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PIP movement during disaster

  • Post #1
  • Quote
  • First Post: Aug 2, 2005 9:46am Aug 2, 2005 9:46am
Does anyone recall what the market movement was like during the 9/11 disaster? Or possibly during the shuttle disaster in 93'?

Basically, I'm trying to figure some type of disaster factor into my positions. I know this seems silly since it's almost impossible to gauge the reaction of the market to any one disaster, but studying the response of the market to past events can give an expectation level for future events.

It's hard to tell from the charts now, but it appears that the EURO/USD dropped about 250 points and less than 150 on the shuttle disaster.

Does anyone recall their own experiences during these periods?

Appreciate the help.
Capital Preservation is key to long term wealth accumulation
  • Post #2
  • Quote
  • Edited at 10:34am Aug 2, 2005 10:34am | Edited at 10:34am
Quoting MuddBuddha
Does anyone recall what the market movement was like during the 9/11 disaster? Or possibly during the shuttle disaster in 93'?

Basically, I'm trying to figure some type of disaster factor into my positions. I know this seems silly since it's almost impossible to gauge the reaction of the market to any one disaster, but studying the response of the market to past events can give an expectation level for future events.

It's hard to tell from the charts now, but it appears that the EURO/USD dropped about 250 points and less than 150 on the shuttle disaster.

Does anyone recall their own experiences during these periods?

Appreciate the help.
I was not trading during those times, but have always been curious myself on the impact on the markets during those times.
MB,

This has always interested me too... as in WHY? What is the underlying motive that the market is reacting to? So what if there is a disaster. Why should there be a reaction to it in the spot FX market? I can understand a change in the price of gasoline if there is destruction of a refinery.

This brings up the next question... what was the 'recovery' time?

Also, MB when you said the Eur/Usd went down, I think you must have meant that the USD went down.... which would make Eur/Usd go up. I just want to be clear about this.

Thank you

Lou
Sorry about the confusion. Yes, I meant that the dollar dropped.
Capital Preservation is key to long term wealth accumulation
Quoting MuddBuddha
Does anyone recall what the market movement was like during the 9/11 disaster? Or possibly during the shuttle disaster in 93'?

Appreciate the help.
Merlin was shorting the US dollar during 911. He may have some useful comments. I clearly remember not paying any attention to the market because I had visitors that morning.

FT
Quoting fijitrader
Merlin was shorting the US dollar during 911. He may have some useful comments. I clearly remember not paying any attention to the market because I had visitors that morning.

FT
hey thanks for calling me out fiji. :o

you forgot to mention i donated the money i made to charity!!!
Relax and be happy.
Quoting Lou
this has always interested me too... as in WHY? What is the underlying motive that the market is reacting to? ...Why should there be a reaction to it in the spot FX market?
when there is a disaster, money flows out of the country. investors around the world have thier pick of investments. if there is uncertainty in one country, investors will move thier money to another place. this lightens demand for investments in the country, and therefore prices will move down. if there is less demand for US dollars, then the "price" of a dollar will drop as well.

thats my take at least...
Relax and be happy.
Quoting MuddBuddha
Does anyone recall what the market movement was like during the 9/11 disaster? Or possibly during the shuttle disaster in 93'?

Basically, I'm trying to figure some type of disaster factor into my positions. I know this seems silly since it's almost impossible to gauge the reaction of the market to any one disaster, but studying the response of the market to past events can give an expectation level for future events.

It's hard to tell from the charts now, but it appears that the EURO/USD dropped about 250 points and less than 150 on the shuttle disaster.

Does anyone recall their own experiences during these periods?

Appreciate the help.
disasters are few and far between so i havent studied them due to small sample size. however, ive noticed that disasters used to be a whole lot more over cooked. i think investors are smarter these days. take for instance the london bombings recently. when the bombing happened, the markets reacted immediately and violently. but then a few hour later everything was back to normal! this i believe was caused by the smart investors coming in a scooping up a deal. a deal created by fearful investors.
Relax and be happy.
Quoting merlin
hey thanks for calling me out fiji. :o

you forgot to mention i donated the money i made to charity!!!
Hehe. No I didn't forget I just wanted to see if you'd mention it. I'd never have thought less of you for keeping the profits either. You were not in any way in favor of or instigating the terrorism nor were you rejoicing in the suffering of others. You were doing your job which is to make a profit. Had you any hand in promoting the disaster or in any way sided with the terrorists because of the money they helped you make - it would be different. Lots of people made money selling services to the disaster clean up and security companies have had windfall profits in the aftermath. I cannot fault any of them for not giving it all away to charity. Contractors who do work for insurance companies make all their money from the misfortune of others. It is not wrong unless you promote or cause the misfortune.

FT
MB,

Are you considering having Disaster Stops of say 250 pips and otherwise not using stops that are closer to the market? If so, are you doing this to thwart stop hunting?

