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Swiss Nat Bank Ends Peg To Euro!


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That is stunning. That is why I don't put stops on.

The problem is not so much stops, but leverage.

If the market moves against you and you're insanely levered like many of these retail forex brokers allow, then your position might get forcibly closed out at 50 pips because you have exceeded your margin.

If the market gaps at 1000 pips then both you and your broker are going to have to have a little chat.

Edited by ChumpusRex
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Any speculative positions, I usually assume the possibility of a complete write-off, and indeed this has happened to me before (I mean a substantial 100% loss). I have never blamed anyone for these losses. Not even myself, because I wanted that risk and was fully aware of it. :D

I often look at the worse-case position too, so trading losses, when they come, I can put into wider context, and not going to break me (vs net equity).

Found it difficult to shrug off losses, without blaming myself. Fear I would skip over anything that could be learned from the experience, which may help avoid repeat mistakes. Still can take losses now, but my trading is more disciplined and marshalled, from experience of losses.

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Ah, price discovery. What a bitch. The petroleum bubble has collapsed. Iron ore and copper aren't far behind. The gnomes of Zurich couldn't fill the boots they'd made for themselves. The EM currencies look like dogshit (again). China's $26tn tower of crap is shaking itself to death.

Anybody sweating?

sweating.jpg

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Ah, price discovery. What a bitch. The petroleum bubble has collapsed. Iron ore and copper aren't far behind. The gnomes of Zurich couldn't fill the boots they'd made for themselves. The EM currencies look like dogshit (again). China's $26tn tower of crap is shaking itself to death.

Anybody sweating?

If copper and iron prices collapse, that'll put the Aussies in a spot of bother...

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I'd expect it to weaken the euro rather than strengthen it, though - QE is effectively printing money...

As everyone else does. Market is designed to take money from the 99%. Market likely to surprise by raising € with EU QE, maybe from following week.

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Lagarde didn't know. Jordan didn't want move front run Full marks to him.

Cost of peg CHF50-100Bns 10-20% of GDP

F'g c bankers!

#turningjapanese tumteetumteetumteetum

CHF = deflationary trigger. Maybe...

Article also sees deflationary risks, even when the writer (boom-end journo, at WSJ for 7 years apparently.. not that it's any credentials) is obviously fluffy about ECB QE magic goodness, and repeats the tales about threat of deflation.... vs all the £350K+ valued very basic houses around here.

The decision caught markets totally off-guard. In part, because the rationale for the move is very tough to understand. After all, the strong franc will still hurt the economy, as the performance of the Swiss stock market this week suggests. And it likely means Switzerland will slip deeper into deflation. Prices were already down roughly 0.3% year-over-year in December.

[..]But if you’re looking for scary implications, here’s the biggest: The Swiss National Bank has effectively thrown in the towel in the fight against deflation, which is emerging as the major economic bogeyman of 2015.

The world’s most important economies are all seeing slowing price increases or outright price declines. (China, Europe, the US, Japan) We haven’t seen such a coordinated downtrend their like since the financial crisis and the Great Recession. [..]In other words, five years after the worst of the global financial crisis and Great Recession, the world still seems to be tip-toeing toward a deflationary vortex.

http://qz.com/327410/absolutely-everything-you-need-to-understand-what-happened-to-the-swiss-franc-this-week/

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So I have been paying a premium for guaranteed stop losses, on many hundreds, possibly 1000+ trades, for no reason? Where's my compo also yes? I hope the brokers are able to enforce debt owed to them by clients... where the terms and conditions for each broker is fully clear about the risks.

Where I hold my account, it was made very clear the difference between a stop loss, and a guaranteed stop loss. Never traded a market without a Guaranteed Stop Loss, (and there have been some markets I would have liked to trade, but where Guaranteed Stop Losses are not available.. but never risked it, where others have).

The corollary to that is that the Broker will pick up the tab.I'm unsure how prevalent the use of guranteed stops was/is given the mentality of most people who trade forex I suspect it will have been very low.

http://www.forexfactory.com/news.php?do=news&id=522201

sorry if already posted

Swiss Franc Trade Is Said to Wipe Out Everest’s Main Fund

2 and 20.

Seen those with stops of 20, 50 or 100 pips.

Cleared out at 1000...

Oh f...!!!

Shirts off back to the left.

Lots of squealing.

Edited by Sancho Panza
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http://www.bloomberg.com/news/2015-01-18/banks-struggle-to-fight-speculation-denmark-s-euro-peg-at-risk.html

Banks in Scandinavia are joining the Danish government in trying to persuade offshore investors that the Nordic country isn’t about to copy Switzerland and drop its euro peg.

SEB AB, the Nordic region’s largest currency trader, said it’s been fielding calls from hedge funds wondering whether Denmark might be next after the Swiss National Bank shocked markets by exiting a three-year-old euro cap on Jan. 15. Economy Minister Morten Oestergaard a day later sought to silence doubts surrounding Denmark’s currency peg, which he said remains “secure.”

Carl Hammer, chief currency strategist at SEB in Stockholm, says he’s been trying to make clear to callers that it’s “highly unlikely” Denmark will alter its exchange-rate regime

Will Denmark manage to hold it's peg???

