I'm quiting trading but can someone elighten me on this? | Forex Factory

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I'm quiting trading but can someone elighten me on this?

  • #1
  • First Post: Jan 8, 2016 9:44am Jan 8, 2016 9:44am
What the F!@K happened this morning? Im trading the GBP/NZD and there is no major news that should affect this pair but guess what, it did and even the non farm payroll for USD also somehow managed to cause some volatility on this pair. my broker even widened the spread to over 200 pips for 10 mins.

I have attached a screenshot of GBP/NZD on 1H timeframe....as far as im concened, this pair was ranging and breakout was going to happen at some point but this huge boost for GBP or weakness for NZD despite no economic news is suspicious. i had checked other brokers bid/ask prices and it doesnt seem like its my broker messing with me.

I'm a bad trader and all but i honestly fail to see why the pair would go from bearish until 7am GMT and then just rose nonestop.

any ideas??

thanks
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  • #2
  • Jan 8, 2016 9:46am Jan 8, 2016 9:46am
Demand > Supply so price started moving up.

Emotional traders were shorting but bids probably from institutions and algos kept coming in.

Shorts eventually covered at higher prices leading to even more buying.

Pretty much the standard explanation for any move.
Build good relationships with others.
  • #3
  • Jan 8, 2016 10:06am Jan 8, 2016 10:06am
Last two nights watched gy spike up and down around 815 est for no reason. Made a bundle on first ride and got taken out on second. Looks like going to be volatile year possibly. If you are over leveraged you can make a bundle or get wiped out.
  • #4
  • Jan 8, 2016 10:23am Jan 8, 2016 10:23am
Quoting Crimson
What the F!@K happened this morning? Im trading the GBP/NZD and there is no major news that should affect this pair but guess what, it did and even the non farm payroll for USD also somehow managed to cause some volatility on this pair. my broker even widened the spread to over 200 pips for 10 mins. I have attached a screenshot of GBP/NZD on 1H timeframe....as far as im concened, this pair was ranging and breakout was going to happen at some point but this huge boost for GBP or weakness for NZD despite no economic news is suspicious. i had checked...
Crimson, I'm sorry to hear you're quitting trading. I, too, used to try to justify every price move. In fact, a lot of big moves happen on no news, but instead on perception. As traders we react or try to predict these things, but every move is what it is, then it simply was. You can't take the market personally or think "this move is bullshit!" - that is sadly a losers attitude.

As far as the current state of the currency markets:

NZD and AUD are trading differently then they have in previous years - traders are running away. I got tuned up on the Aussie this week myself. I am a long time trader of it, and I have difficulty telling where it may go from here. Perhaps to 2008 lows? I will likely stay away.

Despite what seems like good economic news in the US, there is some other trend going on. This is creating a market where people really like the euro (perhaps this is the currency the chinese are buying to devalue the yuan - as they already have so much exposure to US denominated assets). In my opinion people are looking at the currencies like this

EUR > JPY > USD > GBP > NZD > AUD

On this particular move:

The pair opened as normal, finding some support for the GBP at a time that mostly does not matter. Time passed and traders grew excited that China did not devalue the Yuan further causing the 8PM EST spike in the NZD. The market then tested the range of this spike, creating in itself what could be considered a larger move for this pair in the time frame. Traders thought to themselves... "does it make sense for China to devalue the yuan on a Friday?" - Indeed, it does not. However, that doesn't mean China won't devalue more next week. A report surfaces that China is under heavy pressure to devalue the Yuan by 10% - 15% in the next month. Which they will do, in my opinion, by buying more euros.

Price recovers to the daily open. Trapping now panicking NZD longs who have to sit through a volatile USD announcement that they likely did not plan to sit through, or at least they hoped they would be in heavy profit for it. When price makes a move in one direction and recovers with plenty of time to trade, you have to watch out. In this case it is even more so, as the GBP has been strengthening all week against the NZD and this is simply a trend continuation. USD report confirms market sentimenet. GBP has a nice rally.

Hope this sheds some light on what happened here.

-Spencer
  • #5
  • Jan 8, 2016 10:35am Jan 8, 2016 10:35am
I quit trading in May 2015. I started trading in May 2013 and I had a good run initially. However, with the craziness of the last 18 months, I became forced to observe my trades 24/7 even during the European Open (2am for me)

I still watch the markets often and it helps to convince myself not to ever restart it. I have observed this week's craziness and the debacle on Aug 24. I was also lucky to not have any open trades on Jan 15, 2015 when the SNB pulled the floor.

