News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bearish
Gold
Bearish
GBP/USD
Bearish
USD/JPY
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Heads Up:🇲🇽 Balance of Trade (SEP) due at 12:00 GMT (15min) Expected: $3.795B Previous: $6.116B https://www.dailyfx.com/economic-calendar#2020-10-27
  • EU Commission says both the EU and UK are engaging intensively to reach a deal $GBP
  • There are many different types of forex orders, which traders use to manage their trades. While these may vary between different brokers, there tends to be several basic FX order types all brokers accept. Learn about different FX order types here: https://t.co/lIJdiz4xSz https://t.co/kERhNpX24T
  • 🇫🇷 Unemployment Benefit Claims (SEP) Actual: -15.2K Previous: -171K https://www.dailyfx.com/economic-calendar#2020-10-27
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.88%, while traders in NZD/USD are at opposite extremes with 72.94%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/vSpkpJR5DJ
  • Heads Up:🇫🇷 Unemployment Benefit Claims (SEP) due at 11:00 GMT (15min) Previous: -171K https://www.dailyfx.com/economic-calendar#2020-10-27
  • Commodities Update: As of 10:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.36% Silver: 0.20% Gold: -0.18% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/R4iP2hBi7y
  • The AB=CD pattern is simple once you know how to spot it and draw the proper Fibonacci retracements. Make your trading strategy as simple as ABCD here: https://t.co/AKmlmaAZBS https://t.co/opRjJQoGPZ
  • Forex Update: As of 10:00, these are your best and worst performers based on the London trading schedule: 🇨🇦CAD: 0.21% 🇯🇵JPY: 0.17% 🇳🇿NZD: 0.14% 🇬🇧GBP: -0.00% 🇪🇺EUR: -0.01% 🇨🇭CHF: -0.16% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/sbn9fdKRMA
  • If you're in the UK or Western Europe this will be an hour earlier than previously because of the clocks going back... https://t.co/mhvbYLCAkA
Video: What We Can Learn from GBP/USD's and Other Flash Crashes

Video: What We Can Learn from GBP/USD's and Other Flash Crashes

2016-10-08 03:01:00
John Kicklighter, Chief Strategist
Share:

Talking Points:

• There is debate over what contsitutes a flash crash, but extreme moves in very short time frame is a common feature

GBP/USD dropped as much as 6 percent on some feeds in the span of minutes this past Friday

• We compare the Pound move to accepted flash crashes in 2010, 2013 and 2014 to find commonalities to avoid

See the DailyFX Analysts' 4Q forecasts for the Dollar, Euro, Pound, Equities and Gold in the DailyFX Trading Guides page.

The label of a 'flash crash' is thrown around somewhat liberally in trading circles, but they are very real and destructive events. Definitions of what qualifies for this extreme moniker vary widely, but there are familiar features across descriptions - particularly that it characterizes an extreme market movement (magnitudes larger than standard deviations) in an exceptionally short time frame (often minutes). However, what is missed in applying this simple label is the underlying conditions that sow the catastrophic moves that follow. And, as random as these events seem to be in terms of timing and with supposed catalysts; there are commonalities that we can identify to direct our activity in the markets moving forward.

Flash crashes seem a modern phenomena which is why they are frequently associated to high frequency and algorithmic trading. In reality, inordinate market moves have occurred as long as there have been markets; but we look to compare more modern events to keep it an apples-to-apples comparison. First was the April 23rd, 2013 drop in US equities that followed a hacked AP twitter update suggesting an attack on the US White House. The move was abrupt, but it did not have the depth of more famous events. The October 15th, 2014 Treasury flash crash saw a dramatic plunge in US government bond yields and surge in price despite no high-profile headline. Thinned liquidity, a steady build up in bias and a trigger event were the foundation for one of the most dramatic moves this preferred safe haven had witnessed. Similar, background market issues proved the genesis of the May 6th, 2010 crash that wiped out nearly a trillion dollars of wealth in US equities in little more than half an hour.

Compared to these events, the GBP/USD's dramatic tumble through this past Friday to fresh multi-decade lows fits the bill of a flash crash. A steady build up of a bearish position instigated by the UK Prime Minister's remarks on a 'hard Brexit' drove the currency to extremes. In an already-drained financial system, liquidity was deflated even further between afterhours quiet that was amplified by the pre-NFPs release we have come to expect. With a fundamental spark, these conditions were ripe for the near 6 percent plunge GBP/USD suffered in the of just a few minutes. What can we learn from these events to better protect ourselves in the markets going forward? That is the focus of this weekend Strategy Video.

To receive John’s analysis directly via email, please SIGN UPHERE

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES