Now, FXCM Reporting Major Losses

The bloodbath continues.

WOW! $FXCM says clients experienced significant losses, generating negative equity balances of $225m owed to FXCM
— Shane Blackmon (@shaneblackmon) January 16, 2015

After crashing 15% during the day, $FXCM crashed another 12% after hours. And that's before the latest announcement.
— Joseph Weisenthal (@TheStalwart) January 16, 2015

That's on top of this:

HOT Foreign Exchange Brokerage Firm Shuts Down Because of Swiss National Bank Policy Move; Does Not Have the Ability to Reimburse Losses From Trades Not Exited

This:

The Geniuses at Goldman Sachs Blow Up Some Client Accounts

And this:

Now Indications Saxo Bank Clients Are Going to Take a Hit Because of Swiss Central Bank Move

NOTE: Trend followers who do not understand the fundamentals of a trade and how it can reverse are always vulnerable to these blow ups. At the EPJ Daily Alert, I am predicting a year of such blow ups.

On Monday, just days before the Swiss Bank announcement, I wrote in the ALERT:

I continue to expect kaleidoscopic changes in 2015, These will be surprise changes that will shock most.... But because of the kaleidoscopic nature of some of the changes, it is going to be very difficult to recognize them all in advance. Thus, I am continuing to recommend high levels of cash at this time (Money market funds, cash at banks, Treasury bills). TIPS are also good at current prices. Cash levels of aprox. 50% should be maintained.

I then went on to identify some areas where I do expect some of the surprises might occur.

On Tuesday, I wrote in the ALERT:

 I also expect major SURPRISE moves in markets later this year and want to keep a lot of powder dry to take advantage of opportunities that might emerge because of the surprise moves. It is always tempting to be fully in the market, but some time it is best to have plenty of sideline cash when major changes could occur--as I expect they will in 2015. 

The Swiss central bank move is just the beginning. The entire financial sector is very unstable at present. The current financial structure is lulling many traders and investors into very bad positions. The trend followers are going to get wiped out in 2015. It is time to understand the fundamentals behind current market activity.

-RW