• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Goldman Finally Capitulates: Closes EURUSD Trade At 2.3% Loss

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Wed, 11/23/2011 - 09:07 | 1906209 Coldfire
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.

Wed, 11/23/2011 - 09:18 | 1906252 philosoraptor
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?

Wed, 11/23/2011 - 09:32 | 1906290 Max Hunter
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..

Wed, 11/23/2011 - 09:22 | 1906261 jdelano
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.   

Wed, 11/23/2011 - 09:45 | 1906336 firstdivision
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.

Wed, 11/23/2011 - 09:42 | 1906320 P the P
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%.

Wed, 11/23/2011 - 10:26 | 1906531 Coldfire
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.

Wed, 11/23/2011 - 10:29 | 1906540 jcaz
jcaz's picture

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

That's so precious......

Wed, 11/23/2011 - 10:53 | 1906619 Alien Invader
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!

Wed, 11/23/2011 - 09:55 | 1906378 SheepDog-One
SheepDog-One's picture

If THESE dummies control the world, we are FUKED!

Wed, 11/23/2011 - 09:07 | 1906214 split4to1
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 http://www.traddr.com/forum/topics/daily-technical-analysis-by-fxcc-november-23?xg_source=activity#.TszvxWOBq0s#ixzz1eX8aOuMU

Wed, 11/23/2011 - 09:07 | 1906215 silver500
silver500's picture

Just went long at 1.3391

Wed, 11/23/2011 - 09:09 | 1906224 kloot
kloot's picture

sell = buy

good call.

Wed, 11/23/2011 - 09:19 | 1906254 Gief Gold Plox
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.

Wed, 11/23/2011 - 09:41 | 1906312 pudding
pudding's picture

Simply buy the GS CDS, someday it will blow

Wed, 11/23/2011 - 09:08 | 1906218 DCon
DCon's picture

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


Wed, 11/23/2011 - 09:09 | 1906219 Sudden Debt
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....


Wed, 11/23/2011 - 09:11 | 1906232 achmachat
achmachat's picture

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

Wed, 11/23/2011 - 09:14 | 1906243 Sudden Debt
Sudden Debt's picture

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


Wed, 11/23/2011 - 09:09 | 1906221 jcaz
jcaz's picture

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

Wed, 11/23/2011 - 09:09 | 1906223 BW
BW's picture

Is it time to go long EURUSD?

Wed, 11/23/2011 - 09:10 | 1906226 Sudden Debt
Sudden Debt's picture

What would Cramer do....?


Wed, 11/23/2011 - 09:09 | 1906225 Fips_OnTheSpot
Fips_OnTheSpot's picture

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

Wed, 11/23/2011 - 09:11 | 1906229 Carlyle Groupie
Carlyle Groupie's picture

ZeroHedge Ink Patrol

100% chance of ink in the water.

Wed, 11/23/2011 - 09:11 | 1906230 gmak
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.

Wed, 11/23/2011 - 09:13 | 1906240 GeneMarchbanks
GeneMarchbanks's picture

Holding my breath for a Stolpology?

Wed, 11/23/2011 - 09:25 | 1906262 vegas
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?



Wed, 11/23/2011 - 09:50 | 1906263 firstdivision
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.





Wed, 11/23/2011 - 09:29 | 1906281 michaelsmith_9
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.    http://bit.ly/rLrDer

Wed, 11/23/2011 - 09:44 | 1906325 P the P
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




Wed, 11/23/2011 - 09:48 | 1906341 eurusdog
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.

Wed, 11/23/2011 - 10:00 | 1906402 merchantratereview
merchantratereview's picture

So NOW I go long Euro, right?

Wed, 11/23/2011 - 10:12 | 1906478 Byte Me
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....

Wed, 11/23/2011 - 10:00 | 1906407 The Knights Who...
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.

Wed, 11/23/2011 - 10:29 | 1906539 LeBalance
LeBalance's picture

Somebody Stopl me!

Wed, 11/23/2011 - 13:26 | 1907277 dcb
dcb's picture

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

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