Boris and Kathy's FX Blog www.bktraderfx.com
11/27/2006
Today's Email Alerts:
Alert # 2 Holding Over the Weekend
We heard from many of you and apparently most FX dealers did not honor the stops. As we've noted earlier gap openings are very rare in FX but nevertheless a fact of life. Oanda is one of the few market makers that quotes on week-ends - and they stopped us out at 1.9340 at 1:13 PM on Sunday. One of the attributes of the FX is that it is a decentralized market and every market maker has a different dealing policy.
Although these moves are rare- in the future we will try to remain flat over the week-end in order to minimize the chances of these liquidity vacuums but as traders we know that you can never fully avoid all sharp adverse moves. That's part of risk. However, rule #1 is to never let any trade become your last. Like any professional risk managers such as insurance companies, good traders cap their losses and move on to the next idea.
Alert # 1 Stopped on the Short GBP/USD
We were stopped on our short GBP/USD (-20) earlier in the day (1:13 PM EST). For those of you wondering how that's possible our dealer makes markets on the weekends - but even those dealers that do not will generally honor your stops even on gap opening such as we are having tonight. Generally, gap openings over the weekend are very rare in FX - they happen no more that 4 times a year, but tonight's price action underscores the importance of always trading with stops in order to control risk.
As for the price action, momentum rules the day as option players who sold volatility scrambled to cover their exposure and triggered yet more and more stops in the spot market Note that dollar weakness against the commodity currencies has been far more modest than its losses against the majors. That's why we think when the turn in the dollar comes we may want to take advantage of it through another USD/CAD long. For now we are sidelined
Alert # 2 Holding Over the Weekend
We heard from many of you and apparently most FX dealers did not honor the stops. As we've noted earlier gap openings are very rare in FX but nevertheless a fact of life. Oanda is one of the few market makers that quotes on week-ends - and they stopped us out at 1.9340 at 1:13 PM on Sunday. One of the attributes of the FX is that it is a decentralized market and every market maker has a different dealing policy.
Although these moves are rare- in the future we will try to remain flat over the week-end in order to minimize the chances of these liquidity vacuums but as traders we know that you can never fully avoid all sharp adverse moves. That's part of risk. However, rule #1 is to never let any trade become your last. Like any professional risk managers such as insurance companies, good traders cap their losses and move on to the next idea.
Alert # 1 Stopped on the Short GBP/USD
We were stopped on our short GBP/USD (-20) earlier in the day (1:13 PM EST). For those of you wondering how that's possible our dealer makes markets on the weekends - but even those dealers that do not will generally honor your stops even on gap opening such as we are having tonight. Generally, gap openings over the weekend are very rare in FX - they happen no more that 4 times a year, but tonight's price action underscores the importance of always trading with stops in order to control risk.
As for the price action, momentum rules the day as option players who sold volatility scrambled to cover their exposure and triggered yet more and more stops in the spot market Note that dollar weakness against the commodity currencies has been far more modest than its losses against the majors. That's why we think when the turn in the dollar comes we may want to take advantage of it through another USD/CAD long. For now we are sidelined
posted by BKTrader # 11/27/2006 05:03:00 PM 
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