Pound crashes - Brexit all over again - Forex Trading For Profit

Forex Trading For Profit

Pound crashes – Brexit all over again

No ratings yet.

Share on...

Pound crashes on low liquidity

This morning thousands of traders woke up having their positions taken out account wiped out and being left with wondering why and how did this happen.

My chart shows a low of 1.19164 on Pepperstone but has been noted to fall as low as 1.11.

Lets try and break this down and make sense of it.

The rumor is algorithms or a fat finger caused the flash crash. Technically the support at 1.26000 was broken  and from there the pound became a bottomless pit.

GBP/USD 126.000 support

Low liquidity and volume

Low liquidity and volume I believe to be the main driver for the Pound crash . All it takes it one massive trade to sink the market on low volume. Quick in and out and a few hundred million dollars richer for someone today. Call it manipulation all you like but the fact is everyone is in it for the money and if you can do it why not.

The other reason long stops were hiding just under this level of 1.26. As long stops were all taken out the momentum of the fall cascaded.

The pound recovered quite quickly which indicated there were some buyers around the 1.20 levels. We must ask ourself why was it bought back quickly and with heavier volume than the drop?  This is telling us sellers were not committed at all and was a once off trade to clean up long traders.

Volume

At this stage its become a bottomless pit and there is no telling how low the pound will go. Until we now see either a bullish candle on the daily or weekly there is really no foreseeable potential upside.

On the other hand on these occasions when there is an unexpected crash like this one, it may have reached the bottom, can easily be flipped around. For such a big drop it has accomplished this on very low volume. Those who go short now may possibly find it may not go down anymore for a long long time to come.

I think cable will stay at a low liquidity level for some time. We now need to wait for London to open for some insight on why this has happened and which way price will go from here.

The pound crashing this morning did so faster than the day of the referendum vote but has recovered quite quickly. See charts below.

Brexit  Post brexit

Market manipulation and dealing desk brokers.

Was the pound crashing due to market manipulation?

For me I say “no” and I don’t believe in market manipulation and only believe in supply and demand. There was a lot of talk of brokers freezing up accounts which traders were unable to take profits. These again are dealing desk brokers and had no option but the freeze their clients accounts. This kind of event can potentially send dealing desk brokers broke. ECN brokers had no issue with the event except for widening spreads.

Just think how many traders lost their account with these kind of brokers and those who were on the right side only made a 10th of the profit they could of.

There were a lot of traders that lost their entire pot on this event and don’t think its was just retail traders that were taken out. Believe me when I say this but Banks, brokers, and fund managers all lost out on this and millions of dollars not just a few bucks in a cent account.

Why I survived the Pound Crash

Money Management is KING

This brings me onto the subject of money management and its something I am still yet to explain in detail as yet ( there will be a post coming up on this).

I were also long on the pound but only down 3%. I rarely use a stop loss but trade with no leverage. There are two ways to combat risk.

  1. Tight stops
  2. Trade with no leverage

Every time I hear traders loosing their accounts and blaming market makers, brokers, and everyone else except them self it all boils down to money management.

Only Money management is important entry is only seconded. Anything can happen in the financial markets and when trading you must use some strategy to protect your account.

What now for the Pound?

I would like to see where this week and daily candle will close. Its a high possibility for a massive weekly and daily pin bar/hanging man. If this is the case its highly possible that the pound could rally from here.

Best option is to stay out of the GBP pairs. As long as low liquidly prevails, volatility will remain high.

forex trading

Share on...

Please rate this

Leave a Comment

Be the First to Comment!

Notify of
avatar
Photo and Image Files
 
 
 
Audio and Video Files
 
 
 
Other File Types
 
 
 
wpDiscuz

Forex Trading For Profit


Forex TFP

A journey of a retail trader. How to trade on the foreign exchange market and make it a lifstyle.

Comodo SSL
    Connect
  • Facebook logo
  • Twitter logo
  • YouTube logo
  • Linked in logo

We have been voted in the top 100 Forex Sites

Top-100-Badge

Forex Trading

Forex Trading For Profit, a journey of a retail trader. This website has been set up for retail traders to give answers to those seeking the same information I was when I first started trading. Forex Trading For profit endeavours to bring the most informative approch to trading forex, and shows anyone can become a successful trader no matter what your background, with some dedication, study and determination. Trading CFD's and in the foreign exchange market is a high risk investment so please read the disclaimer.


DISCLAIMER: Any advice or information that has been presented on this website and related accounts on social media forums is only general advice and is not intended for you to invest your money solely based on its contents. By viewing the content on this site you agree that it’s for educational purposes only and will not hold the Author responsible for any loss incurred by the content herein and associated online accounts or paraphernalia. Forex Trading for profit nor do the Author('s) operate under an AFSL and any product or advice sold on this site is only bought or taken as an educational product or guide from my collective experience’s and knowledge trading forex. If you invest any money into forex you do solely at your own risk.

HIGH RISK WARNING: Trading CFD’s such as forex and/or on high leverage is a high risk investment and you must make yourself aware of the potential loses you may incur. Forex trading is not suitable for all investors and you have the potential to lose all of your deposited funds or more. Any opinions or analysis of the financial markets on this site is ONLY commentary in nature and does not solicitate investment advice. Please do not invest any money based on the advice given on this site or associated accounts nor invest money that you cannot afford to lose. Past performance of any trading system or method is not indicative of future results.


Privacy policy

What information do we collect?

We collect information from you when you fill out the form. When ordering or registering on our site, as appropriate, you may be asked to enter your: name, e-mail address or phone number. You may, however, visit our site anonymously.

What do we use your information for?
Any of the information we collect from you may be used in one of the following ways:

For contact purposes and conversing requirements between staff and client.

How do we protect your information?
We implement a variety of security measures to maintain the safety of your personal information when you enter, submit, or access your personal information.

Do we use cookies?
We do not use cookies.

Do we disclose any information to outside parties?
We do not sell, trade, or otherwise transfer to outside parties your personally identifiable or business information. This does not include trusted third parties who assist us in operating our website, conducting our business, or servicing you, so long as those parties agree to keep this information confidential. We may also release your information when we believe release is appropriate to comply with the law, enforce our site policies, or protect ours or others rights, property, or safety. However, non-personally identifiable visitor information may be provided to other parties for marketing, advertising, or other uses.

Third party links
Occasionally, at our discretion, we may include or offer third party products or services on our website. These third party sites have separate and independent privacy policies. We therefore have no responsibility or liability for the content and activities of these linked sites. Nonetheless, we seek to protect the integrity of our site and welcome any feedback about these sites.

Childrens Online Privacy Protection Act Compliance
We are in compliance with the requirements of COPPA (Childrens Online Privacy Protection Act), we do not collect any information from anyone under 13 years of age. Our website, products and services are all directed to people who are at least 13 years old or older.

Your Consent
By using our site, you consent to our web site privacy policy.

Changes to our Privacy Policy
If we decide to change our privacy policy, we will post those changes on this page.

Contacting Us
If there are any questions regarding this privacy policy you may contact us using the information below.

Paul@forextradingforprofit.com.au

Back to top

© 2019 Forex Trading For Profit. · Disclaimer · Privacy policy