The bucks stop for FX traders.

Recent poor managed futures performances, particularly among currency traders, raise the question whether the markets themselves have fundamentally changed.

The carnage started in August 1993, says Ferrell Capital Management Managing Director Virginia Parker, when a coordinated intervention

Since then, currency markets have kept traders back on their heels. The main reason: Many traders are long-term technical trend-followers, usually a sound strategy for markets driven by the tidal forces of macroeconomics, but not in the recent choppy markets.

"About 70% of CTAs [commodity trading advisors] use some form of technical trend following," says Jeff Reckseit of Campbell & Co. in Baltimore. "What has changed, and it's only temporary, is the lack of clearly defined trends."

Ironically, these traders' own success has brought in a veritable deluge of new money, and possibly painted them into a corner. Large CTAs can't put $100 million into trending pits like coffee or copper, but are confined to liquid -- and whipsawing -- markets like currencies. Global political and economic uncertainty, highlighted by current U.S./Japan trade talks, also have added to market congestion.

Pierre Tullier, vice president at Dunn Capital Management Inc. in Stuart, Fla., remembers the havoc international finance ministers caused in 1985, and doesn't believe market behavior has changed.

"We lost a fair amount of money because it took time to get ourselves reversed," Tullier says. "When the government is messing around with things...(and) you're in the wrong system you can take some lumps."

In a year of poor returns, perhaps the hardest hit was Colorado Commodities Management (CCM) in Boulder, Colo. CCM's currency/financial program has long been a star, averaging 17.43% yearly returns from January 1984 through 1994's first quarter. But after a 10-month losing run (more than -50%), funds in the program dropped to an estimated $100 million in June, down from over $480 million in January.

CCM President Tenny Lode has heard conspiracy theories afoot involving central banks exacting revenge on traders, but is skeptical, saying their reserves aren't that great and their modus operandi always has been to make as big a splash as possible.

Another theory has central banks using their influence to tighten credit lines to hedge funds, which precipitated this year's wild gyrations across financial markets. That's highly unlikely, says Ezra Zask, president of Ezra Zask Associates in Norfolk, Conn., who also worked for several U.S. banks for more than a dozen years.

"The central banks don't have much influence over banks on micro-issues like that," Zask says. "It's a correction in an overbought market. In this case a good, old-fashioned trading explanation suffices."

Lode says "it's too soon to abandon currency trading." He plans for CCM to stick by its predominantly computerized, technical system, but adds enhancement work by CCM's trading system analysis and development team "is going on at a more rapid pace."

No one is saying currency traders are out for the count yet. "It's usually two or three months in a year when currency traders make all their money," Parker says. Sustained trends in June "gave a number of firms a chance to make their losses back," she says, although July looked rough for traders.

Lode is left to contemplate whether recent events are random chance or a system trader's equivalent of a 100-year flood -- a tough call because currency traders have only been around for two decades.

"You have to have a 'worst ever' every once in awhile," Lode says. "Is it that sort of a thing? I don't know."