A low-risk/high reward Soros Style trade

This is a discussion on A low-risk/high reward Soros Style trade within the Economic & Fundamental Analysis forums, part of the Methods category; Originally Posted by Shakone Swiss could print as many francs as they like and use the euros accrued to invest ...

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Old Apr 11, 2012, 9:51pm   #16
 
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Re: A low-risk/high reward Soros Style trade

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Originally Posted by Shakone View Post
Swiss could print as many francs as they like and use the euros accrued to invest in other areas for as long as they like, until they're ready to change the level.
Zimbabwe had the same idea, worked out well if I remember rightly.
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Old Apr 11, 2012, 9:59pm   #17
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Old Apr 11, 2012, 10:08pm   #18
 
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Re: A low-risk/high reward Soros Style trade

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Originally Posted by Shakone View Post
How sure are you of this? I can think of some markets being much more rigged in the past. Then again, it's hard to measure isn't it.

On EUR/CHF, I think there was another thread on this, and the conclusion seemed to be that the Swiss could print as many francs as they like and use the euros accrued to invest in other areas for as long as they like, until they're ready to change the level.
Printing of money is unprecedented
CBs balance sheets growing
ZIRP
Cos the main players are TBTF
Primary dealers can leverage up to 100:1 illegally using customer deposits
Rehypthecation
Fudging of economic numbers
HFTs - flash orders and other nefarious activities allowed by exchanges
Ecb changing retroactively greek bond contracts
Unelected leaders running Eu countries in supposed longstanding democracies
Falsifying sub prime mortagage apps
Illegal transfer of bad assets to off balance sheet - corporate and sovereign

There's prob dozens other more informed ppl can add.

Interesting interview:
Chris Martenson Interviews Charles Biderman: The Problem With Rigged Markets | ZeroHedge

Fire away with yours......

Last edited by rsh01; Apr 12, 2012 at 12:18am. Reason: forgot zirp!
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Old Apr 11, 2012, 10:31pm   #19
 
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Re: A low-risk/high reward Soros Style trade

Are you really comparing what Zimbabwe did to Switzerland being able to defend a particular exchange rate? That seems to be a complete misunderstanding of everything involved here.
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Old Apr 11, 2012, 11:06pm   #20
 
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Re: A low-risk/high reward Soros Style trade

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Originally Posted by new_trader View Post
....That is an indisputable fact and has zero to do with market irrationality. Do you honestly think that if Governments decided to supress the price of gold at US$5/oz that eventually it would stay there of its own ‘free market’ accord? I know we are talking currencies but the principle is the same. Do you honestly think an economy can survive the complete destruction of its own currency? [B]Do you honestly think the SNB is willing to do that?[B/]

Anyway, you just keep looking for pinbars or whatever...good luck
No,I am not thinking / saying any of those things and never have done, you are saying them.

I agree mkt intervention by a CB cld have catastrophic consequences, but I cannot predict when this will happen and by how much. What happens if euro goes on massive bull run now? What as someone else mentioned the floor is risen by SNB to 1.3? Sell some more? I doubt it can happen, but it may.

And how can I be missing the point when once again you bring up markets contrary to the OPs post? I am saying I cannot predict which way the market (any market) is going, and I would definitely avoid betting against a CB peg of its ccy. And I don't care which way it goes cos its irrelevant to my trading.

You obviously can predict which way it is going, and you will bet on it - well done, many congrats seriously. Leave the crap quips (10p a pip / pin bar) aside though.

Fwiw the reason I replied to the OP was cos he seemed to assume selling eurchf is a free money trade cos the CB will always lose - but its not that easy is it (he's betting against the euro so there's a lot more factors to look at rather than just SNB has pegged it = that work! it has been down at this level for 6 mths now). There seems to be a massive focus by ppl wanting to be right everytime re which way the market is going (I did this at the start also) which imo is much harder than finding a strategy that has a win ratio >33% and a RR1:3...whatever your style.

This type of trading/investing (whatever you want to call it) is not for me for reasons outlined above, is that ok?

I am just repeating myself so gonna leave this thread alone.

Happy trading all.

Last edited by rsh01; Apr 11, 2012 at 11:08pm. Reason: for grammatical error
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Thanks! The following members like this post: scose-no-doubt
Old Apr 12, 2012, 8:27am   #21
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its been done before and it will happen again. The market dictates where price goes. The only currency that doesn't fall victim to it is the Yuan
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Old Apr 12, 2012, 8:46am   #22
 
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Re: A low-risk/high reward Soros Style trade

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Originally Posted by Shakone View Post
Are you really comparing what Zimbabwe did to Switzerland being able to defend a particular exchange rate? That seems to be a complete misunderstanding of everything involved here.
OK, explain how a Central Bank can print as much money as they like without any adverse consequences.
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Old Apr 12, 2012, 9:48am   #23
 
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Re: A low-risk/high reward Soros Style trade

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Originally Posted by rsh01 View Post
Printing of money is unprecedented
CBs balance sheets growing
ZIRP
Cos the main players are TBTF
Primary dealers can leverage up to 100:1 illegally using customer deposits
Rehypthecation
Fudging of economic numbers
HFTs - flash orders and other nefarious activities allowed by exchanges
Ecb changing retroactively greek bond contracts
Unelected leaders running Eu countries in supposed longstanding democracies
Falsifying sub prime mortagage apps
Illegal transfer of bad assets to off balance sheet - corporate and sovereign

There's prob dozens other more informed ppl can add.

