A low-risk/high reward Soros Style trade

[forker]

its been done before and it will happen again. The market dictates where price goes. The only currency that doesn't fall victim to it is the Yuan

 

[new_trader]

Are you really comparing what Zimbabwe did to Switzerland being able to defend a particular exchange rate? That seems to be a complete misunderstanding of everything involved here.

OK, explain how a Central Bank can print as much money as they like without any adverse consequences.

 

[new_trader]

Printing of money is unprecedented
CBs balance sheets growing
ZIRP
Cos the main players are TBTF
Primary dealers can leverage up to 100:1 illegally using customer deposits
Rehypthecation
Fudging of economic numbers
HFTs - flash orders and other nefarious activities allowed by exchanges
Ecb changing retroactively greek bond contracts
Unelected leaders running Eu countries in supposed longstanding democracies
Falsifying sub prime mortagage apps
Illegal transfer of bad assets to off balance sheet - corporate and sovereign

There's prob dozens other more informed ppl can add.

Interesting interview:
Chris Martenson Interviews Charles Biderman: The Problem With Rigged Markets | ZeroHedge

Fire away with yours......

1) London Gold Pool
2) Nixon's Wage and Price Controls
3) Nixon defaulting on gold payments by closing the gold window
3) The New Deal
4) Chase's market intervention in 1864 to alter the exchange between pound/dollar
5) Bailing out britain in 1927 the Bank of England in mid-1927 induced the New York Federal Reserve Bank to lower its interest rates and step up open-market purchases of securities.
6) Thatcher's monetarist policies in England that depended too much on central bank manipulation of the money supply.
7) In late 1700's USA In an attempt to stem the inflation and depreciation, various states levied maximum price controls and compulsory par laws. The result was only to create shortages and impose hardships on large sections of the public.

 

[marbig]

There has been some interesting discussions and differing points of view expressed since I posted my initial post. I guess that is what makes a market: some people have different views on where a currency pair is going and the speed at which it may get there.

My trade (I have sold at 1.2025) is a long term trade.
My trade is based on the Eur/Chf falling to almost parity (1.0064) in August 2011. The SNB threw a large pile of money at the Euro in Sept which caused the market to move immediately and strongly up above the 1.20 level, where it has remained.

But, on Thursday of last week, the SNB threw ANOTHER €1billion (£825m) at the market (to weaken the Swissie by buying Euros) and yet the Eur/Chf market barely moved. :-0 :-0

Clearly, the Money markets/hedge funds were clearly prepared to sell as many of their Euros to the SNB as the SNB was prepared to buy, because the Eur/Chf simply did NOT go up.

And, if given the opportunity of betting whether a market will defeat a Central Bank over a set currency level, I will always back the market to win in the end. (And I think the end is not far away in this case. The SNB will not keep buying Euros that are dropping in value)

I have thrown the trade suggestion out there as a conversation starter, because I thought it was an interesting trade opportunity. I have personally taken the trade and will watch it work itself out. Hopefully, we may see it fall back to where it was before the SNB intervention in September at near parity. That will give me 2000 pips per trade lot.

PS I trade short term , long term and anything in between. This is only one of my trades.

 

[Martinghoul]

Not this discussion again...

 

[scose-no-doubt]

This discussion occurs in every thread New Trader participates in

 

[The Leopard]

I'm no fan of old Georgie Sore-ar$e, but he did remind us of one thing - nobody can fight the market. It always wins in the end. It's a simple matter of human nature. Sore-ar$e knew this.

Thanks Sore-ar$e!

 

[Martinghoul]

I'm no fan of old Georgie Sore-ar$e, but he did remind us of one thing - nobody can fight the market. It always wins in the end. It's a simple matter of human nature. Sore-ar$e knew this.

Thanks Sore-ar$e!

Well, this isn't really true... Weakening one's ccy (smth the SNB is attempting to do) is fundamentally different from maintaining its strength (which is what the BoE was trying to do when Soros did his infamous trade). Most obvious case in point is China, which has been successfully "fighting the mkt" for well-nigh 20 years now. There's no signs of them stopping any time soon, either, and certainly no sign of the market "winning", however you define that.

 

[The Leopard]

Well, this isn't really true... Weakening one's ccy (smth the SNB is attempting to do) is fundamentally different from maintaining its strength (which is what the BoE was trying to do when Soros did his infamous trade). Most obvious case in point is China, which has been successfully "fighting the mkt" for well-nigh 20 years now. There's no signs of them stopping any time soon, either, and certainly no sign of the market "winning", however you define that.

Hi MG,

I made the point mainly because I wanted to call Soros "Sore-ar$e", and one doesn't often get the chance to do that as often as one would like.

I assumed that we were talking about the free(ish) countries, but of course you are right about China. Even accepting that this is a special case, I did say "in the end" - 20 years is nothing really, they can keep it going longer than that.

