As for your simple question, nothing has brought me more pleasure than answering this. It actually makes my argument even stronger and I will actually incorporate it in the report I am putting together that highlights this situation in detail, so thank for bringing this up.

First of all looking at daily range data, in order to proxy volatility moves for the respective currencies (EUR/USD and GBP/USD or the Euro and Cable).

Euro: we observe that the average daily range for this pair is .57 big figs and about 1.2 big figs for a 1 sigma range.

Oct 14, 2008: The first time in the HISTORY of the Euro that it ever traded in a daily range in excess of 5 big figs (actual was 5.1). This is considered a 8 SIGMA event.

Cable: we observe that the average daily range for this pair is .8 big figs and about 1.8 big figs for a 1 sigma range, so slightly more volatile than the Euro but this is also observed by many FX traders as well.

Oct 14, 2008: The cable actually trades within a 11 SIGMA range of 10.5 big figs. The next closest range is 2 sigmas away at 9 SIGMA, and yes you guessed it, it was Sept 16 1992 when your Hungarian friend was having a field day.

[Source: Bloomberg, Factset]

So NO we have never seen moves this big in the FX markets and this is a historic event. It was the subprime defaults fueled by the american housing bubble that led to a spill over in the banking and financial system that put these wheels into motion thus taking out various derivative structures that would have paid off otherwise. Even Litterman’s quant (GS) or Simon’s acclaimed quant model that drives his HF, Renaissance, do not account for these kind of sigma events. Do ppl love money every day, yes. After all these markets are zero sum. but do ppl lose this much money, probabilistically and historically no. Kuwait might possibly make it on the world ranking for derivative losses, first place at the moment goes to Citic Pacific with a $2 bn fx hedge that went wrong.

Even if you look at equity returns, as noted by Value Square Asset Mgt and Yale University for the S&P yearly return data for the S&P index the only other year that compares to 2008 is 1931 where the losses range from -50 to -40 %.

Anyway, I think i have exhausted this point many times and if you dont get it by now then i think you should change careers, maybe go into bus driving or something. I actually think that your i-banking career was either spent fetching coffee, or u were a sales/marketing guy. I am not going to waste my time on this subject but I am glad at least I came out ahead and with more data to support my argument.

If for any reason you would like an additional beating please email me and we could discuss the topic further, or any topic for that matter. you can find my contact info @ http://www.alhamour.com

its been fun ;) LOOOOOOOOL

Did I strike a nerve? You seem awfully defensive. Relax, take it easy and next time (assuming there is a next time) prior to posting your erroneous nonsense, try doing a little more research.

I’ll leave you with one simple question:

Could this rogue trading loss have occurred when the World was going through an economic boom?

Case closed.

Quit whilst you’re behind.

2. I think this is truly amateur in nature and again you are thinking within the box. Obviously again you have not traded in FX in your 13 year lifetime as a hairdresser/i-banker. 5 big fig moves in single days in the Euro are not common. There is a reason all this is happening simultaneously and its due to the reasons highlighted in my piece.

As for the hungarian reference, he was actually not the guy to put on the cable trade, his trader came to him with it, all he did was apply a lot of leverage.

Im starting to really think you are delusional. But in any case this is all good for my blog, thanks to you I am getting a lot of email with support and ppl are seeing how ignorant you are.

Thanks and keep it up please you are only making a fool of yourself. :)

So you make 2 critically false statements that completely negate your original premise – and you still expect to be taken seriously?

1. Long dollar, Long volatility

2. Correlating a rogue derivative trade with a World liquidity crisis, when in reality this loss could have happened at any single time in our history, even when the KSE was at 15k.

You do know that currency trading has been very active for decades right? You’ve heard of Soros right? No? Didn’t think so.

Nice try, but I think the only person to be proven wrong by ‘you’ is yourself.

Desperation is a B**** ;)

Quote from your ‘piece’

“The derivative product was long US$ and long volatility (That means if the US$ appreciates vs the Euro the investor losses money)”

OOOOOPS

Oh dear oh dear oh dear…..Talk about erroneous information. You’ve been called out big time.

Explain that to us why don’t you….

lololol