markets fall faster than they rise | Forex Factory

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markets fall faster than they rise

  • #1
  • First Post: Apr 15, 2007 7:39pm Apr 15, 2007 7:39pm
I notice that Forex and any other market (i.e stocks) fall faster than they rise. It seems that it doesn't take a lot to make a market fall but would take substantial reports or action of traders to make it go up.

So basically downtrend is quick and fast, while uptrend is slow with corrections along the way.

This could be a way of using a short term swing on downtrends where i can follow the price closely and still make money. But use some kind of 'position' type trading on uptrends to allow corrections to take place
what you guys think??
  • #2
  • Apr 15, 2007 7:51pm Apr 15, 2007 7:51pm
Wouldn't that depend on the pair and which currency you are expecting to do well or not? And the orientation of the currency (Eg. GBPUSD or USDCHF)

In each of these cases, if you are expecting the USD to do badly, then you expect GBPUSD to go up and the USDCHF to go down.
  • #3
  • Apr 15, 2007 8:19pm Apr 15, 2007 8:19pm
Quoting hilmy83
I notice that Forex and any other market (i.e stocks) fall faster than they rise. It seems that it doesn't take a lot to make a market fall but would take substantial reports or action of traders to make it go up.

So basically downtrend is quick and fast, while uptrend is slow with corrections along the way.

This could be a way of using a short term swing on downtrends where i can follow the price closely and still make money. But use some kind of 'position' type trading on uptrends to allow corrections to take place
what you guys think??
Inflation requires Energy while Deflation only requires the release of Energy.
NOTE: The Inflation can be to the Downside and the Deflation a rapid release back North.
  • #4
  • Edited 8:41pm Apr 15, 2007 8:29pm | Edited 8:41pm
According to Tom DeMark in his book 'The New Science of Technical Analysis':

"My (Tom DeMark) research indicates that markets generally move in trading ranges and trend much less frequently. Historical observations suggest that, approximately 75 to 80 percent of the time, price (of particular security) tends to move in a trading range. On the other hand, 20 to 25 percent of the time, price trends are either up or down. Furhtermore, additional research shows that price accelerates in a downtrend generally about two to two and half times faster than price in an uptrend. This phenomenon can be easily accounted for by the fact that investors typically accumulate a position over a period of time, their recognition of a price decline is immediate and their tendency is to liquidate the entire position at once."
  • #5
  • Apr 15, 2007 10:37pm Apr 15, 2007 10:37pm
Quoting deepleo
According to Tom DeMark in his book 'The New Science of Technical Analysis':

"My (Tom DeMark) research indicates that markets generally move in trading ranges and trend much less frequently. Historical observations suggest that, approximately 75 to 80 percent of the time, price (of particular security) tends to move in a trading range. On the other hand, 20 to 25 percent of the time, price trends are either up or down. Furhtermore, additional research shows that price accelerates in a downtrend generally about two to two and half times faster than price in an uptrend. This phenomenon can be easily accounted for by the fact that investors typically accumulate a position over a period of time, their recognition of a price decline is immediate and their tendency is to liquidate the entire position at once."
so my obervation is right? that market falls faster than they rise?
i just wondering if it applies to forex, cause i'm sure he's just referring to stocks
  • #6
  • Apr 15, 2007 10:39pm Apr 15, 2007 10:39pm
Forex is not like a stock.

When EURUSD is on the rise, USDEUR is falling. How could you define your 'rise' and 'fall'? Hence where is your 'faster' phenomenon?
凹凸 only
  • #7
  • Apr 15, 2007 10:47pm Apr 15, 2007 10:47pm
Quoting Samuri
Forex is not like a stock.

