The Market Philharmonic Orchestra Presents – Symphony EUR Carnage

Last night I watched a symphony orchestra
It was called EUR Carnage.
Target longs 1.3980
Target shorts 1.3880
Killed all in one clean algorithmic sweep.

EUR STOP LOSS CHART

The most profitable algorithm this year has been the STOP LOSS Algorithm. Unfortunately it belongs to only a few – those with the order books of clients and now with computerised trading systems, it is easier to manage the stop losses as compared to the past when it was manually done.

I remember seeing many an eye light up in glee as a critical level nears and a big fat juicy stop loss order beckons. The trader would inevitably have to run ahead of the customer’s order because he cannot afford to wait for the level to trigger and take over the entire position. It was a true spectacle to watch the entire desk fall over themselves to square the position, usually profitably. But those chaps are mostly gone, replaced by equally, if not more profitable machines.

 

Yet, last night’s price action was equally entertaining and I watched the pretty candles form with my jaws wide open, naturally, because I had no positions on the EUR. My heart wept for the poor souls who knew what Draghi was going to say but did not live to hear the words and my sympathies ran deep for those who had bought but had no to time to react in the swift and sharp collapse (within minutes) that only a machine could execute.

I do not think it is wrong. There is a slim chance of an anomaly happening such as a BIS flow or if GE decided to buy those Euros they need for their takeover. Yet, with almost the entire market trading on more or less the same parameters, the result would be easily anticipated and maneuvered.

Thus when I read that “An Australian Bureau of Statistics staffer and a NAB employee have been arrested on insider trading and corruption charges over allegations they made $7 million by trading on market sensitive information on the Australian dollar.”  http://www.smh.com.au/business/markets/abs-and-nab-employees-charged-with-insider-trading-20140509-3809o.html#ixzz31CQrbUyt

I had a good laugh.

Because the chances are that they would have lost money if they had been trading this year. Market sensitive no more for the AUD currency. No more Aussie rules (not football). It’s Algo rules.