On 5/17/2010 10:23 AM, Christoph Reuss wrote: > It is this speculation that steals billions >
I debunked this myth in 1998. Currency and commodity futures & forwards & spot are zero sum games. The only direct losers are those willingly playing the game. The government flow of supposed honest stats and news is challenged by speculators who suspect the veracity of the data. They are like a 'truth commission.' When a currency declines versus another one (in a specific trade); it could also simultaneously decline against many others if the others look better for some reason. So, one or more currencies RISE when the weakening currency declines. Few complain when a currency is strengthening...until it pinches exports by making them too costly vs competitive products. Currency trades require two willing counterparties to transact a deal. Depending upon the direction and duration held before closure of the position, one party looks to have made what the other side lost. But...it is rare that a position is closed with the same counterparty; and when it is, rare that the counterparty help the position for exactly the same duration. Banks run 'books' for each currency they trade. These are floating and involve thousands of trades daily. A net long or short book is the banks decision and is independent of any particular trade with a counterparty. These markets are the most liquid on earth, and positions are passed off like hot potatoes to other market makers (banks, brokers, etc) in most cases. Steve _______________________________________________ Futurework mailing list [email protected] https://lists.uwaterloo.ca/mailman/listinfo/futurework
