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[leon143]

Hi everyone. I am a new member from South Africa and aspire to become a forex trader in the near future. Can anybody please explain to me why before the big move up or down - the fake? move in the opposite direction?. (today)
Thanks and for the humor from some members.


"Instead of seeing the carpet being pulled from under us, we can learn to dance on a shifting carpet" Thomas Crum

[Wallace]

A very interesting event occurred this morning, courtesy of the CNBC 'Squawk Box' host Mark Haines.

Steve Liesman, Senior Economics Reporter and 'Kudlow and Kramer' Larry Kudlow were having a pre Payroll release chat with Haines about the forthcoming release.

A few minutes before 8:30 am EST, each gave their opinion whether the release quantity would be lower, higher or the same amount as the estimates. Haines said they'd be higher than the estimate. Liesman asked Haines why he thought the quantity would be higher — good question.

Haines replied that Greg Mankiw would be a guest on the show later on.

Ahaaaa !

Haines: [not a direct quote] " Mankiw would only come on if the figures were good like last time ".

Mankiw is the Chairman of the Council of Economic Advisors to President Bush.

Thomson Financial IFR Forex Watch SQUAWK BOX
" 2:34 GMT:
EUR/USD: Wild Price Action Pre and Post Payrolls: Boston, May 7:
Obviously someone thought they had the number and ramped EUR/USD higher only to get crushed as non-farm payrolls exceeded estimates and March was revised higher. . . . --Jamie.Coleman@thomson "
" 19:40 GMT:
EUR/USD: . . . A leak was suspected, but it turned out not to be the case as payrolls hit the tape like a bomb, driving EUR/USD quickly below 1.2000. . . . --Jamie.Coleman@thomson "

Viewing the 1 min EUR/USD chart one can see where frantic selling – exiting Buys orders – drove the price rapidly higher along with a multitude of Sell orders going into the markets, followed by the release, confirmation Haines was correct, and the accelerating collapse of the price.

[leon143]

Thanks, excellent explanation.

[Catalonia]

Nice and documented exposition, Wallace.

I want to be prosaic. Last month we had the affair of Reuters. Reuters gave Payrolls 2 minutes earlier. They said they had problems with their clock
As a result of their "clock", just a few could catch the big move

Yesterday we had "whisper trading". And next month we may have "creative trading" and so on..... Funny, don't you think?

Did brokers want to kill yesterday all those who bracketed data?

A lot of traders got badly hurt yesterday. A lot. I was lucky, but this is another story.

When trading, I use to think the worse. They cheat us, Wallace, they do.
Sorry.

Leon:

Take care, you are about to swim in infected waters of sharks.

[Catalonia]

Just a chart to illustrate what I said:

[RunningTurtle]

Hi,

Yesterday I placed order to buy EURUSD @ 1,2110 and as it was filled by the broker... I stupidly declined to close it by hand ...giving up 50-60 pips and loosing instead about 45 pips (s/l filled with slippage) as it crashed to lower levels... but I have also placed order to sell EURUSD @ 1,2050 ... slippage... sold @ 1,2017 then bought @ 1,1900 ...actually nice but I could made more than 117 pips.

Cheers,

Running Turtle

[eternalfuture]

Wallace,

Did Greg Mankiw show up later on?

[Wallace]

Hi Eternalfuture, yes.

Haines wouldn't have said what he did without knowing Mankiw would be on, and Mankiw have been booked 'some time' ahead.

[Catalonia]

More about the subject:

"Beyond Event Risk



Technical traders cannot ignore the fact that predictable, directional, profitable currency moves oftentimes follow the release of economic indicators that are materially different than consensus forecast. Last Friday’s non-farm payroll is a good example; number was significantly higher than forecast and USD rose more than 1% in minutes and almost 2% in a few short hours.



In EURUSD for example a move of 1% is about 120 points and 2% about 240 points; technicians can spend a whole month trading “breakouts” to make 240 points; a well played “news trade” can make it in a few short hours, without any pain. Clearly, many news trades are simply a price adjustment to reflect new information; the new information is quickly reflected in the currency price.



I have been trading news for a long time; as traders catch on I know the window of opportunity will slowly close; it has already begun. On-line brokers are refusing to accept stop loss entry orders around significant news time. Currencies are moving 50 points or more within a minute of major release.



Banks are getting the “news trade” orders from the on-line brokers and waiting until the market becomes super-thin less than a minute to release time and then “running” the stops (forcing the market higher or lower to levels where significant amounts of stop loss orders are; the purpose is to eliminate event risk for the Bank and also to make profit from the orders). Obvious examples are April 8 and May 7 non-farm payrolls. On April 8 the EURUSD moved 50 points lower in two minutes prior to non-farm payroll release; on May 7 EURUSD moved 70 points higher in one minute prior to release.



Beyond hitting home runs on misforecast key economic indicators, I use economic indicator releases to determine market sentiment and initiate short-term trades. Here is an example.



On Tuesday April 27 Conference Board consumer confidence was 92.9 versus 88.6 expected; if market sentiment was balanced EURUSD would be expected to drop between 50 and 75 points on such a drastically better than expected U.S. number.



EURUSD was 1.1875 before release and fell to just 1.1860 after release; after trying to trade below 1.1860 twice the EURUSD rallied to 1.1935. When a misforecast economic indicator fails to create the expected price adjustment (in this case EURUSD lower by at least 50 points) it’s a clear indication that the EURUSD is either oversold and or there are more buyers than sellers.



Once the EURUSD rate got back above 1.1875 (the rate prior to the positive U.S. news) an excellent trade was to buy EURUSD with a stop at 1.1855 (below the low after the USD bullish news). Profit target would vary by trader.



My experience has been that price action following misforecast economic indicators provides a rare glimpse at market sentiment on a real time basis; trades can be initiated with tight stops and excellent profit potential. When combined with technical indicators such as moving averages, trading channels, and support/resistance; the resulting trade ideas can yield serious profits."

http://www.pfxtrade.com/news/commentary.asp?Act=V&ID=484&Se=&SeP=1&SF=

Posted by svahid. http://www.moneytec.com/forums/showthread.php?%20postid=45179\

[Catalonia]

We are those birds hovering above elephants:

[leon143]

Thank you Catalonia and Wallace - sorry Running Turtle next time
you'll catch it.
Cheers leon143

[Wallace]

Just caught your picture Catalonia.

Might we also be wee retail online fx trader mices, occasionally scaring the doodoo out of those same elephants ?

[mishak]

Here is the picture posted by Catalonia