Why would a market move the wrong way?

[Arbu]

USD GDP figure 20 minutes ago was weaker than expected. So you'd expect EUR/USD to go up. But it went down about 20 pips before going up very sharply 100 pips. Why the fall? Is it that some traders have long positions with very tight stops that all trigger each other so a tiny move in the wrong direction gets compounded?

 

[Vorbis]

Markets never move the wrong way. It isn't possible for them to do so.

I agree that the move down was very likely a stop hunt and shake-out performed by those expecting a move up.

 

[Pazienza]

Markets never move the wrong way. It isn't possible for them to do so.

I was thinking the same thing.

 

[scose-no-doubt]

Short capitulation creating buying pressure?

 

[bbmac]

As others above have pointed out 'the market is always right,' it is our reading/analysis of it that is sometimes wrong.

Could have been a short squeeze/stop run/fake-out before the real reaction of knee-jerk disspaointment at U.s Q2 Gdp number ?

Similar reaction on gbpusd a knee-jerk run up to the 61.8% of the 6438-6260 move so far.

G/L

 

[Arbu]

OK, sure I could have phrased my question better.

Anyway it's good to understand the reasons for a move like this - I may have more confidence to sit it through next time (unlike this time unfortunately).

 

[Hotch]

Arbu, I really think "sit in through it" is the wrong thing to take away. I think it would be better to wait to see if there's a stop hunt straight away, and if not maybe get in.

Sitting in it isn't enough of a plan, how far would you let the market go thinking it's a stop hunt? It could be some other news or something, just be careful

 

[Arbu]

Arbu, I really think "sit in through it" is the wrong thing to take away. I think it would be better to wait to see if there's a stop hunt straight away, and if not maybe get in.

Sitting in it isn't enough of a plan, how far would you let the market go thinking it's a stop hunt? It could be some other news or something, just be careful

Well I suppose with an awareness of the possibility of stop hunts I would be more willing to try to sit through a move on news which appears to be going the wrong way than I would otherwise. But clearly there has to be some limit to this.

To me, it seems logical, if you have a view about a figure, to try to take a position before it comes out. Otherwise you're likely to be too late to profit from your view. But maybe not. Maybe I shouldn't be trying to form my own views and should wait a short while after the figure is out until there is some sign that the market is indeed taking it the way I would expect it to.

 

[rawrschach]

how is taking a view before the figure not gambling?

 

[Arbu]

You can build up an understanding of how economies work and trade based on that, or you can build up an understanding based on how markets work and trade based on that. Both involve risk and could be called gambling.

 

[rawrschach]

Just cuz they involve risk doesnt make them gambling. Gambling is how you do something.

Getting into a position pre news because you have an opinion that a figure will be higher/lower is gambling. imo