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At $4 Trillion A Day, And At 50x Leverage, FX Trading Volume (and Risk) Dwarfs That Of Equities And Treasuries
If one looks around and wonders where the speculators have gone (the carbon-based variety, not the feedback-loop creating, binary terrorists) look no further than the FX market, which according to the latest BIS data, has hit $4 trillion in daily notional volume (20% higher than the $3.3 trillion in 2007), nearly quadruple the combined U.S. stock and Treasury trading, which in April averaged about $134 billion a
day (down from a daily average of $148 billion in 2007) and $456 billion (down from an average
of $570 billion for all of 2007), respectively. This amounts to nearly one quadrillion in total dollar transaction volume per year. There are two main reasons for the exodus from other products, and for ongoing cloning of the "Japanese housewife" phenomenon: the ongoing migration away from the bizarre daily moves in stocks, which are now traded almost exclusively by robots, or other frontrunning machines (see Schwab daily 52 week low), and the ridiculous leverage allowed in FX margin accounts. Just today, the CFTC announced that after the proposed 10-to-1 retail FX transaction leverage was shot down by "dealers, lawmakers in Congress and others who
feared it could push investors into overseas markets with less
protection", instead Gary Gensler's goons decided to keep all the habitual gamblers in house, and give them virtually unlimited leverage, or, as the case may be: 50 times. Recall that Bear and Lehman just needed 30x leverage to blow themselves up, and that happened with the FRBNY and the SEC both supervising. So let's see: $4 trillion...50x retail leverage...no regulation...this will surely end well.
Below is a chart from the WSJ, which in turn recreated a BIS chart on the same topic, highlighting the explosion in FX gambling.
The WSJ's Tom Lauricella has more:
The $4 trillion mark represents a 20% gain from $3.3 trillion in 2007, the last time the global foreign-exchange markets were surveyed, according to the Bank for International Settlements. While the survey found continued growth in currency trading, it did reflect a slowdown in the market's growth from the prior survey, when trading volumes had soared 69% from $1.9 trillion in 2004.
The BIS survey, taken every three years in April, this time provides a snapshot of the currency market during the height of the European debt crisis and at a time when lightning-fast computer models have juiced trading volumes.
The survey showed how investors are seeking out faster-growing economies and big commodity producers. Trading volume between the U.S. dollar and the Australian dollar rose 35% from 2007, and volume with the Canadian dollar was up 44%. Trading also jumped in the Indian rupee, Chinese yuan and Brazilian real. In contrast, trading in the U.S. dollar against the British pound, a mainstay of the currency markets, fell 6%. Trading in the euro against the dollar rose 23%.
The debt crisis likely boosted trading volumes in the euro in the latest survey. But the continued rise in trading reflects the increased globalization of investing. With the big developed economies of the U.S., Europe and Japan struggling, investors are turning toward other markets for returns and generating more foreign-exchange trading in the process.
Lately a critical market question has been one of a "chicken or egg" variety, long highlighted by Zero Hedge: does the market push the carry trade, or does the carry trade (and lately this means almost exclusively the AUDJPY or the EURJPY) exert an effect on stocks. Now that we know that the notional ratio is roughly 25:1, the answer is clear. Yet with so much more leverage allowed in FX (especially for institutions, which can lever their trades practically infinitely), it would not be at all surprising if a truly de minimis amount of actual equity capital, levered up thousands and thousands of times, in the form of carry pairs, was the true mutated heart of this mangled monster of a market.
As for what specific pairs dominate FX, the WSJ explains:
Overall, the U.S. dollar remained the dominant global currency. It
accounted for 84.9% of transactions, down from 85.6% in 2007. The euro's
share rose to 39.1% from 37%. The share count data add up to 200%, to
reflect the fact that there are two currencies in each transaction.
Another quick look at the carry trade:
The shift in currency trading to these investors is evident in the big move in the yen recently. Historically, currencies in countries with high growth rates and interest rates tended to be strong, driven by trade flows and the attraction of the high rates for investors. Japan has neither of these factors, yet the yen is at 15-year highs, largely because investors see it as a safe haven from global financial turmoil.
