Did Interactive Active Brokers Honor CHF Stops Thursday ?

[Visaria]

I don't trade currency so I might not be giving the correct answer, but holding a 4x margin position overnight does not sound like good money management. That seems super high risk.

The black swan event happened in market hours, overnight has nothing to do with it.

 

[Visaria]

At the bottom of this thread, i outlined a possible black swan event in crude oil. some discussion followed:

http://www.elitetrader.com/et/index...hould-one-use-in-a-single-trade.206664/page-5

 

[volpunter]

Hi LuisHK,

THanks for getting back and shedding more light into your situation. And especially I appreciate someone else who seems to be willing to stick to the truth and is being honest even at times of losses. I guess when I said that LMAX and some others still showed prices and filled orders I should have been more precise: The price gaps were huge, spreads were huge, what I meant was that one could have easily gotten filled north of 0.98. That, to be fair, is still around 20% below the cap level but at least it is far away from the lows around 0.85.

Volpunter
Thanks for your input on this thread and the other one you mention. I was actually considering replying there after I put more time into it.
I checked the audit trail available on tws, and there is no much information on the capped orders (I might copy and paste part of it here later). I guess one can get more information, but not so keen on pushing the issue further with IB. It looks IB and other brokers are gonna be quite busy with legal issues over that CHF and I'm focusing on getting out of a drawdrown started in December..
But you write Lmax had no liquidity issues ? How come than brokers went bankrupt pointing the cause to liquidity drying up ?
I was long 26RF contracts so the difference if I hedged over 1.05 when there were bids there but IB capped the orders and 1.0088 wich is the average price I could sell eurchf is not immaterial. But considering the lack of liquidity I'm far from convinced there was enough to exit fast at 1.05 or even 1.03.
And again the technology issues discussed could easily destroy a traders' account (not that you claimed otherwise, I just want to remind traders out there), it will be a disaster even with a small leverage.
Also if IB didn't cap SLs on futures, the account would have vanished as there was nobody to pickup the offer (I didn't have SLs on), anyone here has feedback on actual SLs on eurchf spot positions with IB ?
Worst ever absolute money single day loss on my part (most of the portfolio suffered and I missed on euro stocks rebound after closing eurostocks positions mostly because tws wouldn't let me touch the eurchf), but not worst ever percentagewise. The whole month is not disastrous yet so far, but I don't like much those very volatile markets, and tws doesn't seem to either.

 

[volpunter]

I justy came across this ad in another thread. Hilarious...notice the last legal disclaimer at the bottom (at least they are honest about THAT PART, lol).

Why is USD dollars continuously becoming increasingly more expensive to the Swiss as the peg continued a problem?
This was one of many reasons i read as to why the peg was dropped. Seems the same problem is present across many currencies in the world.

 

[ExperiencedJoe]

Hi guys my broker is Cap Trader (interactive Brokers) and i had to face huge losses on the last thursday i had a small position about 1% risk in the Cad/Chf but my Stopps wasnt triggert and when i logged into my trading account -> all the money gone + negative balance
Does someone know if there is any possibility (laws , policy?) to get the money back or part of it ?
thx for your help and have a nice weekend

You gambled and you lost. That's about all there is. As bucketshops often take the other side of people's bets, some of them may choose to forgive the negative part of the balance. They can do that because your bet was against them directly and they have the option to limit the money grab to just what was in the account and nothing beyond.

 

[Maverick74]

Hello Maverick74:

Can you please explain why the Swiss had the peg to the Euro in the first place ?

It seems to me that having a fixed exchange rate would have been a bad idea for the Swiss in the first place since it opens their economy up to the very problem which caused them to abandon the peg.

In other words with a a fixed exchange rate the ECB creating more and more euros requires the SNB to create more and more francs as more and more Euros are exchanged for francs to escape the Euro devaluation. This in turn just means more inflation for the Swiss with no real advantages that I can see. While this disadvantage seems obvious in hind sight it also seems obvious from the very beginning. So why did they have a fixed exchange rate in the first place ?

