Ah, I understand. Well that was really extremely low profit/high risk trade given the fact how much EUR NBS already had and that there were huge pressures on them to leave the pegging to EUR. You can recover on EUR.CZK CNB is doing the same and is going to keave it after 31.3.2017 ;-)
EUR/CHF wipeout/margin call ... negative balance ... what to do?
- Thread starter Pentaquark
- Start date
Yes I know. Maybe they meant long the pair.
If I am expecting CHF to rise but trading the EURCHF pair I would obviously say I am short - short EUR / long CHF.
At first it didn't look that risky. They wouldn't abandon a policy just after implementing it, especially since it was "successful". I remember a lot of commentators in Switzerland suggested the BNS wouldn't be able to bring it back to 1.20 when they announced it . I was later tempted to redo it from 1.21 and thought "If the BNS withdraws itself , it goes straight to 1.15". Little did I know it would go straight to 0.9...LOL
Anyway, I am not a forex trader. It was just a small trade. I wouldn't have blown up on this trade, but it would have certainly been painful.
Actually the other way round. CHF hugely appreciated as originally NBS didn't want to let it get stronger than 1.20 CHF for 1 EUR (to protect exports) pegging it 1:1 would be just plain stupid and wouldn't help the economy which currently actually suffers a lot from strong franc. But they collected massive amounts of EUR in their reserves and had to let it go if they didn't want to be virtually dependent on ECAfter they removed this barrier EUR (not CHF) massively crashed I believe there were moments when you could got 1 EUR for only 0.85 CHF. Then it stabilised above 0.95 and now it is on 1 something levels. But point is that it was extremely unwise and risky go short on CHF when there was one irrational player on the market (NBS) who was shorting it (to preannounced levels) in insane amounts against everyone else and it was clear that they couldn't do it forever.
Thanks. Funny enough that's what happens now around EUR.CZK. All analysts and banks are like, when they leave the 27 barrier it would be 26.30 or even over 27. Inflation is now 2% (target) it's from many reasons going higher. They guaranteed the 27 exchange rate till 31.3. Whatever fundamental calculation am I doing nothing is less than 25 (and possible increase in the repo rate which can drive CZK even stronger). Everyone is like - there is something fishy. This looks too clear, but I struggle to see it. Am I wrong?
Seriously, I am not qualified to give any advice on this one. But just looking at the chart and how the market is glued to the 27 cap, be sure everybody is playing the other way this time . It would be great if we could gather some clues about if and when the cap might be removed. Are puts overpriced on the downside?
We re talking about a different event. i m talking about when the 1.20 cap was introduced. And shortly before that from memory There were several snb interventions to pull the chf lower. Plenty of occasions for Loyek to lose money long CHF. I presumed he meant the cap rather than the peg.
Besides i incurred sufficient losses to day the cap was removed to understand the CHF apreciated that day
Usually I am using stop loss to manage the risk in my plan trading, if talk about eurchf, I have nice experience trading with this pair few years ago when SnB making intervention chf then making pair like as eurchf and usdchf move more than one thousand pips, I am get profit more than one hundred percent only a hour
Ah, now I understand. Lot of people lost their money when they removed the cap, so I assumed it was that event. I am currently trying to study hard what would be the result of the same action from Czech National Bank, which is expected to happen after 31.3.2017