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Manage, manipulate, try to control. Define terms as you go, swing a big bludgeon and win every argument. Tiresome.
Old Hippie, there is a tremendous difference between trying to stabilize a currency via responsible government behavior and trying to manipulate a currency by buying or selling huge blocks of that currency.
I think you, or anyone else for that matter, clearly recognizes that difference. You are just being obnoxious by pretending there is no difference. But if I am wrong, if you truly cannot tell the difference, then that says something entirely different, something not very complementary of your intellect.
Ron Patterson
I only locate markets so magically large the big players all bow down and worship or "responsible government behavior" when in seriously deep mystical trances.
I also don't think I outrank George Stephanopoulos. Handwaves all around.
I personally ran up against blatant PPT intervention in the stock market in 2004, 2005, 2006, that I finally gave up and bowed out. Each time, I was trying to buy PUTS on either GM, Fannie Mae, or Ford. For those not in the know, PUTS are a bearish bet.
Each time I was told "U R OUT" and my order was canceled. Each time I called them to find out why. All they would tell me is that "we are not allowed to open any new positions on that security." When I asked about the free market, i.e., "if you have a willing buyer and a willing seller, what business is it of yours?" I received NO answer whatsoever---just stony silence.
Just on a lark, I tried to open a CALL position each time on the same security. A CALL is a bullish bet. I put them in with a limit order that I was pretty sure would not get executed. Each time I did this, the CALL orders did NOT get canceled.
First hand experience. I don't need any more evidence to know that the stories of manipulation are true. And the currency is most certainly manipulated right along with everything else. It is done by creating new money (via the fractional reserve banking system and/or the presses) and by reigning in the same.
Also, just out of curiousity Ron, do you know what the leverage is on the FOREX exchange? I trade forex, and I can tell you that it is obvious whenever a central bank buys or sells a currency because of what it does to the price. The buy and sell such huge quantities, that combined with leverage, it has a huge impact on the market. After the fact, you can always tie these moves to the central bank currency disclosures.
I wish I still believed that we have the best government in the world and that we lived in Wonderland. But we don't. All governments are corrupt, and that includes ours.
Ckaupp, I am having trouble with your story. I know what puts are, I was a stockbroker for all of six months back in 1986. A put cannot possibly affect the price of the stock and neither can a call. A put is a bearish bet but it has no bearish effect on the market whatsoever. It is only a bet that the stock will go down. Purchasing a put or a call has absolutely no effect on the price of the stock.
Even if a PPT actually existed, why on earth would they care whether you buy puts are not. That just does not make any sense whatsoever.
Ron Patterson
I know EXACTLY what they are---I've been trading them for years. I did NOT say purchasing either a PUT or a CALL has ANY effect on the share price of a stock. 6 months versus 8 years of options trading....
I was there and experienced first hand. My impression was that it was about perception control.
You have 2 of the biggest US Corporations and a huge GSE (Government Sponsered Entity) -- all 3 of them having serious financial trouble. A HUGE number of BEARISH bets looks BAD when you consider the old saying that "Where goes GM goes the US."
Since they were willing to let me open CALLS, or BULLISH bets, but not PUTS or BEARISH bets, I was left with the impression that it was all about PERCEPTION CONTROL. Lots of people really do look at such things at PUT/CALL ratios. It was not about controlling the stock price, but it most certainly was about "managing the market" and perceptions of these companies. If foreigners really knew the state of our economy, they would bail on US debt instruments and we'd be in a world of hurt.
Ckaupp, I traded options for years also, I was a broker for six months.
A put is only a bearish bet for the buyer of the put. It is a bullish bet for the seller of the put. Likewise a call is a bullish bet for the buyer of the call but a bearish bet for the seller of the call.
But no one pays the slightest bit of attention of the put or call volume or the put/call ratio for any given stock. Hell, they are not even listed in the newspaper.
This is absurd! Puts and calls are market neutral since either is a bet by two people, one betting the stock will go up and the other betting the stock will go down. Do you think if you tried to sell a put, a bullish bet, that your order would have been cancelled. Well, if the cancelled the buyer they would also have to cancel the seller. That just makes no sense whatsoever.
Ron Patterson
In 2001, the SEC widely published new regulations preventing investment houses from selling shares short over which they had no control. The diminished supply was reserved for Preferred customers.
Rather than corruption, this is an issue related to novice participants.
This had nothing to do with selling short.
The leverage on the FOREX exchange is pretty amazing. A small time investor can purchase millions of any currency he wants with a relatively little account. I have at least 20-40 thousand of different currencies at all times sloshing around
A billion or so by a bank would hugely move the FOREX market.
Indeed. When I first opened my puny little forex account, I opened a regular account.
After my first trade, I watched the huge swings in my tiny account as the losses/gains swung back and forth precipitously to what is essentially a "margin" call (but not handled like in the stock market---in forex if your losses breech your margin they automatically close your position).
When it finally swung back near where I started, I closed the position and closed the account and opened what is called a "mini" account.
In a regular forex account, currencies are trades in blocks of 100,000 units, such as $100,000 at a time. You can get leverage all the way to 1% -- meaning you only have to put up 1% of the value of the trade. Can you see where this can go? With 1% leverage, you can control $100,000 with $1,000.
In a mini account, you trade in blocks of 10,000 units, such as $10,000. I also had them decrease my leverage to prevent heart failure.
Normally the margin is 2%.
http://www.interactivebrokers.com/en/trading/marginRequirements/currency...
There are accounts that require only 1% margin. These accounts automatically liquidated at .99%.
http://www.ac-markets.com/en/online-forex/fx-accounts.asp
Ron Patterson
I didn't say anything different that what you just said. I said you "can" get 1% margin, and I said they automatically close your position when you get close to breeching your margin. I just didn't give the actual number.
I think you like to argue just to argue. I'm done here. You win.
The margin requirments for the FOREX is 2% for the major currencies. But if the currency moves against you by 2% you lose your entire investment. A billion dollars would purchase 50 billion dollars worth of any other currency. Or you could go the other way and buy 50 billion dollars, in Euros or whatever, worth of dollars.
When you invest (gamble) on the FOREX you must bet one currency against the other an in USD/Euro. And if you bet the wrong way, you start to lose money very fast.
But the question is, why would any bank do such a thing. The truth is they don't. Banks don't really give a damn which way the currency moves. A FOREX member bank makes its money by taking both sides of the bet. They make their money by taking the difference between the bid and the ask. That is usually about three basis points, (three one thousandths), greater for the thinly traded currencies. Banks or FOREX brokers charge no commission because they make their money from the difference between the bid and ask price of the currency. A trade always involves two parties. The bank never takes one half of the trade, there is always a bid and ask price.
Banks are not in the gambling business and it is simply foolish to think they are.
Ron Patterson
Boy have you twisted this.
Yes, you can get margin to 1%. It isn't uncommon. And no, your calcs are not correct since a unit in one currency doesn't usually equal the $ units in your account. I'm not sure where commissions came into this discussion at all. But you are correct about commissions--there are none...it is the spread.
I did not say the banks were betting. Where did that come from? Methinks thou doth read things that aren't there.
I said they move the markets. I assigned no motive for moving the market. It could be for many reasons. They might want to lighten up on one currency or go heavy into another. They may also do it to help manage the market. For example, Japan might perceive that the Yen is getting too strong and it will slow down their export business--so they manage it lower. They do this, as I said before, through fractional reserve banking and the printing press. They also do it through the forex markets.
And there have been times, during this "management" process, where they've literally gotten their you know what in a wringer.