And just in case you thought robots would miss the opportunity to trade in trillions daily, and create their own little feedback loop gargoyles, with gargantuan leverage to boot, think again.
Some of the rise in nondealer trading likely reflects the growing prominence in recent years of computer-driven trading models broadly known as algorithms. Similar to their trading in stocks, these models make huge numbers of very short-term bets, adding considerably to the volume, but generally not having an influence on the overall direction of the currency rates.
Once again, this is a recipe for disaster, with far too much equity at risk, and a ridiculous amount of leverage on top. How this will end is all too clear, but in the meantime, retail has to suffer a few years worth of losses, with Wall Street pocketing the gains, just to make sure that when the plug on the ponzi is finally pulled, the getaway jet to the nonextradition country is completely packed with more than enough gold and other hard assets.
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Historically, currencies in countries with high growth rates and interest rates tended to be strong, driven by trade flows and the attraction of the high rates for investors. Japan has neither of these factors, yet the yen is at 15-year highs, largely because investors see it as a safe haven from global financial turmoil.
A question nettling me for some time: Why do "investors" see the Yen as a safe haven? Thoughts, gentlemen?
Oh, uh, ... FX beetchez!
I'm no Yen bull on their terrible fundamentals, but I think the argument is that as the economy weakens (risk off) all of the carry trades (include Japanese citizens investing overseas for yield) get unwound, meaning they have to cover their Yen shorts/repatriate their overseas investments.
OT: Dow futures up .7% on the in-line Chinese PMI, with a bit of unwanted input price increases in the government's sub-indexes. Chinese stocks up .1 to .2%, Hong Kong up .2%. So, US futures rise more than the reaction in the data's home country?
Probably didn't take Bennie too many e-mini's on Globex to pump that data print.
US futures react to any data? I thought they just waited till volume was low enough then reacted.
Update: Shanghai now down 10 points, with S&P still up 8. Silly.
yeah isn't that special, Chinese data isn't good enough for China but boy oh boy put 20 points on the SPX futures
Aus GDP beat... hence the AUDJPY.... however Canada missed yesterday and my chart has a gap at 1048
If anyone needed more evidence of just how rickety and rotten the entire system has become, look no further than the cat-and-mouse game now being played in desperation across damn near every market that exists. Equities, commodites, treasuries, FX...they all look like the gasping, final breaths of a body about to shit the bed.
The more one follows the money, the more the picture resembles abject desperation.
"The technique of deposit creation through bank-to-bank credits is another aspect of the same principle. The process is typical for almost every period of 'prosperity'. Finance bills were the instrument by which the most notorious speculative ventures had been countenanced, ending in disaster. Baring Brothers of London failed in 1892 with a ratio of 1:4 between capital and acceptances. A more unfavorable ratio was again characteristic for many London acceptance houses by 1929. The quantitative expansion of credit is especially important when it indicates a deterioration of quality. Before World War I, the balance sheets of German banks showed for a long time a more rapid growth of acceptances than of deposits, and the German experts became suspicious of this inflationary practice by which the competing banks diverted money market funds to their industrial customers. The jittery 1920's revived this age-old technique of prosperity-makers. It began with legitimate acceptances with shipping and insurance documents attached. Gradually, the documents were dropped and eventually every reference to the commercial transaction disappeared. Next, the 'quasi-reimbursement' was replaced by simple bank-to-bank credits transferred on the wire in fantastic proportions. The creditor banks had helped to finance the boom by 'confining' themselves to a most 'liquid' asset, to credits granted to other (foreign) first class banks. What could look more liquid than a balance with an A-1 bank? But what guarantee did the creditor have that the debtor bank would keep liquid in its turn?"
Melchior Palyi, 1936
50:1 leverage is nothing. There are international FX buckets shops (but I repeat myself) that offer up to 400:1 leverage. Their advertising dollars are keeping the lights on at Bloomberg TV.
I'm in Thailand and saw a Google provided ad here on ZH offering 500-1!
Hilarious!!!
