps it's time to put UK on the back burner (forex trading-wise) until everything plays out and wait for a good time to step in as investors instead of speculators. Maybe I'm way in left field, but every collapse brings with it opportunity Just thinking out loud...
let it collaps first that's the major move, recovery if ever is years and years behind no sense planning now imho
Don't be a hero. Don't have an ego. Always question yourself
  • #144,426
  • Oct 24, 2016 3:43pm Oct 24, 2016 3:43pm
Quoting USD-Bear
{quote} let it collaps first that's the major move, recovery if ever is years and years behind no sense planning now imho
Just likening it to 2008, and what the US market has done since. For me GU un-tradable- TDAmeritrade just raised margin to 5% as well- sure many brokers following suit

and planning now = putting $ back in my case
  • #144,427
  • Oct 24, 2016 3:48pm Oct 24, 2016 3:48pm
Quoting chester123
as there is mostly nothing to do around the board. technically interesting is A/U - I remember sisse was mentioning the pair as takin.....
Since I'm posting, both PTL and I discussed shorting AU awhile back- I've since held mine and I believe PTL was looking to tack on a position soon once his parameters are satisfied.

Flying in the dark FA-wise, but direction looks solid from a TA perspective without a break of the current swing high. So in essence I agree with your post and have a trade riding your midterm map currently
  • #144,428
  • Edited 4:37pm Oct 24, 2016 3:53pm | Edited 4:37pm
Quoting chester123
... And if carney resignes.... lol {image}
Indeed that will be a killer blow for markets. I still think he will step down out of principle. If the government decide (like a good third world country) to keep using Sterling as political and bargaining tool mostly unethical puppets will take that job....

Quoting ExForX
Quick question about GBP - if a major panic happens, won't central banks be ready to step in to help keep the situation under control? If it cracks 1.20x, that is? Sorry if this is a dumb question.
Yes thats we have been talking for a few weeks. Sterling wont hold a sustained break for more than a few weeks below 1.20xx as the collateral damage in the economy will become 'mainstream' damage.

Check back posts for details. BOE will step in a panic leg as thats their job to protect uncontrolled exchange rates and a major explosion in inflation. Market impact will start shifting from currency to the real economy. The long term bottom in Sterling is very close, while the Top in UK Equities it's around the corner ....

siss
Pending conversations? PM for a chat...I am mainly in OTM now
  • #144,429
  • Edited 4:53pm Oct 24, 2016 4:33pm | Edited 4:53pm
Quoting chester123
Short/mid/long term leg/chop. But we are just talking about time, no? Or is it also the size (price range) of the leg? ...
Both.

In term of impact.

In the best case scenario the UK will be in the same position market access, regulation, trade and economic flows wise as its now after 6 or 8 years from the best case divorce. In the worst ...well protectionism, chaos and the end of the common market is the limit ...GL trying to quantify that in trading and real terms...everything else in between is in play but most are as clueless as the current UK government in where are we right now....

In terms of timing.

For the short term, First, check banks, and int companies pulling the trigger. Second, check inflation staring to destroy the core of the economy and reduction of real wages. Third, check risk via uncertainty rising by the day, check the political front with Scotland in particular spoiling the brexiters party calling a referendum etc etc or check....that is just for this year.

For late and the mid term leg next year, we have European election in Germany and France and thing may turn very nasty very quick. Check Article 50 officially announcement in a messy divorce and finally check details to see the extend of the damage we are going to have when Brexit activates....

All of them will trigger flows and major flows in the UK. Sterling in the short term will receive the blows but less and less if BOE takes action. Then Equities and finally Banks and financial services as contagion agent to Europe and the world ....

--> if you project short term lvls of short term swing =) the lvls must be proportional to the underlying fundamental driver, no? But would you rationally project that the extension of the post-brexit SHORT term swing is at the ATH??????? I mean that is kind of non-intuitive at all.

No. I don't think there is a proportional correlation that can be measurable like that. Sure a major FA will have a stronger impact than a tiny one.