IMO, spend your money on something else. Just leave trading for a few weeks and observe all the bullets you dodge and you'd never come back. The markets are very different from the relative calm of 2013 when I started trading. USDJPY has made a multi-year top and with the Fed first rate hike already done as well as the failed triple break of 123.50, the risk is very much that the only way is down for this pair and yen strength is probably a theme for this year, and maybe next.

With all this in mind, I'd say you are right in quitting trading. Maybe someday in 3 or 4 years if the calm ever returns to the markets, we would come out of our holes and resume trading.
  • #6
  • Jan 8, 2016 11:21am Jan 8, 2016 11:21am
I say the market are always the same from hundreds of years, but we, we change continually.

From our perspective of course it's not us but the markets to change.

Tricky
  • #7
  • Jan 8, 2016 11:27am Jan 8, 2016 11:27am
Quoting Crimson
What the F!@K happened this morning? Im trading the GBP/NZD and there is no major news that should affect this pair but guess what, it did and even the non farm payroll for USD also somehow managed to cause some volatility on this pair. my broker even widened the spread to over 200 pips for 10 mins. I have attached a screenshot of GBP/NZD on 1H timeframe....as far as im concened, this pair was ranging and breakout was going to happen at some point but this huge boost for GBP or weakness for NZD despite no economic news is suspicious. i had checked...
"Everything touches everything". Even if you were trading the now diminishing Amazon Forest palm tree coconut yield futures, you should have been flat before the NFP came out.
Not being mean, just the truth.
  • #8
  • Jan 8, 2016 11:38am Jan 8, 2016 11:38am
Quoting Crimson
... this pair was ranging and breakout was going to happen at some point but this huge boost for GBP or weakness for NZD despite no economic ...
Hi Crimson.

Thats how market works. Stop hunting.
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  • #9
  • Edited 12:09pm Jan 8, 2016 11:40am | Edited 12:09pm
Some very plausible reasons in the replies already.

Another possible contributing reason is triangular equilibrium. NFP is going to affect all USD based pairs, including both GBPUSD and NZDUSD. Now since GBPNZD price must always equal GBPUSD / NZDUSD, then GBPNZD will be affected by any (imbalanced) movement in GBPUSD and NZDUSD.

Today's NFP was particularly tricky in that the employment component was significantly higher than expected (292k v 203k), but the hourly earnings -- which is also watched carefully by the FOMC, in terms of their consequent decision making -- was significantly lower (0.0% v 0.2%), i.e. a mixed result. (Mixed results occasionally have the effect where a deviation in the more 'obvious' component tends to cause a sudden spike, while the less obvious component gets 'priced in' a little more gradually).

The spot FX market is arguably the most complex market to trade. Firstly, unlike other markets, with FX we must trade pairs, which represent the intersection of two different economies. News events (both scheduled and unscheduled) that affect one currency potentially affect all pairs for that currency, and (due to triangular equilibrium) downstream pairs also. Secondly, high impact news events can disrupt any TA-based strategy. Pair-based TA tends to work for two main reasons: (1) the existence of trends, and (2) self-fulfilling prophecy, both of which can be easily overturned by high impact news (which is one reason why so many retail EAs fail: their inability to process news). Hence, if you're using a strategy that's purely TA-based, you should consider avoiding trading into tier-1 news announcements, i.e. close your positions beforehand. And thirdly, we have this intersecting blend of (1) macro-fundamentals, (2) sentiment based moves (currency strength/weakness analysis can help to follow this), and (3) at a pair level we have TA/orderflow/attempted manipulation occurring on (potentially) several timeframes simultaneously.

