Thursday, January 15, 2015

Futures Extreme

Today's move by the Swiss central bank to remove a cap on their currency reminds us all what can happen. Over $30,000 move per contract in less than a half hour.  Odds are someone in the world was short with too much leverage and no stop in place.  And vice versa!

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10 comments:

  1. JMF3January 16, 2015 at 8:47 AM

    Looks like more than a couple fx shops are out of business, even reputable ones.

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  2. MBAGearheadJanuary 16, 2015 at 8:52 AM

    Just imagine the money made by insiders at SNB, or their family/friends, that knew this move was coming! Meanwhile, the sh!t is hitting the fan: http://www.zerohedge.com/news/2015-01-15/2-fx-brokers-suffer-significant-losses-after-snb-surprise-breach-regulatory-capital-

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  3. coryJanuary 16, 2015 at 9:11 AM

    The SNB have shown themselves to be amateurs today and there is many people that will suffer considerably as a result." -Alpari's CEO, James Hughes

    remind me of when the Fed started their trading

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  4. MichaelJanuary 16, 2015 at 10:34 AM

    This comment has been removed by the author.

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    1. JMF3January 16, 2015 at 1:03 PM

      Could the same thing not have happened in futures? Margin is more than half as little for 6E than spot EURUSD. As with MBA's chart above, the brokerage would go to exit the position, but would not find a counterparty until the equity was well spent in the client's account.

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    2. MBAGearheadJanuary 16, 2015 at 2:30 PM

      Yes but futures account are segregated so you shouldn't lose your funds even if the FCM goes bankrupt and even in the case of fraud, you should be made whole eventually. Forex accounts are not segregated so if the dealer goes under, I would be much more worried.

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    3. JMF3January 16, 2015 at 6:23 PM

      I see. Nonetheless, I seem to hear about more massive futures brokers failures than forex (at least domestic forex) brokers. Until now!

      Looks like FXCM got bailed out.

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  5. MichaelJanuary 17, 2015 at 12:04 PM

    This comment has been removed by the author.

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  6. MBAGearheadJanuary 18, 2015 at 11:15 AM

    Who's your broker? (in case I open an FX account at some point I can look into them. or do they not take US clients?)

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