Coup Declared!

[shygye]

Futures

 

There you go OH. Don't lose your shirt, unless to a BG.

[gummigut]

You have yet to say anything of substance or consequence.

 

You can't even explain your own words!!!

 

Why?

 

Cause you can't! Is that ignoranct or what?

 

So it isn't surprising you resort to name calling. You finally dropped trying to hook Gadfly into the argument but added KS.

 

I thought you are supposed to be jj with the big dick? Not the whining child?

 

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[Old Hippie]

Thanks for the links and info. No ideas what my 401K (Fidelity) is compleatly comprised of, other than the names and basics of each fund I move the money around in.

 

I was always advised to avoid trading on Margins, more a cash on closing stock buyer. But I'm strickly small time, 5-10K a year in Stock purchases. WAs/am pretty much a buy and hold type.

 

I would tend to think the 1.4% is important given the over all amounts the big guys play with, really any profit is a good one, some just better than others. Tend to think it is more a matter of the over all picture of what that 1.4% move effects, rather than just the currency trades, but what do I know?

[jai-dee]

I agree with most posters that the move of 1.4% in Thai baht exchange rate is pretty insignificant. If you look at the one year chart you'll barely notice it.

 

In January baht fell about 6% in a mater of days. April, May and June also had bigger and faster changes.

 

The thing with currencies, however, is that they are traded on margin, sometimes as low as 1%. So you can buy or sell $1 million worth of baht for as little as $1,000. If the rate moved 1.4% in the wrong direction you just lost 140%, in a single day.

[Old Hippie]

Right. So figure several million is/was margined, and it went wrong...or right. Also, doesnt the currency effect trade? Depending on what side you are on, you either want your currency up, or down?

[jai-dee]

Yes, you can trade in either direction. The instrument is a currency pair, for example EUR/USD. If you think EUR is going up, you buy contracts and later sell them for profit. If you think USD is going up (EUR down) then you first sell and later buy back cheaper, thus making profit.

 

And in my previous post, 1% deposit for a million should read $10,000, of course.

[surebet]

Lets talk some numbers to put this discussion into some perspective:

 

The Average True Range (ATR) is a measure of a security's volatility - the degree of price movement. Over the past 250 trading days the baht has an ATR of .21 baht/day. On Coup day, the baht had a range of 76 "pips" (a pip is like a point - the smallest unit of measurement in foreign exchange. 1 baht = 100 pips) from 37.20 at the open till 37.96 at its peak. For a retail investor on a $10000 investment "fully leveraged" (tight stops, 50:1 margin) each pip is worth approx $50, hence a return on investment of roughly 34% after the commission ("spread") assuming you got in at the open just before the coup announcement and got out 3 hours later just off the highs. Notice the volatility of the move for that day was 361% of its "normal trading range" (76/21) - Outstanding volatility and excellent returns.

 

Lets look at the Euro/usd yesterday - the worlds most traded financial instrument by far (just over half a trillion a day is traded on just this pair, not including its synthetic crosses/exotics).

 

Over the past 250 trading days its ATR has averaged 89 pips. Yesterday it had a range of (1.2641-1.2711) or 70 pips. If you had sold it short on the european open and got out sometime mid morning USA time you could have caught roughly 50 pips (short@1.2700 covered @1.2650). Keep in mind that you can make money regardless which direction price moves - as long as you get the direction right. On a $10000 investment "fully leveraged" each euro pip is worth approx $35, hence a return on investment of 18% . "Normal volatility" of 78% (70/89) and good returns.

 

In the first example it was an extraordinary event to return these figures - as oppossed to an average good day for the euro. By the way, once a week the Euro will put in a performance of twice what it did yesterday (100 pip move) and return the same as our baht investors above. However, the point is that in the first example IF some one at the top had prior knowledge, it was a risk free return with nobody to prosecute you as interbank fx is an unregulated market. And that is the key here, not the fact that some huge amounts were made but someone could have made upwards of a 30% return in a day with zero risk. Same person could do similar returns day in and out speculating on the "Majors" (eur/usd, usd/jpy, gbp/usd, usd/chf) - if they can properly assess risk using movements in price/momentum patterns as an entry paradigm.

 

I would have thought that "baht insiders" were glued to the quote as the coup was progressing and for whatever reason the follow through didn't eventuate and probably insiders cashed in there chips early for a quick scalp.

Plenty of other places for the hot money to go.

[Old Hippie]

Hey, you sound like you know some stuff...maybe you have the biggest financial dick on the board Sorry, just trying to

[JJsushi]

You have yet to say anything of substance or consequence.

 

You can't even explain your own words!!!

 

Why?

 

Cause you can't! Is that ignoranct or what?

 

So it isn't surprising you resort to name calling. You finally dropped trying to hook Gadfly into the argument but added KS.

 

I thought you are supposed to be jj with the big dick? Not the whining child?

 

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Your a funny little dude!!! Like I said u haven't said squat in this entire thread. The only thing u have demonstrated to be is that u don't understand derivatives, volatility and leverage. Stick to your secret little personal SET investments that you crow about occasionally and stick too trading your drinking money.

 

[JJsushi]

Nice to see someone "gets it" without me having to illustrate every damn point!

Some folks here get sensitive when u give them a different perspective(gummi) and other are interested in understanding new things(old hip).