When EURUSD is on the rise, USDEUR is falling. How could you define your 'rise' and 'fall'? Hence where is your 'faster' phenomenon?
true. But I guess i'm thinking of the interest rate effect. I'm assuming big institution don't like carrying long positions against the carry trade cause that would reduce their profits from interest charged. So when for example if they assume that usdchf going down, they would want to make sure it's quick trade (hence the quick and fast fall). But if they assume it's going up, they get interest added to their profits, so the rise is slower because they can be more relaxed about keeping positions in the uptrend. Is that a viable theory??
  • #8
  • Apr 15, 2007 10:54pm Apr 15, 2007 10:54pm
Quoting hilmy83
true. But I guess i'm thinking of the interest rate effect. I'm assuming big institution don't like carrying long positions against the carry trade cause that would reduce their profits from interest charged. So when for example if they assume that usdchf going down, they would want to make sure it's quick trade (hence the quick and fast fall). But if they assume it's going up, they get interest added to their profits, so the rise is slower because they can be more relaxed about keeping positions in the uptrend. Is that a viable theory??
When we come to the carry trade, I agree with you definitely. GBPJPY is another good example.
凹凸 only
  • #9
  • Apr 15, 2007 10:57pm Apr 15, 2007 10:57pm
Quoting Samuri
When we come to the carry trade, I agree with you definitely. GBPJPY is another good example.
i guess the trick is to figure out when the carry trade plays out. Does anybody know how to determine that amidst all the econ reports that come out?
  • #10
  • Apr 15, 2007 11:08pm Apr 15, 2007 11:08pm
  •  CWH
  • | Joined Feb 2007 | Status: United We Buy, Divided We Sell | 249 Posts
From my own observation, the market has been mostly affected by the Yen-carry trades. No matter how weighty some economic news have on certain currencies, for example GBP/USD, it will rise again after a fall.

If you have noticed that the market falls faster than it rises, maybe you can place a position on both sides, long & short, so that you can rake in all the profits in either way.
"If, at first, you don't succeed, try, try, try again" - Winston Churchill
  • #11
  • Apr 16, 2007 2:38am Apr 16, 2007 2:38am
For people who follows certain religious restrictions (avoiding interest), carry trading doesn't exist in their book. :
  • #12
  • Apr 16, 2007 3:20am Apr 16, 2007 3:20am
if there is trend, then there is fall, people react faster when they smell loss, so the fall is affected by recent / in going trends. since people already put the position, usually less people put 2nd position to their position ( /averaging up- as TwoBlink said).
  • #13
  • Apr 17, 2007 4:56am Apr 17, 2007 4:56am
I think the idea "market rises slower than it falls" only applies in market where the participants are biased to one side ... e.g stock market.
Most stock market player do not take short position.
  • #14
  • Apr 20, 2007 4:45am Apr 20, 2007 4:45am
Quoting hilmy83
I notice that Forex and any other market (i.e stocks) fall faster than they rise. It seems that it doesn't take a lot to make a market fall but would take substantial reports or action of traders to make it go up.

So basically downtrend is quick and fast, while uptrend is slow with corrections along the way.

This could be a way of using a short term swing on downtrends where i can follow the price closely and still make money. But use some kind of 'position' type trading on uptrends to allow corrections to take place
what you guys think??
Stocks fall faster than they rise, this is true...There is a famous saying about this, it takes buying to lift stocks up and they fall off their own weight...

In currencies, this is not true, since the fall of one currency is actually the advance of the other....If you switch the pairs you will see an inverted chart and instead of seeing an uptrend, you shall be seeing a downtrend..So I believe this is not true at all in forex...


Thanks,

Nader
  • #15
  • Last Post: Edited 6:38am Apr 20, 2007 6:09am | Edited 6:38am
Quoting hilmy83
I notice that Forex and any other market (i.e stocks) fall faster than they rise. It seems that it doesn't take a lot to make a market fall but would take substantial reports or action of traders to make it go up.

So basically downtrend is quick and fast, while uptrend is slow with corrections along the way.

This could be a way of using a short term swing on downtrends where i can follow the price closely and still make money. But use some kind of 'position' type trading on uptrends to allow corrections to take place
what you guys think??
It is mainly due to gravitational pull, specially with GBP/JPY
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