Why is the market behaving like this? | Forex Factory

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Why is the market behaving like this?

  • #1
  • First Post: Nov 12, 2008 10:55am Nov 12, 2008 10:55am
Hi,

Can someone explain why the market is moving like this in the past two days? How can one prevent being caught in these hectic movements?
I would really appreciate your answer.
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If you're not part of the solution then you're part of the problem.
  • #2
  • Nov 12, 2008 11:03am Nov 12, 2008 11:03am
The way to prevent being caught in this is to not trade.

You may think I am kidding, but I am not. If you do not have genuine certainty about what price action is doing then it is best not to trade.

You may also consider using MTFs (multiple time frame) style trading instead of trading from one time frame alone.

for starters check out Predictive Stochastics by Spudfyre. you can find it by doing a Forex Factory search.
  • #3
  • Nov 12, 2008 11:16am Nov 12, 2008 11:16am
You can avoid the trade, for sure, or you can fade the extremes in the direction of the overall trend. A lot will depend on your time frame, since there's a clearly defined S&R to trade off, you could always just trade a lower TF.

What you're seeing is very common, it's when the market has no long term conviction in either direction... so it just bounces along.

Because of this "mood" it's likely to continue being this way until a new conviction develops. When that happens, a previously set S&R will be broken pretty strongly (look at the way yesterday's low was broken on the cable).

There is growing downward pressure on the euro, at least recently there's been, notice how the time spent at the diag trendline down (that you've drawn) has been decreasing on every touch. This means there's a growing downward conviction, but not enough yet to force it past support at 1.25.

So that's the "why."
  • #4
  • Nov 12, 2008 11:24am Nov 12, 2008 11:24am
You can understand it by looking at longer timeframe charts such as daily or weekly. The eurusd is right at the key support level on the weekly chart and it hasn't decided yet to break it or just go sideway from there. That's why you can see quite a lot of decisiveness in the lower timeframe. I think it's just the matter of time before this pair heads south strongly again. It's there now to wait for some kind of fundamental stimulus. This is a bit different from gbpusd, which is confirmed to be heading south strongly from now on.
  • #5
  • Nov 12, 2008 11:27am Nov 12, 2008 11:27am
If you have a conviction why the market should move one way or the other. Place your trade.. but set your stops.. you'll be fine

just dont trade for the sake of trading.
  • #6
  • Nov 12, 2008 11:30am Nov 12, 2008 11:30am
Thank you for all your thoughts.
If you're not part of the solution then you're part of the problem.
  • #7
  • Nov 13, 2008 3:18pm Nov 13, 2008 3:18pm
volatility due to lack of volume is the main reason. everyone is scared out of their mind right now. therefore, like mentioned above, not many people are trading. the less volume in the market, the more volatile it becomes because it's harder to fill positions, or the people with the most money are making the market swing in their direction for hundreds of pips. it sucks, i was looking at Citi FX and DBFX yesterday, and they werent even offering some pairs for trading cuz NO ONE was in the market. granted, they were the more exotic pairs, but thats pretty scary stuff. because of stuff like that, it makes it harder for people who have positions in the market to get out. say someone had bought EURDKK before they stopped trading the pair. now he's stuck in the market. so they start losing and decide that they will take any price to get out of the market. so someone decides to gamble and decides to buy that guys position at fifty pips below the current close, and, because there is no one else in the market, the guy sells it to him. and thats where these humonguous jumps come from. as i was typing this, USDCHF just dropped close to 70 pips in three minutes. wow. anyways, the best thing to do right now is to either stop trading in general, or only trade more stable, less volitile pairs like the EURGBP, or EURUSD, etc.
  • #8
  • Nov 18, 2008 7:36pm Nov 18, 2008 7:36pm
yeahp! that's true...there's no confidence at all for traders to place orders! even more on the long term...but i must say that anyways it is not that bad moment for scalpers to make some pips!
  • #9
  • Nov 18, 2008 8:02pm Nov 18, 2008 8:02pm
Quoting majorusa
Hi,

Can someone explain why the market is moving like this in the past two days? How can one prevent being caught in these hectic movements?
I would really appreciate your answer.
Is this a trick question?...... Am I on camera?.....
Same Whore .... Different Dress
  • #10
  • Nov 18, 2008 8:07pm Nov 18, 2008 8:07pm
Quoting johnedoe
Is this a trick question?...... Am I on camera?.....
lol, you and everyone else on the forum...........

