EURUSD 6E Euro | Currency Futures


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EURUSD 6E Euro

  #1950 (permalink)

Miami FL USA
 
Trading Experience: Advanced
Platform: Ensign 10, NT7 DOM
Broker/Data: IB, IQ
Favorite Futures: Currency Futures
 
Cashish's Avatar
 
Posts: 803 since May 2011
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lllusion View Post
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I'm somewhat new to trading futures currencies but I've been managing myself decently scalping on the 3 min chart while keeping an eye on the DX. I'm wondering, what's the best way to investigate what caused this big spike in demand? I checked forexfactory but there weren't any news events around this time.

What are some things that would typically cause this to happen?


"What are some things that would typically cause this to happen?" Fear and Greed

This topic of "cause" could generate a lot of interest, you could probably make a list in alphabetical order a couple times over. FWIW, I'll throw my two cents in and remind (myself) anything can happen,,, at any time.

Basically, price rises when demand is more desperate than supply. And it rises to a point at which there are no more buyers willing to buy at a higher price.

And price falls when supply is more desperate than demand. And it falls to a point at which there are no more sellers willing to sell at a lower price.

Itís not because there are more buyers than sellers. Itís because one side is more desperate than the other.

You picked a nice chart to post, that spike in volume was exceptional. Your chart is a good example for anyone new to currency trading as well as more experienced traders why (I believe) it's important to manage risk with working stops when I have an open position in the market. In this example a 4 or 5 tick mental stop could have turned into a 10 or 15 point loss in a few seconds. Today's markets move fast, and often in one direction. These moves can move faster than you can see the price change on a chart, and as your chart shows, with huge amounts of volume. Often when that heavy volume pushes price into new levels, it (price) never comes back.

I marked up a 5 second chart to offer an idea of what happened within the three minute bars on your chart.

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This chart shows all the three minute bars for the day, obviously that three minute bar was the highest volume bar of the day. The yellow line in the sub window shows the average volume of a three minute bar, the bar you questioned was more than ten times the average, along with the previous chart it's clear more than half of that volume traded in a ten second period in a 13 tick range. Control your risk, use stops.

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