Just a hunch.
  • Post #11
  • Quote
  • Edited at 3:48pm Aug 4, 2005 2:31pm | Edited at 3:48pm
No. Just curious what the reaction of the market is during a major disaster. I normally try to diversfy my pairs so that one doesn't effect the others during extreme movements equally. But having some type of expectation is always good. Even if you expect worse than the actual.

Now, I agree with Merlin in part, because with 9/11 having been done and said, most traders will be more level headed if another were to occur within a reasonable period. However, taking into consideration emotional complacency, if an equally or marginally equal disaster doesn't occur, then emotions have a tendency to soften. So, you definitely can't say that traders will always remain smart. To do so would be to ignore entrophy all together, which you can't.

It's all part of learning from the past, and avoiding the same mistakes in the future. You can only ever expect that from yourself and cannot gaurantee that of others.

Back when I was in law enforcement, we would laugh at rooks that would get excited about every little event, ready to draw down on someone, rather than remaining calm and getting "hyped" only when necessary. Then they would mature only to be have their edgeyness replaced by another rookie. I see no reason the market will not have the same "rooks".

It's the circle of life....
Capital Preservation is key to long term wealth accumulation
Quoting MuddBuddha
Back when I was in law enforcement, we would laugh at rooks that would get excited about every little event, ready to draw down on someone, rather than remaining calm and getting "hyped" only when necessary. Then they would mature only to be have their edgeyness replaced by another rookie. I see no reason the market will not have the same "rooks".

It's the circle of life....
wow, great analogy.

i didnt know you were a cop!! now i know who to come to when i get ripped off by a signal service
Relax and be happy.
  • Post #13
  • Quote
  • Edited at 1:40am Aug 5, 2005 1:31am | Edited at 1:40am
Quoting fijitrader
Hehe. No I didn't forget I just wanted to see if you'd mention it. I'd never have thought less of you for keeping the profits either. You were not in any way in favor of or instigating the terrorism nor were you rejoicing in the suffering of others. You were doing your job which is to make a profit. Had you any hand in promoting the disaster or in any way sided with the terrorists because of the money they helped you make - it would be different. Lots of people made money selling services to the disaster clean up and security companies have had windfall profits in the aftermath. I cannot fault any of them for not giving it all away to charity. Contractors who do work for insurance companies make all their money from the misfortune of others. It is not wrong unless you promote or cause the misfortune.

FT
you know if you didnt mention it then i would. i had a lot of guilt about that day and that was my one way to exonerate myself.

for me it was just a reaction. i see a plane hit a building and i start selling...its was just my natural reaction. but when i saw the first building fall i wasnt thinking about trading anymore...

in the same respect, i cant see a cleanup contractor pushing a hard bargain during the 911 crisis. dealing with disasters is a touchy subject, i honestly dont think i will ever trade one again.
Relax and be happy.
Quoting merlin
in the same respect, i cant see a cleanup contractor pushing a hard bargain during the 911 crisis. dealing with disasters is a touchy subject, i honestly dont think i will ever trade one again.
The way you put it here (driving a hard bargain) suggests a bit of ruthlessness which I don't think I was referring to whe I mentioned people making their living from the misfortune of others. It is a fact of life. There are undertakers, grave diggers, security companies, defense contractors, firemen, doctors, clergy, cops, etc. who either directly or indirectly make some, or all, of their money from the misfortune of others. In fact much of the currency fluctuation comes due to the misfortune of others. People lose businesses and even commit suicide when major financial upheavals occur. At certain points the IRAQ war has played a significant role in the price of the US dollar. I've been short the dollar when a lot of the economic effect of the war (combined with other forces) was dragging the dollar south. Personally I don't make a direct connection between trading the market direction for whatever reason I trade it -- and the disasters that happen to influence it. For me the acid test is... "if I did not know about the disaster and I saw the market moving and a signal was triggered would I take the trade?" If the answer is yes then it is just another trade.

FT
  • Post #15
  • Quote
  • Last Post: Aug 9, 2005 9:10am Aug 9, 2005 9:10am
There is no right or wrong to what fiji has said compared to what Merlin has stated.
It isn't a morality issue as much as it is a personal decision and conviction of what is right and what is wrong.

Here, let me paraphrase Paul:

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If your brother believes that eating meat is a sin and you insist that he intake meat at your table - you have caused him to sin and you yourself in the process.

The only person standing aginst you in judgement is your own conscious.

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So you are both correct in your judgements and only you can damn yourself for your actions within those judgements.

Sorry if it was a bit flaky, but the paraphrase fit the subject and actually is a good topic for new traders to ponder upon themselves as they are for certain to come across this at some point in their trading careers.
Capital Preservation is key to long term wealth accumulation
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