FTSE was/is a great play after Brexit. The week before the vote, the UK just reached full employment, all sectors were booming (or about), some sector were undervalue stock market-wise, the hardship of 6 years of draconian cuts was finally about to pay its benefits and the free trade agreement with the US and Canada was ready in the oven ....

The UK shoot itself in the foot for the next decade or so from a economic and trade point of view but Brexit only meant Brexit from 2017 onwards not before:

-> The vote guarantee massive unlimited BOE bazooka (a lot of free money for the big banks),
-> Sterling got destroyed artificially pumping some sectors and balance sheets in the short term,
-> and more importantly big banks and companies now hold the Government by its balls. The more uncertainty from Brexit negotiation the more they demand to stay in (some just for the sake of using the government). Now we hear some voices of a nuclear cut in corporation tax, no min wages, tax benefits, no taxes for the mega banks on their bonuses, no regulation, no environmental regulation , etc etc you name it. All in on the table....

If you are one of the big corporations in the UK you can pretty much ask for anything right now...you just have to slightly imply you are going to leave the UK and you got a deal....

So as you can see FTSE buy was/is a no brainer right after the knee jerk reaction the day of the vote. Bastards will squeeze every single penny out it, until reality hits ground...then like rats, they will be the first to abandon a sinking ship ...

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #144,430
  • Oct 24, 2016 4:35pm Oct 24, 2016 4:35pm
awesome post!!!! what can i possibly add?
  • #144,431
  • Oct 24, 2016 9:21pm Oct 24, 2016 9:21pm
Lets get a bit theoretical shall we?

Suppose I held onto that losing trade with the expectations that after FED hike, we'll see a rally in EU. For sake of arguement lets say the trade was a much better entry, and not the crappy one ~150 pips north of here.

If I wanted to hold that trade, with the expectation that it will eventually go green due to a rally, what would be the harm in shorting an EU futures contract. That would set a hedge against the drawdown of the spot trade, and essentially add to the chance that I'd

  1. 1. get out of at least one trade profitable, or break even.
  2. 2. get out of both the spot and the futures trade in profit. For this to occur EU would have to fall to put the Futures contract in profit, then rally to catch back up to the spot and then put that in profit.

The only double loss would essentially be if EU stayed stagnant and the futures expired without any meaningful gain, then if EU continued to decline thereafter. Or a liquidity problem on the futures side

Thoughts? @Fool, looking at you here...we use the same platform and you run multiple leg options pretty regularly. Trading half-lots in spot (50,000 units) so that should essentially = out to 5x E-micro EU futures (/M6E) or 1 /6E contract...looks like the liquidity is better on the /6E

  • #144,432
  • Oct 24, 2016 9:52pm Oct 24, 2016 9:52pm
Quoting Pharm0r
@Fool, looking at you here...we use the same platform and you run multiple leg options pretty regularly. Trading half-lots in spot (50,000 units) so that should essentially = out to 5x E-micro EU futures (/M6E) or 1 /6E contract...looks like the liquidity is better on the /6E
sorry I've not been following the trades here, what is your position?
"If The Fool persists in his Folly he will become wise." - William Blake
  • #144,433
  • Oct 24, 2016 10:31pm Oct 24, 2016 10:31pm
Quoting Pharm0r
... what would be the harm in shorting an EU futures contract. That would set a hedge against the drawdown of the spot trade, and essentially add to the chance that I'd 1. get out of at least one trade profitable, or break even. 2. get out of both the spot and the futures trade in profit ...
My quick 2 cents on this...

1. The futures are directly correlated with spot. The prices are a few pips/ticks apart to handle swap costs on the futures - they converge the closer you get to expiration - but this barely affects the direct correlation. So if you long the spot and short the same size of futures you are basically flat and have wasted some commission.

2. The 6E (main contract) is 125,000 units per contract, so you can't use that if you want a non-biased hedge. The micro contract is 12,500 units so you'd need 4 of those to match your spot trade. Liquidity is much less but not a major problem except in news spikes.

3. If have a perfectly balanced hedge then you are relying purely on good timing to get out of both sides in profit. It can and does go badly if you're timing's off!

