Hedge Funds Wiped Out

[jtb790]

Reuters

The article basically says that hedge fund guys who were making money buying euro in October and November got wiped out in December when the market tanked 300 points on them.

A lot of them are completely out of business!

Some of these guys, like Neil, ("trade-ya1") were posting on Elite Trader - Fx Trading section - bragging about how great traders they were.

Well... the proof is in the pudding as they say.

Whatever happened to that guy rezco_s that used to post here? He was a currency fund manager for Refco. He went broke apparently.

This EUR/USD climb has been a hell of a war, that's for sure.

[garyh]

"If you made money in November and you didn't change your positions in early December, you probably lost a lot of money," said Tim Rudderow, whose Mount Lucas Management fund manages $1.5 billion in assets.

WOW! That's profound! What makes me laugh is that they didn't see it coming? Are these guys for real? Wiped out by what should have been expected?

[Hayek]

Look at the chart, please. If sb bought euro at the begining of Nov @1.2800 and held it, his profit is 424 pips now. Even if he suffered 244 pips loss from the historical high @ 1.3468, he still makes profit. If sb bought euro when euro broke through several months' range on Oct 18 @1.2474 and held it, his profit today is 750 pips! I can't see any possibility of hedge funds which made money in Oct and at the beginning or middle of Nov in loss today. Only those which longed euro in the last week of Nov and in Dec may suffer losses. Besides, I think hedge funds have acute sense, quick respondence and strict risk management because they are in high leverage and their goal is higher return than normal funds. As to this week's dollar correction, hedge funds should have already cut their long euro positions instead of seeing their profits reducing or turning into losses.

Don't trust too much what media is saying. Journalists' objects are to attract more attention to their articles. They are not in the same profession as traders anyway.

[garyh]

Don't trust too much what media is saying.

What! You mean the media doesn't ALWAYS print the truth! I know CBS always does....

[jtb790]

Originally posted by garyh


WOW! That's profound! What makes me laugh is that they didn't see it coming? Are these guys for real? Wiped out by what should have been expected?

No. Apparently these guys are the worst market participants.

Look at the performance records: less than 3% for the year.

Many of them thought for sure the euro was going to $5.00 so they loaded up with it.

The 300 point tank killed em.

[jtb790]

Originally posted by Hayek
Look at the chart, please. If sb bought euro at the begining of Nov @1.2800 and held it, his profit is 424 pips now. Even if he suffered 244 pips loss from the historical high @ 1.3468, he still makes profit. If sb bought euro when euro broke through several months' range on Oct 18 @1.2474 and held it, his profit today is 750 pips! I can't see any possibility of hedge funds which made money in Oct and at the beginning or middle of Nov in loss today. Only those which longed euro in the last week of Nov and in Dec may suffer losses. Besides, I think hedge funds have acute sense, quick respondence and strict risk management because they are in high leverage and their goal is higher return than normal funds. As to this week's dollar correction, hedge funds should have already cut their long euro positions instead of seeing their profits reducing or turning into losses.

Don't trust too much what media is saying. Journalists' objects are to attract more attention to their articles. They are not in the same profession as traders anyway.

Well, the way I see it, the reality behind the scenes of a jumbo climb like we had the last 60+ days is this: Longs got shredded on the way up.

MOST did not hold a single position from under 1.2400 or 1.2500, and their stop losses simply chewed them to pieces on the reversals. The 300 point move contrary to their direction was the nail hammering the lid onto many of their coffins.

It would make sense euro longs died on the way to 1.3470. And if you were short from the 1.2100s like I was (and still am) you would have gotten bagged unless you knew what you were doing.

That 1300 point spike was a widow-maker.