The ACD Method

[toolazy]

Question about Oanda

1/ Will they honor your stops to the tick no matter what?

Looking at the USD/TRY chart of 1/27, it reversed 800 pips from a high of 2.39 in a matter of hours:

2/ I get that they match/offset a certain number of trades with other users...but how do these FX shops manage to hedge their exposure so quickly like in the case of a devaluation (in an exotic pair, at that) where the thing "dislocates" without any trades in-between levels?

no doubt, they will serve you nice stop/loss bill in this case

some brokers have guaranteed stop. I find it quite reasonable.

was able to secure 20 contracts with 3 pips bill in USJY on the same number. having stop around 100 pips, I like this insurance.

Bet this exotic pair would have much bigger insurance, say 20 pips and would have low size limit.

 

[Maverick74]

Just wondering...looking at the NG spread chart

1/ Was the spread such an "obvious" buy around par in November?

To be more precise let's say at 0.05 on the TL break

Bear in mind, the outright was looking a confiorm & bullish around this time also.
Obviously barring a rare event the spread could go negative..
What happened in preceding years, how often does it go negative, say < -5 cents ?

It's not a question of obvious, it was more an issue of asymmetry. Could the spread could go against you 5 or 10 cents? Sure. But these spreads are like long calls. Most of them won't go anywhere but the upside is .50 to a 1.00 so the payoff is very attractive. And with gas, all it takes is a weather event. There isn't a lot of risk in that spread to be long at those cheap prices. The problem is, most times you can't get it that cheap. But the sentiment on the street was, we had too much supply in gas from all the shale fracking and the forward curve was flat as hell. So the spread stayed cheap for a long time. As Fisher mentioned on CNBC, the curve is probably going to adjust now but the back end strips are probably deeply undervalued.

 

[Maverick74]

Question about Oanda

1/ Will they honor your stops to the tick no matter what?

Looking at the USD/TRY chart of 1/27, it reversed 800 pips from a high of 2.39 in a matter of hours:

2/ I get that they match/offset a certain number of trades with other users...but how do these FX shops manage to hedge their exposure so quickly like in the case of a devaluation (in an exotic pair, at that) where the thing "dislocates" without any trades in-between levels?

Yes, they WILL honor the stop. As I said before, that comes at a cost though. In situations of high volatility they are going to take you out EARLY! You need to understand that. That is why people on ET scream about running stops. They are NOT running stops. They are executing the way that they are BECAUSE they are guaranteeing your stop price. They could NOT give you that guarantee and not fill you early. Because like you said, they wouldn't be able to offset the trade. Does this make sense?

 

[Maverick74]

http://www.bloomberg.com/news/2014-...n-vix-calls-in-day-s-biggest-options-bet.html

Trader sells 250k VIX calls. I'm betting it was King.

 

[kinggyppo]

http://www.bloomberg.com/news/2014-...n-vix-calls-in-day-s-biggest-options-bet.html

Trader sells 250k VIX calls. I'm betting it was King.

nope but 365 sqrt = 19.10 one could argue the natural log of vix over time.

 

[kinggyppo]

So Maverick why do you think inflation is so high in emerging markets? this will hopefully be covered in your book.

http://www.reuters.com/article/2014/01/27/argentina-currency-idUSL2N0L10DJ20140127

 

[DT3]

I'll take that as a no. LOL. Guys, the selloff in risk is not going to be in equity land, it's going to be in these emerging currencies. WATCH THEM!

The Peso is breaking down. Turkey is getting slammed. Aussie is tied to China. South Africa is taking it on the chin.

So, the update in FX land is, we have confirmations to the upside on USD/MXN, GBP/AUD, USD/TRY and we just last week got the neg confirm on USD/JPY.

What are your thoughts after this rally in these emerging currencies, correction over for equities?

 

[Maverick74]

What are your thoughts after this rally in these emerging currencies, correction over for equities?

As I said before, I think equities will be a non event. The short risk asset trade will definitely be in the currencies.

In other news though, AAPL gapped down right to it's QTR A down around the 505 to 510 area. If this area holds, it might be a good long.

 

[Maverick74]

Crude Oil coming right up against the QTR A up around the 98 level.

 

[Robert Yanks]

Hello Mav,

Something that initially looks interesting is tracking the total monthly A Ups and Downs for all Worden's common stocks with a close greater than 5 and the average 21 day volume greater than 100,000.

Today there were only 6 A Ups (CLFD, GIMO, KRA, LTC, LXP, SIMO) and 108 A downs for a net -102. Following a little of your numberline logic I've tracked them with a rolling 5 and 30 day and a 20 day that starts at the first of the month.

I'll post some results if you or anyone is interested.