Virtually every Riverboater with a computer now wants to be a daytrading Japanese housewife.
And the Bucket Shops are more than willing to provide infinite leverage.
I have one of these, she is half Yen and half Baht though.
Haha.... 'have'.
The baht half sounds sexier. But that's probably why I live in Thailand...
ladyboys?
agree, I consider her Thai
Please stop.
Stop feeding the One World Currency Bozos.
I can just hear them now; "See, if there were no more national currencies, if there was just one world currency, then these risks and excess profits gleaned by the bad capitalists would cease to exist for the benefit of all mankind, no more bailouts, raping of less developed countries, better resource utilization, smaller carbon footprints. The world would be a better place without these evils. One World Currency, Now!"
Come hither, bring me my Burning Bush and allow me to be Jehovah to your Moses, you Doubting Thomases.
It's easier and wiser to limit FX leverage to 4:1 than loose control of your own sovereign currency. Some countries prefer to be less suicidal than others.
It doesn't surprise me, look at the FOREX adds for fuck sake, its like an add for kids.
http://www.youtube.com/watch?v=GVT3uOokBV0&NR=1
Check these losers out. Hilarious!!
For someone called "RobotTrader," you sure have no clue what you're talking about.
Try some real research for once instead of relying on soft-porn sites for most of your "input." I, for one, would appreciate it.
You missed the point here
For instance, from MarketWatch:
"Britain retained its title as the top player in the forex market, with British-based banks accounting for 36.7% of daily turnover, up from 34.6% in 2007.
The United States followed with 18%, while Japan accounted for 6%. Rounding out the top players, Switzerland, Singapore and Hong Kong accounted for 5% each, while Australia-based banks accounted for 4%."
So Mrs. Watanabe is not so pervasive and ubiquitous as you would have us believe, eh? Guess you just have a penchant for Asian chicks.
And you are a Jackass
+ !!
Surprised I am not seeing more of this on the "all night paid programming" channels. Even the most dim don't believe in real estate any more. I guess this is still in the "paid for seminar at a hotel" phase.
Short counterparty risk
Short exponential ponzi
Short self devouring financial industry
Short unsustainable growth
Short debt slavery
Short bonuses
Short leverage
Short the fuckers
Long gold bullion
Vive la revolution!
Great one
Long financial education
Long real friends
Radek
Hi yo Silver, AWAY!
Long Butterflies
Long Daffodils
Long Unicorns
Long Chocolate Labs
Long Freshly Cleaned Sheets
Long Long Walks
Long Heart Shaped Rocks
Short Sarcasm
Nah, I'm just fucking with you. It's me DarkMath. It's all good.
:P
Love me some forex long time!
I for one left the casino of the equities markets when TSHTF and just sat. Then, a friend told me about a little opportunity he called FOREX.
At this point, I've made and withdrawn more than my opening principal riding the Euro down, so I don't give a flying fuck what happens. I'm absolutely gambling, and if 400 million crazy motherfuckers out there trade $10,000 notational a day and it crashes the whole system and we wind up having a megacrisis and hitting the reset button, well, then, by God, I'll be glad to have been part of it.
I'm so fed up with the rigged games that I would gladly push the reset button if given half a chance. Fuckers. All of them. From BHO to Barney Frank to Geithner to Bernanke. They're all boiling us frogs, and I have been noticing the water getting warm for some time.
Fuckers.
Fuck 'em.
That's because Bernanke keeps pissing in it.
I'm setting up a demo video FX poker machine in Vegas next week. No more accounts. Just swipe card and receive 500:1 leverage and start playing. Cool animations and exotic foreign girls entice you to bet on their currency for an evening of enchantment. Or just for a quicky. Results get displayed on video screens all over the casino so you can go lay more games. If it takes off, we set up a sports book for currencies.
I just love zero-sum games...
FX trading for average joe is GAMBLING.
It is a zero sum game. You only win at the expense of another dumbass.
With 50x leverage, it is GAMBLING^50.
The pros just love to fleece each novice FX trader and make a killing.
"A fool and his money are soon parted..."
