Any other factors that move a currency other than news?
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Any other factors that move a currency other than news?


Created January 14th 2014 by masonlee
Updated May 8th 2015 by rleplae
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Any other factors that move a currency other than news?

  #1 (permalink)
Kuala Lumpur, Malaysia
Posts: 2 since Oct 2013
Thanks: 7 given, 0 received

Any other factors that move a currency other than news?

Hi all,

I found that some time when there is no economic data are released for a currency pair, the price of that pair still move quite a lot and quite volatile.

Some time, even when there is some economic data are released, the price of the currency pair move in opposite direction or just did not move, it seem like there is some other factors that are affecting the movement of a currency.

Anybody here can list down any possible factors that may affecting the price of a currency?

Thank you for your comments!

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  #2 (permalink)
Trading Experience: None
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Everything and Nothing

I subscribed to this thread in hopes someone would answer it considering I thought it was an excellent question, but I guess people have better things to do like drink margaritas on the beach with their trading earnings lol. I'll help you out with what I know because I believe it is a great question, and I like to help other new traders. This is something I would have asked in the beginning because it's something I'm curious in myself and it really deserves a detailed explanation. Anyways, If you can't trust the news then what other factors can you trust? Not many.... but the thing is it doesn't matter.

I've come to the conclusion that currencies are all hinged off one another and when a few are consolidated one has to be at the tipping point of volatile for no great reason other than importing and exporting between countries doesn't stop. Since currencies aren't like stocks, but pairs, their short or long bias are all relative. Down is up to one country so volatility ensues rapidly without haste.

There are virtually infinite factors that shape currencies but I believe the main driver is technical patterns of stop loss clusters being hit. I've seen a lot of crazy things with currencies like EUR/USD rallying on declining US unemployment figures and nfp which is something it should do the exact opposite. After that I never trusted the news even the most important releases like nfp. All news equals to me is random volatility.

I basically trade currencies on technical patterns like breakouts, continuations, and reversals and let the volatility work in my favor by letting price move as far as possible in my direction before exiting.

R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.

Last edited by Itchymoku; January 15th, 2014 at 10:43 PM.
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  #3 (permalink)
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If you want to avoid my crazy style of almost incoherent writing and rambling this should be very helpful lol -

I've watched all the videos from this guy and they've helped me out a lot.

R.I.P. Joseph Bach (Itchymoku), 1987-2018.
Please visit this thread for more information.
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  #4 (permalink)
Helsinki, Finland
Posts: 23 since Dec 2013
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Order flow maybe the answer?

The question here is closely related to the one of the major exchange rate puzzles that scientific world is also struggling with. That is, why volatility in FX market is much bigger than the changes in fundamental data expects.

Microstucture theory has some interesting viewpoints in this matter, and it suggest that not only public information (like news etc.) causes the volatility but also private information, which is dispersed across the FX markets by dealers quotes , affects FX markets volatility. Dealer get this private information from the order flow that he receives. Of course this is much deeper thing and should be read carefully if you find it interesting.

The order flow itself contains important information about investors expectations about the future. This private information may also contain rumors about central banks interventions, which has found to be one of the things that affects volatility. Also traders like to ride with the trend and this may cause speculators to join in the markets even thought there is no actual reason for exchange rate moves and therefore strengthen the volatility. The final reason that i have found about what causes exchange rate volatility is speculative "betting" about future news announcements.

My opinion is that volatility in FX market is summary of many factors and the underlying driving force, when there is no news announcemets is really hard determine. I agree with Itchymuko that almost every currency pair in FX market is somehow linked to another and by that the volatility disperses across the market.

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  #5 (permalink)
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Fundamentals, news and STOPS

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  #7 (permalink)
Posts: 135 since Dec 2013

If there is no news... The market just flows naturally on human emotion.

If there is good news and the market is at resistance, it shoots upward a bit then breaks down hard. If the market is at support and there is good news, it rallies for a long time.

If the market is at support and there is bad news it shoots downward a bit, then rallies up hard. If the market is at resistance and there is bad news it falls for a long time.

Well, that's basically it. It's more complicated through because you have to factor in longer term momentum and stuff. Also, news being "good" or "bad" doesn't mean good or bad in a "logical" sense. It means, was the news better or worse than most traders and investors with big money were expecting?

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  #8 (permalink)
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Intraday, it's a game. There's a Barclay's trader in this video that baits a Japanese trader.

Billion Dollar Day - a 1986 documentary about currency (forex) speculative trading - YouTube

Also, note the touch screens - 1986!!

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  #9 (permalink)
Kuala Lumpur, Malaysia
Posts: 2 since Oct 2013
Thanks: 7 given, 0 received

Thanks for the information everybody, it help me a lot.

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  #10 (permalink)
Posts: 5 since Jul 2013
Thanks: 1 given, 4 received

Imbalance of Supply & Demand

I believe the reality is totally different than what we see or hear. Markets are not moved on news ..... strange? .... isn't it? ...... but that is truth that markets are not moved on news; actually markets moves on imbalance of Supply & Demand.

Why does this imbalance takes place? ..... so Smart Money or Big boys (Central Banks, Investment Banks & Hedge Funds) can make lot of profit. Yes they create this imbalance, by increasing the supply of financial instrument being traded they lower the demand so they can Accumulate (buy) the financial instrument in great number & on lower prices. This heaving buying creates demand which increase the price of financial instrument, then they Distribute (Sell) it on higher prices, by doing the they turn their millions in to billions.

Smart Money actually use the news to wrong foot the herd (90% of trader which loose the money). On negative news when panic takes place every body sell that instrument due to which supply increases & price goes down. Smart Money takes this opportunity and buy on lower prices which removes the supply & creates demand. Vice Versa practice comes in force, on positive news when herd buys the instrument Smart Money off load their holdings (Distribution).

So actually markets are moved on imbalance of Supply & Demand (artificially created by Smart Money or Big Boys). The volatility on news is to wrong foot the herd. The international media is bribed by Smart Money to release the good & bad news. ..... seems impossible ???? (Its true, if you don't believe me, they search the news on google about gold in August-October 2011 .... all the media was screaming that Gold is going to moon / Gold is going to go 5,000 USD per Oz ...... same time this Smart Money started Distribution (selling the Gold on higher prices to herd), it took about one & half year to off load their holdings ..... and .... then ...... see what happened with gold in march last year, the SAFE HEAVEN proved itself unsafe.

This is called Market Manipulation which retail traders can understand by interpreting the Volume information and can make profit.

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