This is what my last post was referring to.
Fading Yen - It has gone parabolic
- Thread starter gmst
- Start date
This is what my last post was referring to.
Well let me try once again!
We lost 70% of our allowed risk. Macro trades do go wrong from time to time and when a desk takes a position, everyone understands they are taking a risk. So, where is the question of whole desk getting fired arise??? Honestly, I find it comical. Fyi, the total loss on this trade was around 2.5% of desk annual PL and this trade had management backing. You suggest this in a bank (either prop or mkt making desk) that the whole desk gets fired for losing 2.5% of annual PL on a single macro trade lasting multiple months and see how people react to your suggestion!
Well its easy to criticize on an anonymous board, so lets make it a bit real. May I ask how you would have structured such a trade? Below are the specs:
You have a macro view like below:
1) Expected Target 10-15 big figures. Best case scenario target 20-25 big figures.
2) Expected Holding period: 6-9 months
You work under following constraints:
3) You can't trade the position every day, you can trade maximum of 1 or 2 times every fortnight.
4) You want to give yourself at least 10 figures room if the trade moves against you. The thinking on the desk goes like this - Its a macro bet on fundamentals, fundamentals will assert themselves over 6-9 months even if short term pair moves against.
5) You want to add to the position if position moves 5 big figures against you.
6) Even if the position doesn't move against you by 5 figures, you want to have a minimum of P initial position size so that pay-off in case of win is substantial.
7) Your max loss with P initial size does not allow you to put stop at 10 figures with a spot position.
So, please explain how will you structure the trade under above conditions?
Ok you asked for it you get it:
a) those are stupid constraints. If you cannot manage your risk or adjust risk daily then you are not a trader, you are a back office dude who desperately tries to convince the desk head of trading to give you a shot and you sold him an idea. Why cant you adjust risk on a daily basis? Its your trade, its your risk.
b) why I want to give myself 10 figures to go against me? How stupid is this concept to begin with? I am a trader and a good trader plays defensively, manages his risk wisely. On a trade where I expect to score 20 handles I would never ever risk 10 handles. For what? I would not even risk 2 handles for that, at least not in full size.
c) I would never, never ever setup this trade with a calendar spread, it makes ZERO SENSE: Trade cash fx and you have full control over your delta, its highly liquid, execution cost are at a minimum, which allows you to adjust your trade at any time. Leg into the position, not at your stated 5 handles, which is way too much. But when the position starts to move in your favor then sell more on up spikes that do not violate the prevalent trend and vice versa. All your conditions are met with this, except your weird/unreasonable maximum loss ones because I would never allow the trade to go so much against me.
Any other questions?
a) those are stupid constraints. If you cannot manage your risk or adjust risk daily then you are not a trader, you are a back office dude who desperately tries to convince the desk head of trading to give you a shot and you sold him an idea. Why cant you adjust risk on a daily basis? Its your trade, its your risk.
b) why I want to give myself 10 figures to go against me? How stupid is this concept to begin with? I am a trader and a good trader plays defensively, manages his risk wisely. On a trade where I expect to score 20 handles I would never ever risk 10 handles. For what? I would not even risk 2 handles for that, at least not in full size.
c) I would never, never ever setup this trade with a calendar spread, it makes ZERO SENSE: Trade cash fx and you have full control over your delta, its highly liquid, execution cost are at a minimum, which allows you to adjust your trade at any time. Leg into the position, not at your stated 5 handles, which is way too much. But when the position starts to move in your favor then sell more on up spikes that do not violate the prevalent trend and vice versa. All your conditions are met with this, except your weird/unreasonable maximum loss ones because I would never allow the trade to go so much against me.
Any other questions?
what I don't understand is, USA and everybody else said, "If you want to go to 100 we're not going to stop you." Doesn't mean it is going there, but there is no currency war
so what's the trade?
JPY is operating outside of the band
so anybody that has a position is just a pure flat out gambler
and they are on TV everyday
there's better places to go to gamble than my office in my pajamas in Indiana
what is the long strategy? "I sure hope it keeps going up!" What kind of a strategy is that?
the yen can be stopped at anytime, it's not like a drought when only God knows when it will rain again
who wants to get in on that deal? Unless your uncle runs the BOJ
so what's the trade?
JPY is operating outside of the band
so anybody that has a position is just a pure flat out gambler
and they are on TV everyday
there's better places to go to gamble than my office in my pajamas in Indiana
what is the long strategy? "I sure hope it keeps going up!" What kind of a strategy is that?
the yen can be stopped at anytime, it's not like a drought when only God knows when it will rain again
who wants to get in on that deal? Unless your uncle runs the BOJ
You took the easy way out and said these constraints don't make sense. You also don't agree with the basic premise of the trade in the first place by giving it 10 figure room. But my question was how you will structure this trade given these conditions/constraints that desk imposed on any macro trade?
The desk had a philosophy that they didn't want to touch long term macro trades everyday. They wanted to do deep research before taking the trade and then leave the trade. Of course, we used to trade around macro positions, but touching these macro positions more than 2-3 times in a fortnight was frowned upon. That was the reality and we had to work under that.
Of course, we could adjust book risk and trade multiple times everyday on any short term trade. But for global macro stuff which had a different book, No.
put yourself in a position having trade going against you for a while now and posting on some massage board, while being part of the team on trading desk
"real " money ,hhahaha
i don't think he even has a wife,too young for that
Nothing would make his boss happier than he posting desk prop trades on the internet!
I'd love to see his U4 in a few months.
I'd love to see his U4 in a few months.