...thats alot of cameras

Leon
Living the adventure in my head.
  • #11
  • Nov 18, 2008 8:17pm Nov 18, 2008 8:17pm
its amazing, i remember traders complaining about lack of volatility a while back and now traders are complaining about too much of it. I absolutely love the volatility and I havent seen anything like this in all my days. The only thing I will say is you have to do more homework in times like this and you have to risk less capital. Also, no one should be complaining about spreads as I would happily pay a 3 to 5 pip spread in any pair to capture a big figure or two big figure move which these days can happen in less than 30 mins. Trade well and All the best.
  • #12
  • Nov 18, 2008 8:18pm Nov 18, 2008 8:18pm
You know..... everybody is looking at all this with their gloomy shades on, I am sooooo tired of the whining and sniveling about how we are all doomed and the markets are against us..... yes it is true there is a real problem and the root of the problem is human nature, greed, ego, and arrogance.
But the proper way of looking at this is to see it as a redistribution of wealth.
The markets will have there ups and downs..... always have, always will ... it's that human nature thing again.
Anyway get your heads out of your asses and get ready to have some of that redistribution find it's way into your accounts.
OK?.....ok.
Same Whore .... Different Dress
  • #13
  • Nov 18, 2008 8:41pm Nov 18, 2008 8:41pm
Quoting fxtrader42
Also, no one should be complaining about spreads as I would happily pay a 3 to 5 pip spread in any pair to capture a big figure or two big figure move which these days can happen in less than 30 mins. Trade well and All the best.
yeah, 3 to 5 pips is ok, but i saw some pairs staying at 16 to 20 pips CONSISTENTLY the past week or two. that sucks quite a bit. i placed a EURCAD buy the other day and paid 15 pips in spread. ouch. luckily it was a long term trade so fifteen pips wasn't important. i also saw EURUSD hovering around six or seven pips. so much for two pip spreads for scalping.
  • #14
  • Nov 18, 2008 9:08pm Nov 18, 2008 9:08pm
Quoting blacksun1
yeah, 3 to 5 pips is ok, but i saw some pairs staying at 16 to 20 pips CONSISTENTLY the past week or two. that sucks quite a bit. i placed a EURCAD buy the other day and paid 15 pips in spread. ouch. luckily it was a long term trade so fifteen pips wasn't important. i also saw EURUSD hovering around six or seven pips. so much for two pip spreads for scalping.
I hate EURCAD for the very reason that spreads are so unpredictable with that pair. However, i still find my self trading it because of the volatility but rarely. I have seen EURUSD get up to around there but not for long. Where are you trading by the way? All the best
  • #15
  • Nov 18, 2008 11:31pm Nov 18, 2008 11:31pm
dbFX. i know some people who work there and my company uses them for managed accounts. i just like em i guess.
  • #16
  • Nov 19, 2008 1:42am Nov 19, 2008 1:42am
Hi All,

Do yyou all also realise that most of the pairs is going sideways, instead of one direction. Does anybody has an explanation ?

Quoting majorusa

Can someone explain why the market is moving like this in the past two days? How can one prevent being caught in these hectic movements?
I would really appreciate your answer.
  • #17
  • Nov 19, 2008 3:14am Nov 19, 2008 3:14am
plot some trend lines, chart looks good for range trading.
I'm just moving clouds today - tomorrow I'll try mountains.
  • #18
  • Nov 19, 2008 4:00am Nov 19, 2008 4:00am
Have you guys be paying attention to the USD/CHF pair? This pair has been Trending up for Days.
  • #19
  • Nov 19, 2008 3:56pm Nov 19, 2008 3:56pm
We are in an atypical time and the financial crisis continues to damage the world's major economies. German economy confirmed a technical recession through the third quarter. The Euro-zone 3Q GDP figures revealed that the region’s economy had entered a recession. The decline met economist predictions despite France surprising with growth of 0.1% as Germany’s 0.5% drop dragged down the overall region. Australia faces the risk of recession at the beginning of next year as the Westpac leading index plunged to the lowest in 23 years. Japan's economy, the second largest in the world, fell into recession for the first time since 2001 as GDP fell an annualized 0.4 percent in Q3 and, nevertheless, the Japanese yen still has bullish potential as volatility remains high, leaving risk aversion in play. The Euro and US Dollar find themselves inextricably linked to broader developments in risky asset classes. I think traders are so focus in bullish or bearish pattern that they forget about the rest of the world. But it will be really crucial for traders to identify how the preceding economic indicators from the U.S., European and Japanese economies will affect their positions against all the currencies. That’s why is this time of recession we have to make an analysis about the behavior of the markets in these extremes conditions.

http://www.forexfactory.com/showthre...=1#post2361928
  • #20
  • Nov 19, 2008 7:33pm Nov 19, 2008 7:33pm
Quoting johnedoe
You know..... everybody is looking at all this with their gloomy shades on, I am sooooo tired of the whining and sniveling about how we are all doomed and the markets are against us..... yes it is true there is a real problem and the root of the problem is human nature, greed, ego, and arrogance.
But the proper way of looking at this is to see it as a redistribution of wealth.
The markets will have there ups and downs..... always have, always will ... it's that human nature thing again.
Anyway get your heads out of your asses and get ready to...
A very great way to look at the market! Bravo! Well said sir.
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