for FX traders am I correct in thinking this
- Thread starter jpvil123
- Start date
http://www.bloomberg.com/news/articles/2015-05-20/anatomy-of-an-fx-manipulation
I posted this May 20 last year in Forex Trading. No updates on current reality after the various investigations and fines
No, they don't bother with retail, but if you're near big fish you could be collateral damage.
I posted this May 20 last year in Forex Trading. No updates on current reality after the various investigations and fines
No, they don't bother with retail, but if you're near big fish you could be collateral damage.
Since it's often their stated goal to move their own currency then I guess so. Kind of like saying Congress "manipulates" laws however.
Hey Sig, Perhaps this is true... I can't say I fully agree with that analogy, but I guess that depends on how fairly you feel laws are being passed in congress. Who is checking these central bankers? I admit, I don't know how it works 100%, but I'd more liken it to media manipulation on society.
I think the first central bank to admit they are manipulating currency rates through interest rate policy, or monetary policy accomodation, was the ECB - specifically Draghi, or the BOJ? This is just within the past 5 years. The FED never actually stated that as their goal, but I guess they just word it better. This is openly stated as their goal now? Seems criminal to me.
Central banks directly intervene in currency markets buying and selling their own currency all the time, let alone more indirectly impact it with rate changes. And have done so ever since Bretton Woods ended in 1971. Usually they announce it once they've done it, since letting everyone know what they're doing tends to help move the currency the direction they want it to move. No secret manipulation or conspiracy at all, it's part of their job. If it should be part of their job or not is open to debate between smart well meaning people, but they make no attempt to claim they don't. Here's the first article I found when I Googled "Japanese central bank currency intervention" (http://www.reuters.com/article/global-forex-boj-idUSL8N15Q4BY) for example.
The irony here is, central banks politely tell you what they are going to do well in advance of when they do it. They actually allow traders to front run them. And these guys don't have the common courtesy to say thank you. LOL. Seriously, the actually say, hey contra, we are going to buy 100 billion Yen and we are going to buy it till it reaches this level. So what do the contra's of the world do, get short! LOL. I mean come on guys, the central banks are leading you into the trades, don't fade them.
lol yes, I was around trading FX during BOJ interventions and the rate pegging of the SNB years back. I hear what you guys are saying, indeed, they definitely forecast their intentions openly to allow traders to fix rates before they actually have to intervene, but I am sure plenty of traders accounts were blown out trying to do so before the intervention (trying to go with the BOJ), and while it was happening being idiots betting against the BOJ right before they stepped in. I remember watching the rates on screen as it happened, it was pretty gnarly. I didn't mess with the yen during this time.
However there has to be a pretty damn good reason, (so I thought) for unilateral moves like that, in that case it was major corporations (Nissan, Toyota etc) and import/export industry were suffering greatly because of the exchange rate at the time, and they have to explain themselves to the ECB, FED, etc... at G7 and IMF meetings. I was more speaking about Draghi speaking words and effecting rates on a much smaller level.
You guys can see I don't know too much about it, but I was always under the impression that these central bankers were manipulating bastards. Much more so than hedge funds or banks gunning 20-30 pips above/below the market for stops on their books in illiquid market conditions.
However there has to be a pretty damn good reason, (so I thought) for unilateral moves like that, in that case it was major corporations (Nissan, Toyota etc) and import/export industry were suffering greatly because of the exchange rate at the time, and they have to explain themselves to the ECB, FED, etc... at G7 and IMF meetings. I was more speaking about Draghi speaking words and effecting rates on a much smaller level.
You guys can see I don't know too much about it, but I was always under the impression that these central bankers were manipulating bastards. Much more so than hedge funds or banks gunning 20-30 pips above/below the market for stops on their books in illiquid market conditions.
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