Interesting interview:
Chris Martenson Interviews Charles Biderman: The Problem With Rigged Markets | ZeroHedge

Fire away with yours......
1) London Gold Pool
2) Nixon's Wage and Price Controls
3) Nixon defaulting on gold payments by closing the gold window
3) The New Deal
4) Chase's market intervention in 1864 to alter the exchange between pound/dollar
5) Bailing out britain in 1927 the Bank of England in mid-1927 induced the New York Federal Reserve Bank to lower its interest rates and step up open-market purchases of securities.
6) Thatcher's monetarist policies in England that depended too much on central bank manipulation of the money supply.
7) In late 1700's USA In an attempt to stem the inflation and depreciation, various states levied maximum price controls and compulsory par laws. The result was only to create shortages and impose hardships on large sections of the public.
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Old Apr 12, 2012, 1:39pm   #24
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Re: A low-risk/high reward Soros Style trade

marbig started this thread There has been some interesting discussions and differing points of view expressed since I posted my initial post. I guess that is what makes a market: some people have different views on where a currency pair is going and the speed at which it may get there.

My trade (I have sold at 1.2025) is a long term trade.
My trade is based on the Eur/Chf falling to almost parity (1.0064) in August 2011. The SNB threw a large pile of money at the Euro in Sept which caused the market to move immediately and strongly up above the 1.20 level, where it has remained.

But, on Thursday of last week, the SNB threw ANOTHER €1billion (£825m) at the market (to weaken the Swissie by buying Euros) and yet the Eur/Chf market barely moved.

Clearly, the Money markets/hedge funds were clearly prepared to sell as many of their Euros to the SNB as the SNB was prepared to buy, because the Eur/Chf simply did NOT go up.

And, if given the opportunity of betting whether a market will defeat a Central Bank over a set currency level, I will always back the market to win in the end. (And I think the end is not far away in this case. The SNB will not keep buying Euros that are dropping in value)

I have thrown the trade suggestion out there as a conversation starter, because I thought it was an interesting trade opportunity. I have personally taken the trade and will watch it work itself out. Hopefully, we may see it fall back to where it was before the SNB intervention in September at near parity. That will give me 2000 pips per trade lot.

PS I trade short term , long term and anything in between. This is only one of my trades.

Last edited by marbig; Apr 12, 2012 at 1:45pm.
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Old Apr 12, 2012, 1:56pm   #25
 
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Re: A low-risk/high reward Soros Style trade

Not this discussion again...
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Old Apr 12, 2012, 1:57pm   #26
 
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Re: A low-risk/high reward Soros Style trade

This discussion occurs in every thread New Trader participates in
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Old Apr 12, 2012, 2:01pm   #27
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Re: A low-risk/high reward Soros Style trade

I'm no fan of old Georgie Sore-ar$e, but he did remind us of one thing - nobody can fight the market. It always wins in the end. It's a simple matter of human nature. Sore-ar$e knew this.

Thanks Sore-ar$e!
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Old Apr 12, 2012, 2:05pm   #28
 
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Re: A low-risk/high reward Soros Style trade

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Originally Posted by The Leopard View Post
I'm no fan of old Georgie Sore-ar$e, but he did remind us of one thing - nobody can fight the market. It always wins in the end. It's a simple matter of human nature. Sore-ar$e knew this.

Thanks Sore-ar$e!
Well, this isn't really true... Weakening one's ccy (smth the SNB is attempting to do) is fundamentally different from maintaining its strength (which is what the BoE was trying to do when Soros did his infamous trade). Most obvious case in point is China, which has been successfully "fighting the mkt" for well-nigh 20 years now. There's no signs of them stopping any time soon, either, and certainly no sign of the market "winning", however you define that.
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Old Apr 12, 2012, 2:19pm   #29
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Re: A low-risk/high reward Soros Style trade

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Originally Posted by Martinghoul View Post
Well, this isn't really true... Weakening one's ccy (smth the SNB is attempting to do) is fundamentally different from maintaining its strength (which is what the BoE was trying to do when Soros did his infamous trade). Most obvious case in point is China, which has been successfully "fighting the mkt" for well-nigh 20 years now. There's no signs of them stopping any time soon, either, and certainly no sign of the market "winning", however you define that.
Hi MG,

I made the point mainly because I wanted to call Soros "Sore-ar$e", and one doesn't often get the chance to do that as often as one would like.

I assumed that we were talking about the free(ish) countries, but of course you are right about China. Even accepting that this is a special case, I did say "in the end" - 20 years is nothing really, they can keep it going longer than that.
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Old Apr 12, 2012, 2:22pm   #30
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Re: A low-risk/high reward Soros Style trade

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