AUD/USD - Can someone confirm price?

[Smurf1976]

I had open on June 14 a forward contract sell AUD / buy USD dated November 15 2005. Obviously I intended this as a long term trade.

My stop was set at 0.7705 and was taken out.

Looking at a chart of the price data, I can not see how this happened. The forward was trading at a significantly lower price than the spot rate. Did forward rates suddenly jump up to be higher than the spot and are now lower than spot again?

Such a scenario seems unlikely. I haven't seen this happen before - the forward rate for sell AUD / buy USD is normally lower than the spot rate and comes closer to spot over time (which effectively represents a cost to the trader). We are talking about in the order of 80 pips lower, so the spot would need to get into the high 0.77's to take out my stop, which it didn't. I think that my broker has simply taken out my position for their own advantage and would appreciate it if someone could confirm this for me. I can find no evidence of such a price having been reached.

If it is confirmed that the broker was to blame then of course I will tell you which broker it is. But to be fair to them, until I have proof I have left their name out of this post.

Thanks in advance for any help you can give.

[yep_yep]

I'm not really sure what you are saying. 80 pips? not sure where you got this number from.

When did you buy the trade to go short?

can you copy and paste that particular trading statement line here, might help those what are trying to help to ascertain what you are saying.

but in short, depending on who you are trading with, june 8th hit 0.7705, which is where you put your "stop loss"?

[Smurf1976]

Sorry if that was a bit confusing...

I had sold AUD / bought USD forwards dated November 15th 2005. A couple of minutes ago the forward points on this was -0.0067. That means that if the price now is, for example, 0.7650 then the forward for that date is at 0.7583. As it gets closer to November 15th this gap will reduce gradually which is effectively the "cost" of having the trade open for that time.

My question is this. My stop was set at 0.7705 which is for the forward rate, not the spot rate. So if the spot rate was, for example, 0.7740 but the forward was -0.0067 = 0.7673 then the stop loss would not be triggered. The forward rate has to go over the stop for it to trigger which in this case would mean the spot rate going quite a lot higher than it did.

The date in question was June 14 where the price went to 0.7703 I think.

The only explanations that I can come up with are that either there has been a mistake or that somehow the forward rate went higher than the spot rate and then came right back down again. I have never seen the forward rate go above the spot rate before and it always stays around the same spread between spot and forward rates.

Does the spot / forward spread move all over the place and I just haven't noticed before?
I was just wondering if something is going on here. It just seems rather strange and I was wondering if something funny is going on.

[Habib]

As the spot and futures contracts of even the same underlying commodity have their own price movements and the spot-future difference dictated in steady state by the interest rates and the time to expire of the futures contract. But the key condition is steady state. A sudden large order in one can cause a big spike while the other has no effect therefrom.

However yours may very well be a case of a technical glitch and you must confirm to make sure you were not taken for a ride. Unfortunately I have not traded futures of late (only in the early 90's when I had a Reuter's screen) so I do not know a good source of price data.
GL.

[yep_yep]

Sorry, I'm still not understanding you, we're in June, not November.
What do you mean, "the forward points", I've never heard of this expression before.

Can you not just copy the statement of this trade because I'm having a real tough time understanding you.

What price did you buy the AUD/USD to go short?
What price did you enter for the stop loss?
What price did you enter for the limit stop (target)?
Can you copy the single statment line?

Thanks.

[Gamma_Jammer]

Smurf - I understand your question fully. Will have a look on my Reuters when I get into the office tomorrow. Can't remember anything odd in Aussie forwards in last couple of days, and as you probably know, what you're talking about would probably imply something pretty extreme.

Will try and get a short term chart for the points for you. May be pretty busy tomorrow so can't make ny promises, but will do my best.

GJ

[yep_yep]

Well, I understand partially, but in short, no, the price never reached that high on those dates mentioned. And I've checked 3 other trading stations too and nothing of that nature of hitting 7705, nor even a spike.

[Habib]

Originally Posted by yep_yep

Sorry, I'm still not understanding you, we're in June, not November.
What do you mean, "the forward points", I've never heard of this expression before.
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Thanks.

yep_yep, by forward he meant he shorted the Aussie vs. the buck in a futures (Nov. 2005) contract and not in spot. You know the currencies and infact all commodities (silver, gold, sugar, hog-bellies, stock indices etc. etc.) for that matter trade in multiple ways: Spot, Futures and Options (No I am not talking about exotic options but the traded Calls and Puts). I can understand that most of the newbies know of spot trading only. Just google for "Commodities Futures Trading" to learn more.
This link may also help:
http://www.rb-trading.com/begin.html