Oh Sh*t!

[Stormin_Norman]

the fed announced it was buying treasury bonds last night.

eurousd up 400 points

usdjpy down 250 points

gbpusd up 300 points

usdchf down 250 points

WOW!

 

[macca]

Hi Norman,

Are you just in a state of shock or have you been hanging around with bad company ?????????

Points ? Pips mate Pips

LOL

 

[CanOz]

the fed announced it was buying treasury bonds last night.

eurousd up 400 points

usdjpy down 250 points

gbpusd up 300 points

usdchf down 250 points

WOW!

Believe it or not, you were one of the first people i thought of when i saw the action. I just happened to wake up just after the announcement. Took me out of my last equity short too.

I thought, hmmmm, maybe i should fade that big candle....nah and went back to bed, now i'm quite happy i didn't fade it, for now anyway.

How did Bunyip cope? Were you OFF for the ann?

CanOz

 

[Stormin_Norman]

bunjip got SMACKDOWN!

one account is:

start: 6,500
balance: 10,740
equity: 7,450

the other is:

start: 5,000
balance: 6,650
equity: 6,035

ill see if there's a retrace. otherwise initial equity will be protected.

i dont think such a sharp movement like that has been seen for a long time - can anyone remember one?

 

[Stormin_Norman]

i ended up cutting losses and taking the losses at the point above rather then risk further falls and risking the account.

 

[Stormin_Norman]

here are the equity graphs of the !SMACKDOWN!

 

[pilbara]

i dont think such a sharp movement like that has been seen for a long time - can anyone remember one?

I haven't got much tick-by-tick data but for the EUR/USD in December there was a 150 pip move in 3 minutes but this latest move was 250 pips in 1 minute. Yep very dangerous to be on the wrong side of that move!

 

[wabbit]

Stormin'

Have you considered adding an "oh sh*t" exit condition to the EA? Maybe a one/two/three bar rapid, massive move which closes the position(s)? e.g. if the price moves against the trade by 300 points in three bars, then exit.

Or some sort of trailing stop?


wabbit

 

[peter2]

Funny thing I also thought about the bunyip when I noticed the sharp moves. These moves were with the prevailing 5,15 min trend, but that doesn't mean much to a very short term scalper.

Looks like the bunyip handled it better than the bunyip's master.
These situations call for a disaster exit to be included in the EA.

 

[alwaysLearning]

I haven't got much tick-by-tick data but for the EUR/USD in December there was a 150 pip move in 3 minutes but this latest move was 250 pips in 1 minute. Yep very dangerous to be on the wrong side of that move!

Always have stop losses inputted and try to avoid trading fomc/rate announcements etc.

 

[Stormin_Norman]

Stormin'

Have you considered adding an "oh sh*t" exit condition to the EA? Maybe a one/two/three bar rapid, massive move which closes the position(s)? e.g. if the price moves against the trade by 300 points in three bars, then exit.

Or some sort of trailing stop?


wabbit

yeah its something to investigate. there is an equity stop that i use but i was thinking about your idea this morning.

i will have to investigate more. its not a total loss, this was a huge event, one that doesnt happen all that often (thankfully!). in the first account it put it back to where it was at the beginning of the month; the 2nd at the beginning of the week.

with good money management these events can be limited to hurtful, rather then fatal i think.

Always have stop losses inputted and try to avoid trading fomc/rate announcements etc.

one blue moon event needed change the whole system.

 

[AlwayzLearnin]

I have been messing around with an EA over the last 3 days on a demo $5000 account.

Day 1-2 Total Balance $7500
This morning Balance $36

Last night completely wiped it out.

Glade it was a demo account

 

[Wysiwyg]

I have been messing around with an EA over the last 3 days on a demo $5000 account.

Day 1-2 Total Balance $7500
This morning Balance $36

Last night completely wiped it out.

Glade it was a demo account

Looks like there are two of you blokes "always(z) learnin(g)"

 

[MS+Tradesim]

I feel for you Stormin. I guess that's a black swan for an EA.

 

[sinner]

Last night was playing the scalps during London and NYSE.

Only took shorts against USD/JPY, one scalp long on EUR/USD and one scalp long on USD/CAD.

All exited at a decent profit. Looks like I am the only one who came out last night smelling ok? :

Should have left my USD/JPY shorts open overnight!

Norm, can't you just tell the Bunjip to not trade an hour either side of any announcements?

 

[Stormin_Norman]

Looks like there are two of you blokes "always(z) learnin(g)"

everyone should always be learnin!

I feel for you Stormin. I guess that's a black swan for an EA.

yes. and i learnt how it effect the trader. in some ways im actually quite positive about it. this was an event which was far greater then other 'exceptional' events, and although it caused it a massive drawdown, it didnt totally kill the account.

im not downcast and throwing the baby out with the bathwater, but i will be looking at wabbit's suggestion and thinking some more about it.

going from about 80% up in a month to 20% up in a month is a shame, but its not the end of the world. the way the EA operates leaves it open to such huge movements such as this.

it was a 'grey' swann, not a total black swann event but one which it hadnt seen in its historical testing.

as long as they dont happen with a frequency of more then once every 3 weeks there's no need to panic, just pick up the pieces and keep going.

 

[Stormin_Norman]

Norm, can't you just tell the Bunjip to not trade an hour either side of any announcements?

usually news isnt a problem. this kind of news obviously was!

we have an Ea add on to avoid news. but the question then to be asked is do you shut the open trades @ a loss before (or at) the news announcement? this would increase drawdowns and historically (until last night) it has coped with them ok.

i think wabbit's idea could be a quasi news monitoring solution. if a 5 minute move of x amount is seen - then close all positions on the wrong side of it.

will be investigating more.

 

[white_goodman]

my EA did very well out of last nights news, although i dont trade any USD pairs

 

[pilbara]

Always have stop losses inputted and try to avoid trading fomc/rate announcements etc.

I'm working on an EA system which has stop losses, and avoids trading during times of poor liquidity (when spreads are widened like during last nights move). However last night's move showed that my system isn't widening the stop losses enough to account for severe short-term volatility. It has wider stops when it's more volatile but this uses a longer term measure, and it's clear I need something to kick in, to give the trades more room to move, when things go well beyond the normal range.

 

[pilbara]

if a 5 minute move of x amount is seen - then close all positions on the wrong side of it.

I've seen discussion of fibonacci spiral progression recovery at ForexFactory (on the bank marketmaker FTI's thread). The interbank dealers work with 500 million cash and have a huge tolerance for drawdowns, so they usually use fibonacci spiral to trade their way out of their positions (even if it takes days of effort from all the dealers). He say you need to calibrate the fibonacci progression according to the "true range of a leg of the trend move on the general speed of the thrust". With the fibonacci progression you've got to give it room to handle a 300 pip move, but not average down too quickly if the speed of the price change is too fast.