Anyone who has even a passing interest in trading is no doubt aware of the FOREX event which took place this morning. The Swiss National Bank (SNB) decided to no longer defend the Swiss Franc (CHF) against the Euro.
For the past few years, they refused to allow it to drop any lower than €1.00 : 1.20CHF. This decision was made by the SNB in order to protect their exports. Getting 1.20CHF for €1 makes Swiss made products a lot more affordable when compared with only getting 0.90CHF for €1.
When the SNB stepped back from this defensive line at 1.20CHF, a phenomenal move took place. The value of the Swiss Franc increased at a fantastic rate, moving over 3,000 pips within just a few minutes. Fortunes were made by traders who were on the right side of this trade.
However, with every “ying” there is a “yang”. Fortunes were also lost with such a move. Anyone who was long the EURCHF, without the correct risk management procedure in place, would most likely be simply wiped out.
A move in excess of 3,000 pips in such a time-frame has, to our knowledge, never occurred before.
So how could a trader have profited from this move? They say that hindsight is 20/20 vision, but in this case it should be completely clear that correct risk management would have seen anyone profit. If your belief was that the 1.20CHF level would never break, you must also have held the belief that if it did break, the move would be huge.
So how can you learn to trade? We, at the Academy of Financial Trading, show you the correct way to trade. We show you that you never make assumptions. We show you that you should always be prepared for every eventuality, regardless of how likely they are to occur.
The market is always right!