Wow – these sure are exciting times to be trading in the financial markets. I am not sure whether ‘exciting’ is necessarily the best word for it.
On Thursday, the Swiss National Bank decided to (i) cut interest rates from -0.25% to -0.75% and (ii) remove the 1.20 floor in the EURCHF exchange rate which has been in place for 3 years. On this news the pair gap around one thousand three pips instantly (my FXCM 1M chart shows a gap of this size), then price fell a further 850 pips to a maximum of 2300 pips (about the same size of the max daily movement of USDRUB – see the post on that here). This volatility was able to seen on pretty much all of the CHF crosses.
Today it turns out that this has had a huge impact on many currency brokers with whom many retail traders trade. Alpari has gone bust. A NZ broker has gone bust. the share price of FXCM is down 90% (yes ninety percent) today.
This Forbes Article giving a quick summary of how Thursday’s turbulence in all of the CHF crosses will have blown up many retail traders. The term “blown up” refers to the situation where a trader’s account goes to zero (or even negative) – in other words the traders loses ALL of his (or her) money.
What a time for me to be in France checking out art museums and hunting wild boar in the forest! Ha I am just observing from the sidelines I guess.
It’s making me realize that there really is so much to learn and understand when trading. And really anything can happen!!
Good luck out there!