Goldman Finally Capitulates: Closes EURUSD Trade At 2.3% Loss

Tyler Durden's picture

This will come as no surprise to anyone, because as we noted previously it only took Goldman 2 days to Stolper its clients this time around. But just because the EURUSD apparently never actually "closed" below 1.35, Goldman formally kept the trade on for one more week subjecting clients to not only extra losses but much greater volatility. Today, everyone has had enough of this charade.

Closing long EUR/$ as risk sentiment failed to improve on new reform-friendly governments in Italy, Spain and Greece.

We recommended going long EUR/$ on November 11, based on the view that the nomination of 'technocrat-led' governments in Italy and Greece could lead to a clear reduction in risk aversion. This has failed to materialise - even after the reform-friendly election outcome in Spain. Moreover, with signs of renewed weakness in some cyclical indicators globally, such as the Philly Fed index or China's PMI this morning, EUR/$ could weaken further on risky asset correlations.


We would close this recommendation for a potential loss of about 2.3%.

And now we are eagerly looking for Thomas ".000" Stolper's next FX trade "reco"

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Coldfire's picture

Yeah, 2.3% times whatever leverage used. At a modest 40:1, that's a tentacular 100% wipeout of the capital on that trade.

philosoraptor's picture

If one knew one's risk in advance of taking a trade, as well one should (and did in this case), only an idiot would leverage to a level that exposed one's capital to a near 100% loss. Hands up who's an idiot?

Max Hunter's picture

I would venture to say they were leveraged up at least 25:1..  And a 400 pip drop on the size of trade they probably had... well.. let's just say... it hurt..

jdelano's picture

jesus.  this might be the end of the goldman panache--when you get to the point where you're outright cheating, toppling whole governments in service of your trades, and you still can't turn a buck, might be time to hang up your hat, loozers.  It's sad really, like watching a heisman winner go to seed or an ivy league school lose its accreditation....worst goldman class ever.   

firstdivision's picture

Goldman really is a shell of its former self.  It went from a long-run business, to grab as much cash regardless of the risks.  GS should have imploded with the Dot Com bubble.

P the P's picture

Can I come and live on your planet? A 2.3% loss is a 2.3% loss  - it would have to go to 0.00 to lose 100%.

Coldfire's picture

LOL, yeah, with no leverage that's true. There is an optimal level of leverage to use, down to zero. But that level depends on your aggregate realtime portfolio risk. Rule of thumb is not to risk more than 2% of your portfolio on one trade, but this needs to be optimised and it could be as low at 1% or lower or as high as 3% or higher. If you had a $10,000,000 portfolio and optimised each trade position at 2.00%, you would risk $200,000 on any individual - and to the extent possible, non-correlated - trade. The more you leveraged, the smaller percentage would wipe your position out. If you leveraged nothing, a 2.3% move would wipe out your position (sized according to Goldman's 2.3% sell-stop, if you were foolish enough to swallow it whole). If you leveraged 2:1, then a 1.15% move would wipe your position out; 4:1 leverage would only give you 0.575% leeway until your position was wiped out. But if you did the right thing and kept money management discipline, the wiped out position would only be 2% (or whatever the optimised trade size calculated) of your portfolio. Bottom line, expecting a conflicted stranger to give you a money machine is naive. And money management is key.

jcaz's picture

Oh, you think Goldman reports trades net leverage?  Or that they trade currency sans leverage?

That's so precious......

Alien Invader's picture

Hands up who thinks GS went into the trade unlevered. Come on, nobody trades FX unlevered - especially not the Giant Squid. Then again they were probably on the other side of the trade - after all screwing their clients is their MO!

SheepDog-One's picture

If THESE dummies control the world, we are FUKED!

split4to1's picture

Euro vs US Dollar We see high chances of the pair move down gradually towards (1.34137 – 1.33584). 
A proper confirmation would occur if the EURUSD will manage to close below the (1.34579) support over today`s trading session.

Read more: Daily Technical Analysis by FXCC November 23 - Traddr

silver500's picture

Just went long at 1.3391

kloot's picture

sell = buy

good call.

Gief Gold Plox's picture

I was just about to say it was time to go long with both hands and feet. We should really start an inverse GS ETF.

pudding's picture

Simply buy the GS CDS, someday it will blow

DCon's picture

Is "reform-friendly" code for "Goldman pre-approved"?


Sudden Debt's picture



Oké Oké...

1 less profitable trade...


If this continues like they are doing now, ROBO will have to clean up his office at the end of the month....


achmachat's picture

why would he have to clean out his mom's basement? I don't get it.

Sudden Debt's picture

because she needs more storage space? You can never have enough storage space!


jcaz's picture

"Masters of The Universe"-  BUWHAHAHAHAHAHAHHAHAH...............

BW's picture

Is it time to go long EURUSD?

Sudden Debt's picture

What would Cramer do....?


Fips_OnTheSpot's picture

Failed to materialise - LOL! Sorry! Kthxbai --GS

Carlyle Groupie's picture

ZeroHedge Ink Patrol

100% chance of ink in the water.

gmak's picture

Is this the carrion cal to go long EUR? Or do we have to wait for the next pronouncment from near god's lips to our ears?


Note: I purposely played off of clarion call.

GeneMarchbanks's picture

Holding my breath for a Stolpology?

vegas's picture

As Butch said to Sundance, "Who are these guys?"

Never ones to give up, the vampire squid stays on your account until they have vanquished the entire equity.

Maybe I didn't go to the right school, or know Skippy from prep school, or some such shit, but to bat exactly 0.00 over the course of at least 2 years is quite a feat. A blind squirrel with no legs could crawl on the ground and find a nut now and then.

So, who are the bigger idiots: Stolper and crew, or the accounts that follow him?

firstdivision's picture

Closing long EUR/$ as adding more debt failed to convince the world that the new Goldman-installed governments in Italy, Spain and Greece can do anything relevant.





michaelsmith_9's picture

The EURUSD has plenty of room to fall much, much further in the days ahead.  Clearly risk off is the theme, which was expected. Here is an updated look at the DX and CL.  Both indicate that equities should remain very heavy and are headed much lower in the days ahead.

P the P's picture

Come on Goldies.. if the stop is at the close you ain't out yet - might be 3% by then




eurusdog's picture

There were three "formal" closes below 1.3500 in the last five days. I looked at candles in my MT time zone, NY time zone and GM times zone and all three showed at least three in five. They are rationalizing like novice traders. A look at the last 10 years will tell you that Thanksgiving week can be extremely volatile as is the week following. Glad I am my own customer. I feel a bit more responsibility for the performance of my accounts.

merchantratereview's picture

So NOW I go long Euro, right?

Byte Me's picture

Ze man from Goldman, He say "Riiight"

(And --sotto voce "Sucker")

Actually, probably; but wait for the short squeeze over the US Turkeyfest #1....

The Knights Who Say Ni's picture

So, an annualised loss of around 60%. Or, put another way, an idiot investor would have to wait about 250 years before recouping this loss if he held 1yr USTs at current yields.

LeBalance's picture

Somebody Stopl me!

dcb's picture

time to buy thn, I find going short theyr longs, and buying their capulations works rather well