4. If you want a skewed hedge (e.g. biased towards the down side by selling more futures) then you still have the timing issue to worry about, plus the direction issue. It's harder unless your confident about short-term direction.

5. Don't worry about the futures expiring, you can just roll them over if you want to continue the hedge. But this costs commission and the difference in price between the old contract and the new one.

6. Basically... why bother? I'm not a hedging expert and so not the best person to be giving advice, but you can achieve exactly the same goals using just your spot trade, i.e. adjusting size and/or direction to trade the two legs.

7. I notice you mentioned options at the bottom. This is intriguing... did you mean hedge your spot position with an option position? If so I'll let Fool answer that one for obvious reasons!

Anyway, I've just typed it all in so I'll post it anyway, for what it's worth. Hope it's useful in some way
You reap what you sow.
  • #144,434
  • Oct 25, 2016 12:32am Oct 25, 2016 12:32am
Quoting NorthTrader
I notice you mentioned options at the bottom. This is intriguing... did you mean hedge your spot position with an option position? If so I'll let Fool answer that one for obvious reasons! Anyway, I've just typed it all in so I'll post it anyway, for what it's worth. Hope it's useful in some way
sure, just let me know what you are trying to do & I will give it a shot. Sorry I couldn't be bothered to dredge back thru the posts to find your trade, I was watching Supergirl.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #144,435
  • Oct 25, 2016 3:09am Oct 25, 2016 3:09am
Quoting Pharm0r
... should essentially = out to 5x E-micro EU futures (/M6E) or 1 /6E contract...looks like the liquidity is better on the /6E
You are using the wrong instruments in the wrong way in a wrong definition of what is a hedge. Futures (especially a micro contract) shouldn't be use for something like that (why would you?) and second you are pretty much buying and selling at the same time with different leverage/size.

For that matter why bother locking in so much capital (futures margins will be expensive for swinging currencies like that) just reduce the size on spot to the same level you are aiming to 'hedge' (you are not really hedging btw doing this) and the risk will be the same without having to lock in daily margin maintenance and pay commissions in the futures contracts....

I think what you are aiming to do is reduce risk/drawdown sacrificing some of the potential rewards as insurance. What you are looking at is Forwards and for you as small retail Options. A simple and basic long call or cash locked put will be enough to do the same and a lot cheaper and simpler in what you are asking and should be your starting point to start exploring and learning options (not trading)... Obviously this is just the tip of the iceberg, you can have no least than a dozen other alternative strategies to do more or less the same idea with options ...ask @fool for initial guidance ...

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #144,436
  • Oct 25, 2016 4:21am Oct 25, 2016 4:21am
Quoting sisse
{quote} We are reaching the end of the game. Only one iteration open and 12 traders left. As you know this iteration is about fast reactions on direction and analysis and always being on the market until the last trader is left not about r:r or anything else. We cleared 1.088x on Friday. Today we opened at 1.088x... Euro in full momentum in trending mode. FED rates are coming by default, Brexit is getting worst by the day and more importantly for the short term US election around the corner so --> How would you trade the next leg? Fadhl...

i will keep the rest of my shorts to the lows stp at be
regards
mayafx
  • #144,437
  • Oct 25, 2016 5:37am Oct 25, 2016 5:37am
Quoting sisse
A simple and basic long call or cash locked put will be enough to do the same and a lot cheaper and simpler in what you are asking and should be your starting point to start exploring and learning options (not trading)... Obviously this is just the tip of the iceberg, you can have no least than a dozen other alternative strategies to do more or less the same idea with options ...ask @fool for initial guidance ... sisse
I think in his case he would want to sell calls, not buy them, since his spot position is long. If price went up then his spot postion would cover the increasing premium of his options. If price went down he would benefit from the decrease in premium which means losing less on spot. It's basically a covered call, with the strike price determining how much insurance you want.