I can't believe the CFTC is okay with this. The SEC, sure. But the CFTC?
I trade ES BOND FX OIL HG etc all at 85% leverage... a futures market has been around for a long time... hence Chicago exists... along with margin calls... its not OTC- that is a different story w/o mark2market
truont, you have been here a while... I can't believe I am hearing this. You win, the other side wins, some poor 3rd world puke takes it up the ass. So much for the latter 20th century. In the last few years we have become the third world puke. Few realize it yet.
thanks TD, great article. This is why i am visiting this site 5 times a day (probably more), it is the only place that i am learning. Screw the MSM with there drivel.
Fake needs, Fake money, Fake growth , Fake jobs.......this will all go down badly ....and the middle class who r doing most of the fake jobs will be hit hardest.......thos eMBA jobs wont be coming back.........and plenty of those IT jobs too.....
..and the Fake news, Fake numbers, Fake charts, Fake profits...
...fake women, fake booze...
don't forget fake tits
In the words of a former principal whose insight, clarity and sincerity were inextricably linked to his direct personal (non)investment in the transaction: "It's only money."
I am rather surprised to hear the inane and ill-informed comments on ZeroHedge (of all places...) in regard to trading in the foreign exchange. I suppose most 4X traders would read this article, allow a side-mouthed grin and a snicker, then move along. We know that if you don't get it by now, you're not going to get it.
Allow me to submit an axiom for the record: "Those that can, trade 4X. Those that can't, run around blogs going, 'bitchez!'"
A 50:1 margin ratio for the retail trader is hardly a catastrophe waiting to happen. See, it is a zero-sum game between participants: someone wins, someone loses. Call it gambling, call it what you will but I know that I can trust a 4X chart 100:1 times more than I can a stock chart, or -dread the word!- the options chain. Because the market is so massive, I can get a real and instant assessment of a trend or counter-trend with a simple glance at a four-hour chart. Don't even have to worry about whether Mr. Jobs has a belly-ache. (Not to pick on anyone in particular. It is just an example...) Can't do that in what was once known as the "stock market."
Ask yourself who is really gambling and I believe an honest appraisal would reveal that the 4X trader plays in the "real world" and other traders don't. They just think they do and scoff at anyone who tells them about the man behind the curtain. It is that simple. Nothing else is as vast and as unforgiving a trading landscape as 4X, while nothing else is as manipulated as the thin markets of oil and gold (bitchez...).
Running algorithms on a 4X account is a really common thing to do. Overall, most 4X traders use robots incorrectly in that they drag it over, call it "work," then go to lunch. Any machine left to its own devices is still a dumb machine. I have had great success running algorithms on my account, albeit with modifications and strict adherence to money-management rules. Think small. Greed kills. Bulls make money, Bears make money and Pigs get slaughtered.
For instance, Forex MegaDroid (which I own and am currently running on my account even as we speak...) is a fantastic piece of computing software- but it is slow, slow, slow. It rarely trades at all but when it does, it very rarely loses money. Sometimes it makes two bucks and change then closes the trade but at least the robot can admit when it was wrong and walk away. Most "carbon-based" traders can't do that. Overall, I am quite please with the algo, despite the fact that it is like trading with my mom in that caution and risk-aversion take precedence over making money. I would say to MegaDroid: "Relax, dude. Take a chance."
There are also a great many other fine robots on the market today. I run GBPbot (with my own set of parameters...) that cleans the clock of the 4X dealer, especially when the trend is short. On a day three weeks ago, my robot hit no less than 32 winning trades in a 24-hour period. To my amazement, the robot not only repeated this incredible feat on a day the next week but it did it twice, two days in a row. That is, the robot closed 64 winning trades in less than 48 hours. And that ain't no shit, neither.