Here is a brief explanation:

http://sg.saxomarkets.com/about-sax...-faces-classic-trilemma-as-eurchf-floor-nears

Honestly, the whole mess in the EU really forced the Swiss to try to maintain the cap. Think of the Swiss as a highly leveraged EU economy. If the EU goes into deep deflation, it hits the Swiss 3X. A lot of countries in Europe opted to try to peg vs joining the EU. Denmark is one example. Britain is another. They were pegged to the DM in the 1990's before the establishment of the EU. Most countries think it's a good idea to peg with active trade partners. It doesn't stop economic shocks but it means they go through the shocks together which most central banks favor over the isolationist route. Honestly it would have worked but the EU turned out to be a total mess. And btw, the EU is itself a peg. And the EU will eventually fail as all pegs do.

 

[darwin666]

Honestly it would have worked but the EU turned out to be a total mess. And btw, the EU is itself a peg. And the EU will eventually fail as all pegs do.

THIS IS SOMETHING FEW ARE FOCUSING ON.. THIS DAMN EURO ITSELF IS A PEG AND A DISASTER IN THE HAPPENING.

 

[Visaria]

how is the EU a peg?

 

[Swan Noir]

Lets say I want protect to myself from anything past a 50 pip move in a pair.

For instance EURUSD is at around 1.1563

And say I wanted to buy 4 Lots 400K worth, but make sure I took no more losses past
1.1513.
(This isn't an actual trade I'm going to do just an example)

What vehicle should I look into ? I'm sure its a put option somewhere but I'm trying to get a handle on exactly which one and the total cost of protecting my 4 lots.

I'm doing my research too, but just wondering how someone else would solve this problem.

The problem is not solvable. The solution will likely cost you more than your anticipated profit on the trade. As Maverick has so correctly pointed out pegged (or more accurately rigged) markets at some point unwind and if you are betting on the side of the central bank what you are saying is that unwinding won't happen while I'm in this trade.

BTW, I dismiss the commonly held notion that the SNB action was a Black Swan event. Truly Black Swan events are not just unpredictable but widely held to be unimaginable or at least almost unimaginable. Once the ECB was seen to be considering quantitative easing the SNB had to at least consider a decoupling. And for those that want to make the point that they had committed to holding firm @1.20 PLEASE do not make a fool of yourself. What central banks do before throwing in the towel is lie. And sometimes just hours before they turn. It has always been such and shall always remain such!

 

[jaygould]

The problem is not solvable. The solution will likely cost you more than your anticipated profit on the trade. As Maverick has so correctly pointed out pegged (or more accurately rigged) markets at some point unwind and if you are betting on the side of the central bank what you are saying is that unwinding won't happen while I'm in this trade.

BTW, I dismiss the commonly held notion that the SNB action was a Black Swan event. Truly Black Swan events are not just unpredictable but widely held to be unimaginable or at least almost unimaginable. Once the ECB was seen to be considering quantitative easing the SNB had to at least consider a decoupling. And for those that want to make the point that they had committed to holding firm @1.20 PLEASE do not make a fool of yourself. What central banks do before throwing in the towel is lie. And sometimes just hours before they turn. It has always been such and shall always remain such!

Yeah, my preliminary calculations appear it be in line with what you're saying.
I'm wondering if fx futures options are the only way to go, or will the spreads, slippage commissions on those make that unrealistic as a replacement for forex.
I have a trading strategy that has positive expectancy in forex. Got me 15% last year risking 1% per trade. Max DD was about 10% or so. Around 300 trades total for the year.
This year, I've been kicking up the risk to 4% per trade.
(Drawdown's don't bother me psychologically but I wanted to prove the strategy with smaller risk first.)
I've always avoided trading CHF pairs, ironically because it correlated so heavily with the Euro that I didn't see the point. Sticking only to EUR.USD, USD.JPY, GBP.USD and AUD.USD .
I'm now starting to have concerns that something similar may happen with AUD.USD and haven't decided whether or not to continue with that pair after this.

That being said, after all this the idea that my pockets could be emptied out of the blue
because some central banker decides to lie to the world is just not workable.
I'm wondering how transferable my strategy would be to FX options.