Just a quick one:
Why do you think EURUSD moved 30 pips today, 21st Jan. 2014 between 16:07 and 16:21 GMT (11:07-11:21 EST) from 1.3536 to 1.3569?
As you’ve very well articulated it in the Mastery Course there has to be a reason.
- In this case could it be a news item? But I haven’t found anything in the ForexFactory calendar or in the myfxbook calendar for this time and preceding and following 1 hour.
- Was there an unscheduled report or speech?
- Or moves of this magnitude could often happen regardless of any news or report; e.g. because a big player have bought a large amount?
Anyway, I’m in the middle of immersing myself in the information flow and trying to understand and/or feel what is important and what is not, what moves the market and what does not… not an easy task…
Umm, I don’t remember what exact words I used in the Mastery Course. Did I say there has to be a reason for every tiny market movement? Or every major market movement? You do have to have a reason for every trade you place, whether small or large. The reason could be a complex confluence of factors, or it could be a simple news release, or a simple fading stops, or you see the market “acting right”, or any other element.
I do think it is important to make an effort to try to figure out why a financial instrument does what it does. First and foremost the big movements of the day, say 100 pips or more. If there aren’t any such big moves, then you can try to analyze the smaller movements.
The less financial instruments you trade, the more you try to get into the nitty gritty details and smaller movements. The more financial instruments you trade, then you don’t care as much into the tiny movements of 10-30 pips or so because you are looking for larger swings.
With regards to the EUR/USD up move of +33 pips, I don’t see any immediate new explanation, etc. If I was forced to explain it using every trick in my mind and arsenal of strategies, then I would explain it by saying:
There was a big S&P drop starting at around 11:00 or so, which caused a burst of USD/JPY selling, so that could have caused some slight USD weakness across the board. But that doesn’t explain why EUR/USD and EUR/CAD went up across the board those 30 pips or so that you identified and are asking about. The explanation would be with EUR/GBP, which had some short covering around that time. EUR/GBP had tripped stops below the previous days low, so it was a bit oversold, as some market participants know not to short the bottom pip of the day, so there was some short covering in EUR/GBP of around 10-15 pips, which caused the EUR to be bid around 20-30 pips across multiple currency pairs. Once the EUR/GBP short covering subsided a bit, the EUR started chopping around. Whatever EUR weakness there was from the slightly weaker German ZEW, and any slight GBP strength from the potential M&A deal, which caused the EUR/GBP to be at the lows for that part of the day, well those forces were diminished for those 30 minutes and caused some short covering in EUR/GBP.
That would be my explanation.
I wouldn’t necessarily try to bang your head against the wall if you cannot explain every market movement. There is no way I, or anyone else can explain every 10 pip, 30 pip movement, or even 100 pip movement in every currency pair, every single day. It just doesn’t always happen that I know 100% what is going on. Now, I do think I have plenty of great strategies and techniques with the stops, barriers, macro model, news impact recording system, expectations/scenarios, etc that help me to identify much more what is going on that the average trader. Though, even with those, I don’t always know what causes every single tiny price movement.
One option you have to help you with the information flow process is to pick a currency for the week, to do the habits on. Try your best to write in your own explanations. Then at the end of the week, when I post my habits, you can compare what you wrote and what I wrote. I certainly don’t have a monopoly on the truth and you will have your own style. You can also do a bit of historical analysis of the prior week. Just pick a currency pair for the week, open up a chart, and see what I wrote in for each day of the week. Have the scenario sheets handy and the correlation/sensitivity sheet that I post with the daily habits.