I agree. And I have frankly felt that way for years. Situations like last week are those wherein people betting against the SNB could have been burned, people betting with them could have been burned. I followed my plan ignoring both possibilities and it went as planned aside from major effin slippage. I have had unexpected sudden business expenses in my other businesses in the past, that is business.
“[I]Now we gotta make the best of it, improvise, adapt to the environment, Darwin, shix happens, I Ching, whatever man, we gotta roll with it.[/I]”
For the unlucky people out there they literally didn’t get their stops filled. Even if you had one at 300 pips you would have still take a 3000 pip loss on USDCHF if you got stopped at the bottom. So if you lost 2% with 300 pips then you would probably have lost 20% of your equity but still a decent chunk but yeah you would have lived. I’m sure this is going to make backtesting on CHF pairs interesting in the future.
When the intervention happened a couple years ago, I happened to be long EU/CH at the time and made a bunch when it got bumped up. But because of the peg, I stopped watching the CHF at all, and all it’s crosses. It just wasn’t worth the risk either direction. I didn’t feel like it could be sustained over the long haul, but didn’t want to tie money up waiting.
Greed is a b*tch.
I have only read this on forums but experienced it for the first time after SNB.
Was already 30% up on my account with that single short trade when I closed it.
Then my hands started to itch and I wanted a piece of that retracement which I knew was bound to happen.
Over-leveraged myself… Slippage about 40 pips… price reversed… lost profits + 30% deposit.
Never again. Ever.
Well, for those of us who are still alive. The time and preparation involved in the process paid its price finally. We were not sucked out like many suckers. I had my doubt on some brokers and I know I can trust my actual broker.
I think for me from now on, it means being careful to keep no more than the funds i need to execute my trades with, in a trading account. This looks like it’ll mean a system where i can transfer funds effortlessly and quickly to my trading acct before a trade. Given i’m moving towards trading less frequently this year (and on higher time frames), i hope it may not be as much of a pain in the arse as it sounds. G
If one was extremely concerned about taking absolute massive losses due to stops being skipped from slippage, one could hedge the risk by buying options with distant strike prices. The premiums on these wouldn’t be prohibitive, yet they would provide a nice safety from a negative balance event occurring.
Yeah, that was one of my first thoughts. In fact, I read JP Morgan had some nice puts on the Swissie. That would take some more juggling and effort, but it would be a better long-term solution.
I’m a trend following trader who holds positions for weeks, months and years. I actually shared my CHF story over at FB on 17 Jan 2014. Perhaps if you are interested, you can pop by there at Facebook
Woah! No way! I am a systematic trend following trader also and my situation went very differently. Your stop was filled with just 4 pips in slippage?!?!? My stop loss in the USD/CHF pair was at 0.9875, it was filled at 0.8733 with 1142 pips in slippage. Because my stop was higher than yours, it should have been triggered and filled before yours at a higher price. My reverses on swiss pairs (I was involved in three pairs) were not triggered at all. So not only was I stuck in trades as losses mounted, I was unable to get filled in trades my system would have put me in. Were you trading a live account or a demo?
I’m trading a live account with GK Goh, a local STP-broker here in Singapore. They deal with Forex and Futures. My account number is on the screenshot in my FB post. Maybe the fact that they are STP brokers helped? If I were trading with a market maker, maybe things would have been different? Or was I plain lucky? Even I were to lose, it would be only a few percent, 'cos I didn’t risk much since I was trading more than 20 pairs.
As I mentioned in my FB post, I learned that perhaps trading with a pure Forex market-making broker should be the last thing to do for any retail trader. If anyone likes Forex, go trade currency futures. If anyone wants to stay with a Forex broker, keep that capital small. Consider trading a portfolio of futures. A trend following trader should have at least 50 instruments in the portfolio.
I like to interact with other trend following traders. How many instruments do you trade in your portfolio as a trend following trader?
I trade 20 pairs. I was trading with an ECN (FXCM). I didn’t even have any risk on the USD/CHF trade. My stop was about 150 pips into profit. But between that, GBP/CHF and CHF/JPY, my trades went from risking a couple percent to losing 40+%.
So the onus is on the brokers to fill traders close enough to their desired points. I really can’t say why and how I managed to keep my trades on except that my broker did a good job. When I wrote to them in the aftermath, they admitted that that day was hectic in their office. This was their response:
"Because we are entirely STP, all prices filled will be dependent on the actual market conditions (so we cannot guarantee anything).
In the worst case scenario that everyone pulls out their prices, we also would not have any pricing to show so there ultimately is still this risk that you would need to understand. That said, we have a large number of liquidity providers (and we are still onboarding new ones) so it is less likely (while not impossible) that we would not have any pricing at all.
Personally, I feel that there are multiple layers of protection for the customers, from MAS all the way down to GK Goh’s own practices and setup, to allow for a good trading environment. G.K. Goh is probably as good as it gets where it comes to the company balancing its risk and expectations."
After this positive incident (at least for me), I trust my broker. But then again, I have to safeguard myself. I thrive in black swan and crisis events, but I know the broker has to do their job on their side. No point knowing that I ought to make money in a crisis when my broker cannot do their job to give me the money. That’s why the next best thing I can do for myself is to keep a smaller capital with a STP-Forex Broker while I migrate the bulk of my trading capital to the futures exchanges.
So perhaps if you are trend following trading, you will agree that diversity is our only free lunch. Expand our baskets. David Harding (of Winton Capital) recently shared that he too lost on the CHF trade - 1/10 of 1%. That’s how diversified he is. My capital is far from his, but that should not stop me from trading 40 to 50 instruments which will reduce the risk of individual instrument.
That’s my take. I hope we can all profit from the next big move.
Hi,
I was very lucky not to be impacted by this event;
my take away from that lesson is:
-Don’t trade currency in the Forex Market with small account and high/extra high leverage.
-Trade Future on the currency is less risky.
Cheers
I was having not even one position open with CHF but I was trading with Alpari and here I am after one month with my moneys still segregated and looking for a new broker.
Lesson learned? Well I don’t know if there is an one really, I think probably you should have balance in your account to be still alive if the market goes against you of 2000/3000 pips.
