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GBP and info-release

  • #1
  • First Post: Jun 11, 2007 9:06pm Jun 11, 2007 9:06pm
This may be a totally lame post from me, but I really just wanted to capture an idea that's in my head at the moment and then come back tomorrow and see how it panned out.

I was studying some laws about insider trading the other day, and I know the topic's come up before here on the boards, but it got me thinking about insider trading on news release data, which, to my knowledge isn't exactly illegal.

So, in context of the GBP...

We obviously had a monstrous drop since last week following some data, and from a technical standpoint, it would seem that the current minor "uptrend" may be just an exhaustion move upwards as we shed over 300 pips just 3 trading days ago. So, we COULD explain the move upwards as the market done absorbing the previous week's news.

Tonight (tomorrow morning) we get some key data concerning the GBP...hopefully something that will provide some real momentum somewhere.

So from a fundamental perspective, could this recent (within the last 4 hours or so) tiny little spike be preemptive buying in the GBP? It really is a tiny spike, but the upward movement has legs in multiple currencies, so there could be something to it.

I suppose we could view this as just technical momentum having broken through some key resistance points, but I'm curious to see if this spike has any predictive properties to it.

At the time of this writing, the price is at 1.9728...when I wake up tomorrow, I'll double check to see the results of the news releases in relation to the new current price. Going under the assumption that this could be preemptive buying, I would expect that the price would end higher than 1.9728 by the time the news releases are public. It is my expectation, as well, that the news releases will have a positive bias, and perhaps that's what could be raising the expectations in the market.

Obviously, I'm not REALLY trying to predict what's happening here...but I just want to see if I'm right when I wake up...If I AM right, it would give me something to ponder.
  • #2
  • Jun 11, 2007 10:34pm Jun 11, 2007 10:34pm
Insider "scoop" on the big trading desks is often wrong.

Perhaps because of the unregulated atmosphere, rumors seem to be given more credence in forex than in other markets, but are wrong just as much as they are right.

Last night just before the PPI numbers were released, price ran up 20 pips in a very short time, considering how flat prices had been all night in anticipation.

Then the numbers came out and the market went nowhere for hours as the information released did not warrant a big move.

It was obvious that someone with a fat wallet either had the numbers and miscalculated the market's reaction to them or thought they had the numbers but were wrong.

I have found my trading improved greatly after I cut off the supply of supposedly inside information I was taking in. Rumors mislead me more times than not. I just look at the charts and trade my setups and am much more successful and less hampered by doubts brought on by such "rumors of war".

word
  • #3
  • Jun 12, 2007 4:30am Jun 12, 2007 4:30am
B,

I don't doubt what you're saying.

I didn't trade my prediction...and actually, I didn't even see any "whisper" numbers to back my claim. I merely put this post out there to see whether or not I, personally, could tell whether or not the market was at least somewhat expecting an upwards bias.

At some level, there was an upwards bias, and actually, the news did come out with some positive bias tells me that this may be more of the case of buy the rumor, sell the fact...which could be what happened. Like you said, the news didn't warrant the CONTINUED positive movement. With that said, there was some continued movement upwards after I mentioned the first noticeable spike (which I actually noticed much earlier than I posted) to the time I actually woke up (which at that point was only at 1.9735). Of course, as I write this, the price has fallen from those levels...so what do I know? :-)

Still, the news DID come out in my expected direction, and it was at least somewhat tradeable from the time I realized that there may be movement in anticipation...

Trust me, I have no intention of actually trading these "signals"...I just thought it was a particularly noticeable call.
Quoting bassmouth
Insider "scoop" on the big trading desks is often wrong.

Perhaps because of the unregulated atmosphere, rumors seem to be given more credence in forex than in other markets, but are wrong just as much as they are right.

Last night just before the PPI numbers were released, price ran up 20 pips in a very short time, considering how flat prices had been all night in anticipation.

Then the numbers came out and the market went nowhere for hours as the information released did not warrant a big move.

It was obvious that someone with a fat wallet either had the numbers and miscalculated the market's reaction to them or thought they had the numbers but were wrong.

I have found my trading improved greatly after I cut off the supply of supposedly inside information I was taking in. Rumors mislead me more times than not. I just look at the charts and trade my setups and am much more successful and less hampered by doubts brought on by such "rumors of war".

word
  • #4
  • Edited 6:44am Jun 13, 2007 5:58am | Edited 6:44am
What I find interesting is not so much the difference between the expected news result and the actual result, but what exactly constitutes a buy or sell order based on the "difference" between the expected number and the actual ?
How does this trader calculate in advance, the position to trade based on this expected / actual difference ? Ok so we have technical analysis to use, around major trends and so forth, yet this is simplistic in my view.

