patrick.net

anonymous says

Gold prices are up nearly 4 percent so far this month, after two straight years of declines, but the outlook for the year remains clouded.

LOL CNBC at it again.

Actually sky rocketed is a little "extreme" wouldn't you say? Golds current price is just above 1.01% of the last high. The XAU/CHF pair dropped from 1256.26 to it's current price of 1095.23.

I anticipate the the other XAU pairs to follow once this cools down. XAU players may be a bit confused when it's all oveer and digested.

Graybox says

Actually sky rocketed is a little "extreme" wouldn't you say?

yes but it had been beaten down over night so it was a 2.5% reversal in a short period of time

keep in mind this is against the dollar -the increase was more dramatic against other currencies.

I know,,,lol The main winner is the CHF in this as to XAUUSD a confirmation since it did test the 1255 I have mentioned is price will have to break today's high sometime in the very near future. XAU in all 7 pairs I follow are all at long term resistance. I would have expected a much better showing out of XAU and believe XAU will be heading back down to the lower range of the last year.

Graybox says

The main winner is the CHF in this as to XAUUSD a confirmation since it did test the 1255

The SNB accomplished what the Save our Swiss gold initiative would have accomplished without having to buy the gold.
It was a stupid policy in the first place to peg their stable currency to the Euro and to print francs to support it

smaulgld says

-the increase was more dramatic against other currencies.

No not really, except CHF blew XAU off like a cheap whore. The effect will likely be very short term,

Graybox says

The effect will likely be very short term,

Yes but it is the start of a chain of central bank actions that will cause massive volatility.

gold repatriations, ECB QE or not, Fed raise or not raise interest rates, BOJ abenomics, Russian CB and Chinese actions
some of all will make bold moves like SNB did today.

I'm not thinking like a short term trader

smaulgld says

Graybox says

The main winner is the CHF in this as to XAUUSD a confirmation since it did test the 1255

The SNB accomplished what the Save our Swiss gold initiative would have accomplished without having to buy the gold.

It was a stupid policy in the first place to peg their stable currency to the Euro and to print francs to support it

Not really, more than half their exports are to the EU. Until now they were dealing with speculators and the market-now they have to face the possibility of the printing presses of the EU cranking up and flooding the world with Euros. I doubt they can withstand that onslaught and threw in the towel The Fracn went from 1.02 USD to .87 ina few hours. That is amassive, massive drop and the Eur?CHF fared even worse-with EUR going lower.

I was reading somewhere that before they removed the floor , there 65 longs to one short-I wonder how many folks lost their shirt.

lostand confused says

now they have to face the possibility of the printing presses of the EU cranking up and flooding the world with Euros. I doubt they can withstand that onslaught and threw in the towel

Correct that is why the SNB stopped trying to keep pace.
As Euro prints the dollar and gold will get stronger. BUT if the dollar gets too strong the Fed will have to do something to debase it and that will make gold even stronger

Also keep in mind NEGATIVE interest rates are good for gold.
One rap against gold is that it does not pay interest-neither do most major sovereigns and you have default risk

Or will it have the opposite effect? None of these countries want their currency to appreciate to that degree anytime soon I don't believe anyway.

smaulgld says

Also keep in mind NEGATIVE interest rates are good for gold.

One rap against gold is that it does not pay interest-neither do most major sovereigns and you have default risk

In theory anyway you would think.... The mechanics of the market are trader mentality, thus the "current situation".

Currency analyst http://video.cnbc.com/gallery/?video=3000346809

The end result I believe the goal is to depreciate their currency. They realize long term they have to play in the same playground everyone else is playing.

Skyrockets ?

Yeah, I guess if you're a day trader.

marcus says

Skyrockets ?

Yeah, I guess if you're a day trader.

a move of $40 in a short time is that a "spurt"

lostand confused says

The Fracn went from 1.02 USD to .87 ina few hours

Just in case some don't understand currency exchange that is a 15% appreciation in the CHF against the USD. This should be a reminder to have a catastrophic risk management scenario in their trading or investment business plan.

smaulgld says

marcus says

Skyrockets ?

Yeah, I guess if you're a day trader.

a move of $40 in a short time is that a "spurt"

Only if you sell...lol

Oh by the way it's definitely time to test some selling of the CHF vrs. currency and buy XAUCHF

anyone know an indian code talker??

Graybox says

I know,,,lol The main winner is the CHF in this as to XAUUSD a confirmation since it did test the 1255 I have mentioned is price will have to break today's high sometime in the very near future.

smaulgld says

a move of $40 in a short time is that a "spurt"

Traders don't play this without leverage, Min. it would be $400

A leveraged position on the wrong side can wipe you out with a move like this.

Perhaps it is time to focus on positive-gamma strategies.

Peter P says

A leveraged position on the wrong side can wipe you out with a move like this.

Especially trading an illiquid market where new found volatility can blast pass your stops without looking back.