Now, if you think that I am somehow compensated by the good boys and girls at NextGeneration Forex who sell these algorithms, then you have another thing coming. I do wish to hell they would stop spamming me with algohype gone ballistic, though. Idiotic names and over-the-top adverts come with the territory for these robots but to dismiss them out-of-hand because you don't understand it is a detriment to your account. Keep hoping the boys are snowed in on OpEx day, instead. Hope is a valid strategery, last time I checked. /:
Other robots I have had excellent success with are Forex Transporter and Forex Skyline (a freebie, give-away robot, by the way...). Avoid Forex Godfather and Knight-Rider, though. It's not that these "bad" robots will drain your account- they just don't do anything at all but suck up valuable bandwidth. Forex Ironman is a dangerous piece of software and must be watched very closely. It'll hit big-time but, overall, it's not worth it. Too scary.
Most robots set you back a hundred bucks. When run properly, you will make your money back- depending on the size of your account, of course- in less than a week, while the robot is yours for a lifetime. If you have a day job and want to get started in 4X, buy a good robot, open a demo account at InterBank Foreign Exchange (it is free...) and you can see that what I am saying is true. IBFX even has their own proprietary algos that you can run for free.
I highly recommend IBFX. I have done the bucket-shop thing and traded with "legit" international brokers as well, who turned out to be rip-off artists. IBFX wants you to run robots on their platform, while other companies severely restrict or disallow the retail trader to run algorithms.
That should tell you something right there. If you're trading over-the-counter with a dealing-desk broker, he will find a way to rip you off. He is not going to allow you any advantage whatsoever and having an algo running 24/5 against him is not in his best interest. The best thing to do is don't trade OTC against your broker. Don't bet against the house because you will certainly lose. Instead, allow the house (an introducing broker...) to trade for you against the largest banks in the world. IBFX does that and they do it well. The best part is that they are located in the beautiful fly-over country of Idaho. Or is it Utah? Either way, it is not Wall Street or London= and that's a good thing.
As for the new rules regarding the 50:1 ratio: I think it is an asinine move. First of all, most noobs and dweebs are still going to lose money by- guess what- doubling the number of lots they trade! Oh, the math!
It's just stupid. Protect me from myself so that I can find an even more dangerous path to channel my greed. If I have to trade with FXCM UK (straight-up crooks, by the way...) for a 200:1 margin, then I will go there. Or, better yet, let me open an account with a Cypriot broker who can offer 400:1. Yeah, that's the ticket. Not! It's gonna happen, unfortunately. They should have left well enough alone.
I apologise for the rant but I would suggest that anyone reading this article about the impending doom brought on by the excessive margins offered in 4X take it with a shaker of salt. If you don't know what you're doing, you're going to get burned. End of story. Once you find out how 4X really works, you can set yourself and your family up for life.
This is the real deal,
Olexsandra
http://en.wikipedia.org/wiki/Antonio_Gramsci
Scritti Politti. Allways looking for a perfect way.
http://www.youtube.com/watch?v=hs7Jy2y-33A
Thanks for the sales pitch. How big is your cock again?
Please go on about the how you're so protected flying 50-to-1. But the trading terminal is in Utah! Fuckadoodle doo, you'll be set up for life!
LOL.
So many stupid statements above it's hard to know where to start, but let me just say this: Efficient markets must by definition undercut any robot trading algorithm. The speed at which any advantage disappears depends on the rate of adoption of that advantage.
Now, you're using widely advertised -- and very inexpensive bots to do your trading, and you're claiming a sustainable ("for life") advantage. LOL?
You yourself state with pride that the FX market is efficient, and yet you somehow believe that you have an "advantage" with an off the shelf trading product.
Good luck to you Orly. You're already fleeced but you don't know it yet.
Barings Bank - Nick Leeson
Societe General - Jerome Kerviel
Yeah, please tell me again how they FX market is not a great place to lose, and lose big.
Olexsandra,
Thanks for your post! I agree with all of your points and I don't think you need to apologize for ranting.
There has been a lot of nonsense here on ZH about markets being gambling places, etc.
I wish people would start to understand the difference between speculation and gambling,
My definitions are: gambling is an activity where your skill and experience have almost no effect on your success - it's all luck,
while speculation is a business that requires skill, experience, extreme resilience in the face of failure, and some luck.
Successful speculation is what makes any business succeed.