I understand that most of the larger traders, banks etc, make a great deal of their profits from such announcements, so, how do these traders set up, without inside information ? Obviously they must be able to see the other side of the trade quite clearly in order to take advantage of the market at announcement time and also be able to interpret and action the trade in less than a few seconds.... I guess the word arbitage come to mind so therfore that makes it acceptable in this virtually unregulated market ? yes, another word comes to mind , envy...


Any thoughts, comments welcome
mattfx
Without women, money would have no meaning - Aristotle Onassis
  • #5
  • Jun 13, 2007 7:30am Jun 13, 2007 7:30am
Matt,

News releases are more about expectation than the are about the numbers. don't get me wrong, surprises DO happen...but deciphering those surprises in the seconds after the release is nearly impossible...AND...often, you get a suck-out while everyone tries to figure out what the market is doing. The only way to trade this is decide quickly, go with the flow and leave quickly. Unless the numbers "goose" the market in a continued direction (which doesn't happen all the time), you really have to be on your toes. It's almost pointless you realize, because forever release that causes a continued and deliberate market action (a trend - either a reversal or continuation), there are 10 news releases that will spike and reverse and/or do nothing, so you're relegated more to observing the news release from afar, and then trying to find out if the news release has enough momentum to carry a trend.

Secondly, what makes you think that large traders and banks make MOST of their money in this market off the news releases?

Quoting mattfx
What I find interesting is not so much the difference between the expected news result and the actual result, but what exactly constitutes a buy or sell order based on the "difference" between the expected number and the actual ?
How does this trader calculate in advance, the position to trade based on this expected / actual difference ? Ok so we have technical analysis to use, around major trends and so forth, yet this is simplistic in my view.

I understand that most of the larger traders, banks etc, make a great deal of their profits from such announcements, so, how do these traders set up, without inside information ? Obviously they must be able to see the other side of the trade quite clearly in order to take advantage of the market at announcement time and also be able to interpret and action the trade in less than a few seconds.... I guess the word arbitage come to mind so therfore that makes it acceptable in this virtually unregulated market ? yes, another word comes to mind , envy...


Any thoughts, comments welcome
mattfx
  • #6
  • Jun 14, 2007 4:37am Jun 14, 2007 4:37am
Quoting mrmikal
Matt,

News releases are more about expectation than the are about the numbers. don't get me wrong, surprises DO happen...but deciphering those surprises in the seconds after the release is nearly impossible...AND...often, you get a suck-out while everyone tries to figure out what the market is doing. The only way to trade this is decide quickly, go with the flow and leave quickly. Unless the numbers "goose" the market in a continued direction (which doesn't happen all the time), you really have to be on your toes. It's almost pointless you realize, because forever release that causes a continued and deliberate market action (a trend - either a reversal or continuation), there are 10 news releases that will spike and reverse and/or do nothing, so you're relegated more to observing the news release from afar, and then trying to find out if the news release has enough momentum to carry a trend.

Secondly, what makes you think that large traders and banks make MOST of their money in this market off the news releases?
Some good points here. Absolutely true.

I concern myself less and less with how actual traders decipher the news. Not only do i not have the time but look at some recent evidence - (e.g yesterdays non reaction to the impressive US Core retails sales (USD Bulls) & todays dismissal of positive GBP retail sales (GBP bulls).

It all points to one thing:
Follow the immmediate reaction to the piece of news (whether it makes sense or not), get on board hoping a trend will form, and get the hell out when momentum stalls.

Thats just my opinion.
  • #7
  • Last Post: Edited 5:18am Jun 21, 2007 5:15am | Edited 5:18am
Hello,
I have just read your post gbegly and even though it is your opinion, I see some wisdom within. When I think about it, which is someting I try and avoid as best I can, I have decided that you have made a great deal of "sense"

The long term "expectations" appear to out weigh the short term conditions, as you have described favourable results for the usd "bulls" for example, can actually be positive for the opposing currency when the trend has already formed, or is about to form, the underlying expectation is greater than the actual results, the trend continues, surprise only seem to provide a short term entry to the long term expectations.

mattfx
Without women, money would have no meaning - Aristotle Onassis
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