A Forex View From Afar

A Trader's Look At A Trader's Life

Forex Analysis

Not just Forex Traders get margin calls!

Written by A Forex View From Afar on Friday, March 07, 2008

Back to www.thelfb.com

What is the difference between a Retail Forex trader and Carlyle Capital? Apparently they both can get a margin call; recently Carlyle found out.

Carlyle Capital, a mortgage hedge fund got a margin call from its lenders, which "could quickly deplete its liquidity and impair its capital"

The first shock came on Wednesday, when it announced that it can't meet the margin calls for its $21.7b portfolio. Carlyle used a high leverage ratio, of 1:32, in order to control its assets from $670m of client's investments.

In addition to the Wednesday margin call, on Friday the fund announced it will receive some further margin calls from its lenders.

How I like these transition periods, all year long we watch hedge funds and admire there ability to generate profits, and then in the first market turmoil they fail. The Kitchen Sink retail Traders are so much more adept than that, it's how you handle the bad times that defines your trading skills, and 2% of the account at risk, with 100:1 leverage is how the Kitchen sink Trader will win out. The draw-downs are far more tolerable.

WSJ: Carlyle Capital Receives Additional Default Notices

Please add your Comments

Related Posts by Categories

  1. 0 comments: Responses to “ Not just Forex Traders get margin calls! ”

TheLFB Team & The View From Afar Blog

© 2008 A Forex View From a far Trading Blog

Trade Desk View

Fundies and Trading
There is a constant question from some traders as to why anybody would ever need to consider the ‘F’ word when trading. Fundamentals: what is so damaging at looking at both Technical charts and having a Fundamental filter to gauge how many Lots to put on? Why is it that accepting that Technicals give us price points to trade, but Fundamentals determine the direction that we travel is so difficult for some traders to accept? Without a Fundamental Filter very few pure Technical traders would have seen this Dollar move coming today.

Want to subscribe?

Subscribe in a reader.