Just my 2c.
  • #10
  • Jan 8, 2016 11:49am Jan 8, 2016 11:49am
the solution stop trading with retail forex brokers who have the ability to control the envirorment switch to the futures market (the real market) and trade against the world
  • #11
  • Jan 8, 2016 12:02pm Jan 8, 2016 12:02pm
Crimson,

The monthly non-farm payroll report was released today. There's always volatility when that report comes out, even in currency pairs unrelated to the USD ( like GBP/NZD). It's usually best to avoid trading on NFP day.
  • #12
  • Jan 8, 2016 12:14pm Jan 8, 2016 12:14pm
You decided on direction as soon as you asked yourself "why would pair go bullish from bearish" - and simply put there is no sense into trying to answer that question with oh so many answers like: NFP, currency correlation, ANY news at all - since we trade charts - not news. What on earth gives traders the courage to look for news that drive the market(s)? How exactly you think you can assess the "reason" behind markets' direction caused by thousands (millions) of traders with their own psychology. What are the charts here for anyway?
I am sorry you are quitting trading, sorry to see another victim of "news driven" trading and the never ending circle of "what will happen if a butterfly farts in tajikistan" and similar biased crap which leads into emotional trading.
Below is just my opinion of the H1 chart - in short...

EDIT: Oh I just took a look at it - standard "wash 'n' rinse" it is...
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  • #13
  • Jan 8, 2016 12:32pm Jan 8, 2016 12:32pm
The purpose of any market move is to take the most money away from the geatest number of accounts.
  • #14
  • Jan 8, 2016 12:54pm Jan 8, 2016 12:54pm
The market for small retail traders is, on a short term basis, random. I wrote about this in a old thread dealing with negative expectancy. If your trading style has you concerned with the short term direction of the market, the odds are against you..... big time.

Kind Regards,
  • #15
  • Jan 8, 2016 12:56pm Jan 8, 2016 12:56pm
Quoting FX-Petra
The market for small retail traders is, on a short term basis, random. I wrote about this in a old thread dealing with negative expectancy. If your trading style has you concerned with the short term direction of the market, the odds are against you..... big time. Kind Regards,
To the core!
  • #16
  • Jan 8, 2016 12:56pm Jan 8, 2016 12:56pm
Quoting Crimson
What the F!@K happened this morning? Im trading the GBP/NZD and there is no major news that should affect this pair but guess what, it did and even the non farm payroll for USD also somehow managed to cause some volatility on this pair. my broker even widened the spread to over 200 pips for 10 mins. I have attached a screenshot of GBP/NZD on 1H timeframe....as far as im concened, this pair was ranging and breakout was going to happen at some point but this huge boost for GBP or weakness for NZD despite no economic news is suspicious. i had checked...
btw any one that attempts to trade is not bad even as a trader, thing is these days Markets seem to move at their own pace and speed and the word logical is not warranted - call them algos or what but thats what your really up against and how many times would you have made a trade if you had taken an opposite trade to the one your in - its a guessing game these days thats for sure - you just guessed wrong.
  • #17
  • Jan 8, 2016 12:59pm Jan 8, 2016 12:59pm
Quoting dean1star
{quote} btw any one that attempts to trade is not bad even as a trader, thing is these days Markets seem to move at their own pace and speed and the word logical is not warranted - call them algos or what but thats what your really up against and how many times would you have made a trade if you had taken an opposite trade to the one your in - its a guessing game these days thats for sure - you just guessed wrong.
Therefore do not trade ranges (flat).
  • #18
  • Jan 8, 2016 1:46pm Jan 8, 2016 1:46pm
Quoting DemoAntares
You decided on direction as soon as you asked yourself "why would pair go bullish from bearish" - and simply put there is no sense into trying to answer that question with oh so many answers like: NFP, currency correlation, ANY news at all - since we trade charts - not news. What on earth gives traders the courage to look for news that drive the market(s)? How exactly you think you can assess the "reason" behind markets' direction caused by thousands (millions) of traders with their own psychology. What are the charts here for anyway? I am sorry...
You beat me to it Demo
That strong reversal pattern was key. Crimson - add it to your arsenal of TA - good luck
every Saint has a past. Every Sinner has a Future
  • #19
  • Jan 8, 2016 2:00pm Jan 8, 2016 2:00pm
No ablemy photo for some reason, but I did check my spreads from the beginning of this week with today's spread and found that that most of the spreads did change. You might want to start taking screen shots of before and after....beginning of week and end. I sent an email to my broker about this and asked why they changed spreads without notifying clients.
  • #20
  • Jan 8, 2016 2:33pm Jan 8, 2016 2:33pm
Quoting FX-Petra
The market for small retail traders is, on a short term basis, random. I wrote about this in a old thread dealing with negative expectancy. If your trading style has you concerned with the short term direction of the market, the odds are against you..... big time. Kind Regards,

Short-term and long-term trading are exactly the same. Price action is basically the same on most time frames...
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