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http://www.bloomberg.com/news/2015-01-19/bank-losses-from-snb-surprise-seen-mounting.html

Popular Trade

FXCM Inc., the largest U.S. retail foreign-exchange broker, got a $300 million cash infusion from Leucadia National Corp. after warning that client losses threatened its compliance with capital rules. FXCM, which handled $1.4 trillion of trades for individuals last quarter, said it was owed $225 million by customers.

The SNB’s move “shocked people all over the world,” Timothy Massad, chairman of the U.S. Commodity Futures Trading Commission, said in an interview in Hong Kong. The regulator is “continuously” monitoring the situation, he said.

Shorting the franc was a popular trade and most firms would leverage their positions some 20 times or more, said Williams, who consults for hedge funds. With such leverage a 5 percent move against the position wipes out all the value, yet the trades were seen as relatively low-risk by models used by financial institutions because volatility of the franc was reduced by the SNB’s cap, he said.

So it was a one way bet until it wasn't?

Despite the SNB saying it was a temporary measure no one bother to factor it in the models that one day it might end? Genius!

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Curse of the Hammers....

Longtime readers may recall that Macro Man is partial to the footballing stylings of West Ham United. ...Alpari, as you may have heard, was one of the casualties of the SNB this week; like many FX bucket shops, it was unable to recoup the losses from short CHF customers trading on razor-thin margins, and has gone bust. [...] Curiously, this was not the first firm associated with West Ham that has run into a spot of bother. [...] Landsbanki... XL....

http://macro-man.blogspot.co.uk/2015/01/weekend-interlude-curse-of-hammers.html

Just need house prices to seriously go against the West Ham top brass now.

Daily Mirror

West Ham fan trolls David Gold with amazing tweets

One West Ham fan looking for answers managed to trick chairman David Gold on Twitter

Nov 04, 2014

A cheeky West Ham fan managed to lure in the club's chairman David Gold with a couple of brilliant tweets and of course, Gold fell for it hook, line and sinker.

West Ham are already beginning to pack their bags, clear their desks and empty the lockers as the move to the Olympic Stadium edges ever so closer.

You'd probably struggle to find a die hard Hammer particularly overjoyed at the prospect of leaving the history of their beloved Upton Park behind and they want answers.

Well, the following events are so brilliantly organised by one fan that Mr Gold just didn't see it coming but to be honest, he probably should have:

B1l32doIUAAhkzF.png

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SNB Decision Sparks Calls For Polish Mortgage Bailout; Central Bank Against It

20150119_bailkout.jpg

As we noted last week, the Swiss National Bank's decision to un-peg from the Euro (thus strengthening the CHF dramatically) will have very significant repercussions - not the least of which is for Hungarian and Polish Swiss-Franc-denominated mortgage-holders. The 20% surge in Swiss Franc translates directly into a comparable jump in the zloty value of loan principles and and monthly payments for about 575,000 Polish families owing a total $35 billion in mortgages denominated in the Swiss currency which has prompted calls for Poland's government to bail them out. Never mind the FX risk, the low-rates were all anyone cared about and now yet another 'risk-free' trade has exploded, Deputy PM Piechocinski says, if the franc "remains above the 4 zloty level, the government may provide support" to debtors but Poland's Central Bank is not supportive of the bailout.

People took a risk and lost, naturally they want bailing out. I'm sure if the bet had paid off they would have simply kept the wealth, the losses must be privatised.

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In the eastern European countries houses and cars are sold in euros or francs and not in the countries own currency. It's near on impossible for people to get a mortgage in Zloty.

That is fortunate when they have the ability to move to the UK earn 25-35K a year for 50 hours a week and not pay tax by going self employed, thus giving them enough money to buy a house outright in 1 - 2 years

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Conclusion and executive summary:

A small state with some oversized banks that is surrounded by mountains had manipulated their currency. They stopped doing so, which lead to a brief hickup in their exchange rate. In due course, some smaller FX outlets got into trouble. End of story for those who do not live in said small state and who also did not take out loans in said small currency.

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Conclusion and executive summary:

A small state with some oversized banks that is surrounded by mountains had manipulated their currency. They stopped doing so, which lead to a brief hickup in their exchange rate. In due course, some smaller FX outlets got into trouble. End of story for those who do not live in said small state and who also did not take out loans in said small currency.

Price of Cuckoo Clocks expected to rise.

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http://

globaleconomicanalysis.blogspot.co.uk/2015/01/deflation-bonanza-and-fools-mission-to.html

The soaring Swiss franc that caused howls in financial markets is creating a bonanza in stores, where shoppers are suddenly getting discounts on everything from vegetables to party dresses.

On Monday, Basel-based Coop said it was cutting prices on more than 200 types of fruit and vegetables imported from the European Union. The supermarket chain, Switzerland’s second-largest retailer behind Migros, said further price cuts for imported fish, poultry and cheese were also in the works.

Coop isn’t the only retailer going into bargain mode. Furniture chains, travel agencies and fashion companies are among the retailers slashing prices to rope in shoppers.

“For us housewives, this is welcome news for our daily shopping,” said Anita Mueller, who was perusing sales on Banhofstrasse, Zurich’s main thoroughfare, on Monday morning.

Even luxury stores are passing on the savings.

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Makes sense. After the snap back they had to possibly buy more than ever before to mitigate the immediate outfall. Funny world.

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