When Jobs and Wozniak were building the first Apple computer in their garage, they were speculating in the computer business.
Many others who were doing the same thing did not succeed. That's just the way things happen in life.
Does the existence of algorithmic trading in FX, or any other market, mean that skill and experience are not needed?
I'm not sure, but I'm going to find out soon - I'm almost ready to deploy my own algorithms.
Regarding the new CFTC rules: I'm just relieved that more damage wasn't done.
Given the constant uninformed whining about the evils of leverage, and "casino markets" that we see here on ZH, it's encouraging to see that at least a little bit of commonsense still prevails at the CFTC.
I only apologised about the rant itself, not the content. Not once did I use the word "efficient" or any such thing. I just don't understand where these people come up with this stuff. Deluded souls. Alas.
My only point was that I would hate to have someone interested in trading 4X be frightened away from it because of the drivel read here on this site. Yes, if I can save one future real trader from the nonsense the "bitchez" post here, it will be well worth it. Also, I will be happy to leave you naysayers in the dust, so please, don't bother to try and keep up.
Regarding the use of trading algos, it is very important to use your skill in the placement of robots. For instance, it is possible to lever the risk to this insane market. Obviously, make it small. When trading in a nice, tight trend, crank up the risk- within reason. Also, it is possible to tell the robot to trade either long and short, only long or only short. Obviously, at this point, one would not go short only USDCHF. The downside potential is easily outweighed by the upside possibility. Take a small risk and tell the robot to trade only long.
Also, a robot has a distinct "personality" and their traits are best suited for specific market conditions. Not all robots work well in every market condition, the same as all world-class athletes are not able to jump from one sport to another. Range-bound markets require Forex Skyline, whereas choppy markets can use Forex Transporter or even Ironman. See? Rocket surgery.
Use your own market indicators to tell you when to employ and unemploy the algos, then manage the trades as if they were your own. Don't sit there and say, "Gee, this robot sure is losing me a lot of money."
The CFTC rule changes are silly. I was one who wrote the commission and told them that, indeed, it will make it worse for the average retail trader because he will flee the US oversight for some very, very murky places in order to trade for greater leverage. It could have been a disaster but, instead, it turns out to be some cosmetic changes that will allow the government to feel as though they are protecting little old me from those evil, preying wolves dressed as 4X brokers.
Call me a successful speculator, so that anyone who wants a short, sharp laugh can have it now, I suppose.
Thanks, binomial. Get long USD and stay there! (What? Another wildly popular ZH position, I am sure!)
:D
Orly, what was the middle section of your post about?
You missed the point.
And, you are a jackass.
There is a lot of truth in what you say, Olexsandra ( by the way : you´re not working for a Russian Forex broker ;=) ).
My six cents comments for all ZH doom and gloom fans :
1) The European PMI fell to a six-month low of 55.1 from 56.7 in July, but was still above 50 ( this FACT will actually lead to even more aggressive laments by ZH staff how "crooked" the economy worldwide is - yeah, China is falsifying its numbers, the EU and US, too - I know ).
2) Manufacturing in China grew at a faster pace in August after the weakest performance since early 2009 in July, signaling that the economy’s slowdown is stabilizing. The purchasing managers’ index rose to 51.7 from 51.2, exceeding forecasts, a government-backed report showed.
Have a nice short covering day ! :=))))))
Oh, the dreaded Russian 4X broker! Ha! Those guys bring ruthless and cut-throat to a whole new level.
Truth be told, though, I did start trading in 4X with a Russian company based in Staten Island called FXClub. I used their proprietary platform called "ExpressFX." What a cool little program! If you want to learn the way the 4X market works, that is one way to do it because it is very simple and straight-forward. It forces the trader to trade based on risk assessment with a slider bar that moves from green (safe...) to red (dangerous...) that determines the lot size. It turns out that understanding the level of risk in a trade is the single-most important part of creating a sustainable account and this innate understanding of risk has helped me tremendously. If you want to cut your teeth in 4X, I can recommend FXClub, despite the fact that they are Russian brokers. They never ripped me off and the customer service was pretty good for such a small company.