Swiss franc up 16pct http://www.marketwatch.com/story/yen-falls-against-dollar-euro-as-nikkei-recovers-2015-01-15-2103643?link=sfmw

Graybox says

Peter P says

A leveraged position on the wrong side can wipe you out with a move like this.

Especially trading an illiquid market where new found volatility can blast pass your stops without looking back.

Well, CHF is not normally considered illiquid or exotic. That is the scary part.

Most market participants have a naive understanding of volatility in financial time series. They are unable to comprehend important features like non-normality and heteroscedasticity.

Peter P says

Most market participants have a naive understanding of volatility in financial time series. They are unable to comprehend important features like non-normality and heteroscedasticity.

I know I do, can you splain this to us?

Peter P says

CHF is not normally considered illiquid or exotic

I wasn't really including CHF just a generality, I was speaking more of a equities market which I am positive the large majority invest/trade in if at all.

Peter P says

heteroscedasticity

That is definitely above my pay grade....lol

indigenous says

Peter P says

Most market participants have a naive understanding of volatility in financial time series. They are unable to comprehend important features like non-normality and heteroscedasticity.

I know I do, can you splain this to us?

To start, the distribution of price movement has significant higher-order components like skew and kurtosis. Furthermore, volatility tends to cluster unevenly.

The modern academia is ill-suited to tackle non-linear systems like mass behaviors and financial markets. Sometimes, things are better played than analyzed. :-)

Graybox says

Peter P says

heteroscedasticity

That is definitely above my pay grade....lol

It is just a pretentious word for "variable variability." I am using it here for parody value. :-)

Graybox says

I wasn't really including CHF just a generality, I was speaking more of a equities market which I am positive the large majority invest/trade in if at all.

True. However, many retail traders, especially outside of the US, dabble in currency trading because of the crazy leverage it allows.

BTW, it turns out that retail FX traders as a group have *more* winning trades than losing ones. Most traders are net-losers, so they must be taking profits too soon and allowing losses to snowball.

Peter P says

BTW, it turns out that retail FX traders as a group have *more* winning trades than losing ones. Most traders are net-losers, so they must be taking profits too soon and allowing losses to snowball.

Absolutely and for so many reasons.
Lack of self control and never understanding the concept of the game they are playing.

Where did you learn technical trading?

Is it worth it?

The CHF is still rocketing-I wonder how low it will go? Wonder if this is just the market. it has been a while, almost all the stops must have been blown through by now??

lostand confused says

The CHF is still rocketing-I wonder how low it will go? Wonder if this is just the market. it has been a while, almost all the stops must have been blown through by now??

Blew threw a few accts as well I'm sure. At peak approx. 11 EST. NY session the CHF was the lowest VOL. 85% with nearly 2400% ATR
(7 pairs per ea. collectively).

Graybox says

Blew threw a few accts as well I'm sure. At peak approx. 11 EST. NY session the CHF was the lowest VOL. 85% with nearly 2400% ATR

There will be many unhappy traders all over the world. Watch out for flying bankers.

Swiss Franc strengthens vs gold as gold rises vs dollar.

Peter P says

There will be many unhappy traders all over the world. Watch out for flying bankers.

1 would expect this in small cap and penny stocks, but the currency market....lol I wonder what the end result of black box, neural network and other programed systems will be?

Graybox says

1 would expect this in small cap and penny stocks, but the currency market....lol I wonder what the end result of black box, neural network and other programed systems will be?

Events like pegging/de-pegging are especially hazardous to currency traders. At least for penny stocks you know the risks and can adjust your leverage accordingly.

IMO all trading systems should have some kind of dislocation "safety valves." All strategies have underlying assumptions. When they are broken, it is time to stop trading and enjoy a cup of tea.

Peter P says

Events like pegging/de-pegging are especially hazardous to currency traders. At least for penny stocks you know the risks and can adjust your leverage accordingly.

Risk fundamentals 101 it's a zero-sum game no matter what market you trade. Risk management can be applied to any system if not ignored. So many, 95%+ rely on the "whore of hope" to get them threw it... You know what whores do...lol

Peter P says

underlying assumptions

One of the underlying assumptions every system needs is the "Black Swan" can fly over anytime. Proper risk management will save your butt from a catastrophic event.

Graybox says

Risk fundamentals 101 it's a zero-sum game no matter what market you trade. Risk management can be applied to any system if not ignored. So many, 95%+ rely on the "whore of hope" to get them threw it... You know what whores do...lol

More like the "whore of rope" now. LOL!

Graybox says

One of the underlying assumptions every system needs is the "Black Swan" can fly over anytime. Proper risk management will save your butt from a catastrophic event.

It is quite hard to have proper risk management when the market makes a 2400% ATR move. Many strategies will have to be under-leveraged most of the times. We all know that OPM traders will rather take the tail-risks. :-)

Perhaps it pays to spend more time in defined-risk strategies like long-options or spreads.

Nowadays, so many people are selling options for "income" they are depressing price premiums.