 

[x4x]

This discussion occurs in every thread New Trader participates in

He can't help himself - he's ginger

 

[scose-no-doubt]

Slack

 

[wackypete2]

You guys can't find better opportunities than eurchf??

Peter

 

[scose-no-doubt]

Why would you need to? It's gonna make everyone millionaires... if youz patient enough.

 

[Martinghoul]

Hi MG,

I made the point mainly because I wanted to call Soros "Sore-ar$e", and one doesn't often get the chance to do that as often as one would like.

I assumed that we were talking about the free(ish) countries, but of course you are right about China. Even accepting that this is a special case, I did say "in the end" - 20 years is nothing really, they can keep it going longer than that.

True, but, obviously, we're now beyond any sort of a realistic trading time horizon for a punt like this. If you have to wait 20 years for your trade to work, wearing all sorts of volatility in the meantime (i.e. SNB moving the peg to 1.30 or smth), I humbly suggest that it's a sh1t trade. This is in stark contrast to the Soros trade, the main beauty of which was great timing, rather than the fundamental economic rationale.

 

[marbig]

There has been some interesting discussions and differing points of view expressed since I posted my initial post. I guess that is what makes a market: some people have different views on where a currency pair is going and the speed at which it may get there.

My trade (I have sold at 1.2025) is a long term trade.
My trade is based on the Eur/Chf falling to almost parity (1.0064) in August 2011. The SNB threw a large pile of money at the Euro in Sept which caused the market to move immediately and strongly up above the 1.20 level, where it has remained.

But, on Thursday of last week, the SNB threw ANOTHER €1billion (£825m) at the market (to weaken the Swissie by buying Euros) and yet the Eur/Chf market barely moved. :-0 :-0

Clearly, the Money markets/hedge funds were clearly prepared to sell as many of their Euros to the SNB as the SNB was prepared to buy, because the Eur/Chf simply did NOT go up.

And, if given the opportunity of betting whether a market will defeat a Central Bank over a set currency level, I will always back the market to win in the end. (And I think the end is not far away in this case. The SNB will not keep buying Euros that are dropping in value)

I have thrown the trade suggestion out there as a conversation starter, because I thought it was an interesting trade opportunity. I have personally taken the trade and will watch it work itself out. Hopefully, we may see it fall back to where it was before the SNB intervention in September at near parity. That will give me 2000 pips per trade lot.

PS I trade short term , long term and anything in between. This is only one of my trades.

As I said above, I trade short term , long term and anything in between. This is only one of my trades.

This is one of my longer term trades. It is a Sell and then hold trade.

I am sure that no-one would be interested in any of my other trades.

 

[Martinghoul]

As I said above, I trade short term , long term and anything in between. This is only one of my trades.

This is one of my longer term trades. It is a Sell and then hold trade.

I am sure that no-one would be interested in any of my other trades.

You're aware, I presume, that this is a negative carry trade? So selling and then holding actually costs you money? That's not a problem, per se, it's just that you need to be mindful of that.

 

[rsh01]

I am sure that no-one would be interested in any of my other trades.

Let me guess your other short term trades are long eurchf (where you went short) for a very low risk 50pips?

 

[marbig]

You're aware, I presume, that this is a negative carry trade? So selling and then holding actually costs you money? That's not a problem, per se, it's just that you need to be mindful of that.

Thank you Martinghoul for your Introduction to Trading lesson.

I am a professional trader that has been trading for over 12 years. It is my sole source of income. And I live very well.

 

[Martinghoul]

Thank you Martinghoul for your Introduction to Trading lesson.

I am a professional trader that has been trading for over 12 years. It is my sole source of income. And I live very well.

Whoa, why so sensitive? I didn't mean to insult or anything...

 

[marbig]

True, but, obviously, we're now beyond any sort of a realistic trading time horizon for a punt like this. If you have to wait 20 years for your trade to work, wearing all sorts of volatility in the meantime (i.e. SNB moving the peg to 1.30 or smth), I humbly suggest that it's a sh1t trade.
This is in stark contrast to the Soros trade, the main beauty of which was great timing, rather than the fundamental economic rationale.

You will not have to wait 20 years.
You will not have to wait 20 months.
You will not have to wait 20 weeks.
And I humbly suggest that it's NOT a sh1t trade.

When the market cracks the 1.20 eur/chf, it will be quick and when most people least expect it. So set your trades now in preparation.

And the main beauty of the Soros trade was NOT great timing. How long do you think Soros took to build his position.Do you think that he knew WHEN the GBP was going to crack? (The timing of the announcement by the BoE was a surprise to everyone)

The success of the Soros trade was his commitment and belief in the fundamental economic rationale that the GBP was being grossly (and artificially) overvalued for European Monetary Union purposes.