I wouldn't recommend CME futures options for this though. Liquidity is poor, especially on the micros. As you said, Fool will know which instruments and strategies to use for this.
You reap what you sow.
  • #144,438
  • Oct 25, 2016 7:07am Oct 25, 2016 7:07am
Quoting NorthTrader
{quote} I think in his case he would want to sell calls, not buy them, since his spot position is long. If price went up then his spot postion would cover the increasing premium of his options. If price went down he would benefit from the decrease in premium which means losing less on spot. It's basically a covered call, with the strike price determining how much insurance you want. I wouldn't recommend CME futures options for this though. Liquidity is poor, especially on the micros. As you said, Fool will know which instruments and strategies to...
Sorry to keep in this topic. Absolutely no mate .... don't get me wrong (or I am getting confuse of what he is aiming) but getting a new guy in options to explore a sell call (although is not naked cause he is holding positions in spot) in this case is a useless alternative and will produce exactly the opposite of what he is aiming in his example.

-> He wants to go long but protect himself of the noise and drawdown and bad timing for the entry in spot.

If stays below strike, sure he will get the premium of selling those calls but he will lost all cash positions in spot which is ok theoretically a scratch trade (not really but generalising). However if price goes up (as he is wanting and betting on) he will have to cover every penny out the option going against him, which in the best case scenario will be offset by his long in spot rendering the trade useless and worthless from both outcomes....

-> A simple long call should be the first introduction to options in this case. Not necessarily because is a good trade but because is simple to understand and explore before moving forward

If he buys a call, he will profit on if it moves up, but will have a limited risk to the downside (the price paid for the call) if things go bad. Bastardising and simplifying the example if price move XYZ beyond his strike price he will profit ...while if price collapse -1% or -99% he will only lose the fix amount paid in the option ....

-->Or a simple cash locked put will also do a simple trick to start understanding option. In this case selling the put allows him to buy it back if price moves down first as he is worry about and if price doesn't and fly +99% up non stop he will still profit from the Premium. In the first case, he will reduce the cost of entry and in the second he will get the premium without any extra risk...

sisse
Pending conversations? PM for a chat...I am mainly in OTM now
  • #144,439
  • Oct 25, 2016 7:47am Oct 25, 2016 7:47am
Thanks sisse- that was the answer I was looking for more or less.

I haven't taken the trade and am flat EU- that's why I said lets get hypothetical! The question was basically as to whether or not futures could be used as a hedge in the same way options can. I have basic option knowledge, but when it gets into butterflys and alligators and blue footed boobies...I turned the other way

of course this was after I blew $5k trading naked. My first trading experience back in '07....ouchies.

@NorthTrader- yes, you essentially listed what I was saying in a more user friendly format. The idea would be to get profit on both ends using correct timing...and as sisse said- reduce risk/drawdown via taking the other side. Not sure if you're aware, as an American trader I can't take both sides of spot.

I realize it's a bit of unnecessary work when a stop loss and wait for better chance is simpler in regards to forex- I'm just exploring and trading futures so I put 2 + 2 together. Not particularly a fan of options..I suppose eventually I'll get my feet wet again
  • #144,440
  • Oct 25, 2016 8:06am Oct 25, 2016 8:06am
Quoting sisse
{quote} Sorry to keep in this topic. Absolutely no mate .... don't get me wrong (or I am getting confuse of what he is aiming) but getting a new guy in options to explore a sell call (although is not naked cause he is holding positions in spot) in this case is a useless alternative and will produce exactly the opposite of what he is aiming in his example.
I don't want to get into an options debate on this thread Sisse, but as you know there is no free lunch with these things and the best strategy depends on how long the market will take to go in your favour, and how deep it will go against you while you're waiting. And if you knew that in advance then you'd simply trade it in spot!

Yes of course there are advantages to simply buying a call, but how long will it take before your call makes a profit? And the further out in time you go, the more expensive it is to buy. In most cases it's better to take advantage of the premium time decay by selling options, not buying them... provided you are adequately covered (hedged) of course.

By the way, he did say he wanted to hold on to his spot position, which is why I mentioned the covered call. It would work out great if price stayed low for the duration of the option, then rose after that. A sole long call would be pretty useless in that situation. On the other hand, if price rose quickly then the long call would be great, and the covered call pretty useless. Tricky things, these options!
You reap what you sow.
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