:D
What´s your ytd return on Forex, if I may ask on a "public" forum ? I am up + 200 % this year. Making a killing in YEN crosses :=)
By the end of September, it should be +225% as well.
My main strategery in this crazy market is to accept a trade signal on the H4 chart and go in small. Since I am almost certain that the trade will probably go against me at first, I use a technique I like to call "banding." Basically, it is a lot like dollar-cost averaging when trading stocks in that my initial position becomes the benchmark of the range. Then, I switch shorter and shorter time-frames opening trades as I get new signals until the H4 moves in my direction. Then, I have about five to ten open positions in a narrow band as seen on the daily or weekly charts. Then, I set my take-profit at the top (or bottom...) Bollinger Band (28/2...) of the daily or weekly chart and let them ride.
With this technique, it is important to trade with a tight spread, so exotics are out of the question. I am trading mainly in the spec-bubble on the CHieF, taking a 33% drawdown on the account. (I know...scary...) I am patient, though and I do believe the worm has turned for the CHF and the USDJPY. When this baby starts to move, it is going to be superfast.
I would use the term franc-cost averaging but that sounds stupid. :D
For instance, right now, I have the EURCHF with open positions in three bands: 1.4502 to 1.4190, 1.3520 to 1.3420 and 1.3123 to 1.2846. My take-profit on all three bands is at 1.5. Do the math on that bad boy! Now, I don't know if it will make it all the way but I have a feeling that I am actually low-balling the move. We'll see.
I have similar positions open in the USDJPY and the EURUSD, all long. I have found the best way to do implement this technique is to get a scalping robot, such as GBPbot, and tell it to trade long only with nine maximum open trades and a risk level of 28.
Who knows, if these trades come in the way I think, my account may very well be up over 300% by the end of the year. Good thing we need to be protected from ourselves, don't you think? Mrs. Watanabe may just get the better of me, right Robo? Ooh. I am so scared...
:D
Substantially higher %. My basic position on this general subject is it's a question of skill. Never used bots. The market (ALL of it) is full of people who can't calculate a dinner tip in their head, always reliant on the computer to do their thinking for them, or some stochastics or whatever BS "magic" indicator is the fad they advertise on ETrade nowadays, with no educational background in economics, finance, or mathematics, who are now pissed there's no gravy train, because most of the idiots who were telling them what to do are now also flumoxed or bust.
Friend of the family bought bonds. LOCAL HOSPITAL Bonds. Getting 5.5%. More than 100k. Paid CASH, not leverage. He's happy. 5yrs. Just can't make that shit up. Told him to buy Gold when it was 800. He didn't. Told him to buy 10k shares Citi @ $1. Didn't. Told him to sell DOW @ 11k before crash. Waited until 9500. **SAVED HIS ASS** (He's retired). He doesn't mention these, EVER. Know what he does mention? That at DOW 6300 I though it was gonna break <6k. Never mind he was flat & saved 3k pts. THAT, he remembers. That's the kind of person who's complaining about gambling....all these "financial experts" everywhere, you can tell w/in 3 sentences none of them have ever traded anything, like that ball-licker Steve Liesman on CNBC. Obvious here on ZH the % who knows what they're talking about, instantaneously, and it's NOT small, just ... "drowned out."
People who say it's gambling ARE the people who are gambling, who spend an hour every night reading & doing what someone told them to do and can't get to the grossery store w/out GPS. Biiiig, huge rally SPX today. SHORTED IT LIKE A MOTHER FUCKER 1078. CNBC says volume was good. Breadth was good. Everything's a-ok, and we're gonna rally. So I'm probably gambling then ;)
Wanna know why you're losing and think it's gambling? Because while you were stuffing your fat fucking face with pizza and guzzling beer and banging ugly fat skanks, the guy who just took your money was getting a degreee in Finance, and economics, and yesterday 11pm, while you were watching Leno, he was doing Options chains, and this morning while you were still snoring and farting at 3/4am he was checking futures, and the NIKKEI close and the SHANGHAIEX and the London open. FUCKFACE.
Ps: L-EURCHF/USDCHF? You MUST be trading small ;) I think it chops at best.
Ps2: If that's you're picture, I'm coming over ;)
Ps3: Started shorting USDJPY AGGRESSIVELY and with SIZE ~120, so ......... SUCK IT BITCHEzzz
Thanks for the post, themos. I had an itch about this post, epsecially when dufii assholes start calling me names. It is obvious that the big-mouths on here are also watching Leno and farting at the same time. It is irritating.
I take solace in the fact that there are guys and gals in here who actually read and think and do not respond with knee-jerk idiocy. Thanks for that.
Yes, I am trading small, but consistently. Basically, I find a Fibo level on the monthly charts and wait for the approach. I will set up a band of trades that should move in my direction. I have been getting creamed on the EURCHF, that is true, so I have three such "bands" of open positions. My max drawdown was about 33%, which was just a tad frightening.
My reasons for hanging in the trade are:
Once the SPX rolls over, it is Loooooooonnnng USD-City, especially against the JPY.
I never had the opportunity to formally study anything in finance or otherwise. Everything I have learned, I have taught myself, mostly through informational sites, such as ZeroHedge. It is a good thing that it is getting more popular, even though the blog has been over-run with destroy the dollar gold-bitchez types. I don't really get it, myself.
Thanks for replying to my post. I do appreciate it. And-, no- you can't come over! Ha!
Hopefully my next year will be as successful as yours has been this year. Best of luck trading!
:D
Ya niet gavarou y niet panimayiou bolshe parushka.
;)
PS: Btw, at no point in yesterday's rant did I ever mean *you* when saying you, in case you took offense, please don't. You was me talking to all the "market is gambling, fx is gambling, gold is gambling" crowd. :)
"Making a killing", reflecting on that for bit.
and
Stop worrying guys, margin regulations do not affect bucket shops. Leverage all you want, they'll make more.
I, for one, am happy Congress backed off from closing down the "riverboat".
The majority of trading volume isn't leveraged 50x. Only the retail market and these are smaller accounts, which are gamma hedged by the shop.
You're glorifying loss and willing it across all asset classes in a desperate attempt to see suffering. The markets are a casino, yes but if you're not smart enough to win then go play something else and stop whining about it.
You gonna whine when a sudden government action wipes out 10% of the market and 50% of the traders go bankrupt in an instant?
But you're right, I'm sure there's no counterparty risk. I mean, all market participants are honest, right?
Before the recent cftc rule changes it was possible to trade at 100 or 200:1 leverage and this survived the recent years of turmoil in the markets so 50x leverage will actually be an improvement.
Overdose: The Next Financial Crisis (46:22)
This is now fully in YouTube.
http://www.youtube.com/watch?v=4ECi6WJpbzE
I have to sell products I make priced in Euros. Since lead times are around 6 months I gotta protect myself in case the Euro goes down the crapper before I can ship and invoice.
Is this NOT why we have forex? For a small amount, I can lock in my whole profit margin no matter what the Euro does.
I do like the Vegas Forex machine idea, though.
I am patiently waiting for Tyler to get out of bed and arrive at the office to comment about the Futures action. In the mean time i will shit , shower and shave
leverage is a beautiful thing....if you can discipline yourself. that being said, most traders can't. i liked it more when it was 100:1
Hooray for Robot, hooray for Orly, and nice commrnt Aud. For the rest of you - "take a shot, buy a 100 lot" then tell us how it is.
The giant oozing leech is crawling around looking for a new artery.
My bot is bigger than your bot.
Make 5 k in the forex markets. Then buy a new faster box for 4k. How to get all your industries into the arms race model of power growth.
It is NOT 4 trillion times 50. It is just 4 trillion.
$some_amount * $some_leverage = 4 trillion volume.
true, and only about 2T of that is in the spot/futures markets.
true, and only about 2T of that is in the spot/futures markets.
Why is everyone surprised about how much currency is traded? Theres so much of it kicking around everywhere thanks to that thing..The Printing Press" More useless widgets to kick around.
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