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EP155: Can The Forex Market Be Controlled?
Can you really move the market?
In this episode of Truth About FX, Walter shares his perspective on how little volume it would take to actually move a market. He shares a story about a friend who used to work for a hedge fund and how they — the company — could shake the market. According to him, this could all happen in a blink of an eye and so timing is of the essence.
Hugh also shares his thoughts on this. According to him, it all depends to the volume of your trades to make an impact on the market.
Walter also does a quick throwback on an event with Oanda and how this gave him a whole new idea about the markets.
Download (Duration: 06:26 / 7.4 MB)
In This Episode:
00:57 – tick data
02:21 – year-end bonus
04:04 – spiky moves
06:03 – a deep market
Tweetables:
It only happens so quickly [Click To Tweet].
Keep working at it [Click To Tweet].
You can move the market [Click To Tweet].
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Hi, Walter. Can one institution control price in the forex market?
Walter: Well, that is a very interesting question. Thanks, Hugh. I think the data on this is actually counterintuitive. I saw the co-founder of Oanda, Richard Olsen, at the last FXStreet Conference that they’ve had. I don’t think they’ve had one since then and Richard Olsen was the most interesting presenter, I thought.
I think there were five of us or whatever there. He was probably the most interesting one and what he had was tick data that went back like 30 years or 40 years. One of the interesting things I remember about his presentation was it was surprising how little volume it would take to actually move the market.
Now the caveat is that only happens quickly. In other words, if you said you had this fund and you want to move the Euro, you want to bump it up, you could do that. It wouldn’t take that much like only 10 Million or a Million. It wasn’t really a lot in that instant. The caveat is that it’s just in that instant.
It is possible to definitely push the market quite but it’s not one of those things where you have to work it out to get some follow through. The other interesting thing is I have another friend who works — he doesn’t anymore because he works for hedge fund now. He worked for an investment bank in Europe and what they said was, their forex test, their biggest trade for the year was when they paid everybody.
The company wasn’t based in England but they have a lot of people in London so they would have to move money from Euros to Pounds to pay everyone at their end of year bonus. What that meant was their forex test, of course, is aware when the company is going to do exchange Euros to Pounds.
And so, the forex test would actually piggy back on top of that move. Now that they’ve forex tested and trade EUR/GBP — they trade EUR/CHF because they didn’t want to get, they were worried about getting caught or something ...
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By Walter Peters (FXJake) and Hugh Kimura (Trading Heroes)Can you really move the market?
In this episode of Truth About FX, Walter shares his perspective on how little volume it would take to actually move a market. He shares a story about a friend who used to work for a hedge fund and how they — the company — could shake the market. According to him, this could all happen in a blink of an eye and so timing is of the essence.
Hugh also shares his thoughts on this. According to him, it all depends to the volume of your trades to make an impact on the market.
Walter also does a quick throwback on an event with Oanda and how this gave him a whole new idea about the markets.
Download (Duration: 06:26 / 7.4 MB)
In This Episode:
00:57 – tick data
02:21 – year-end bonus
04:04 – spiky moves
06:03 – a deep market
Tweetables:
It only happens so quickly [Click To Tweet].
Keep working at it [Click To Tweet].
You can move the market [Click To Tweet].
Announcer: Sometimes, forex trading is a wild and wooly place to be. That’s why Hugh is here, to post your questions to Walter, the naked forex guy. Hugh’s got questions and Walter’s got the answers. Here at the Truth About FX Podcast.
Hugh: Hi, Walter. Can one institution control price in the forex market?
Walter: Well, that is a very interesting question. Thanks, Hugh. I think the data on this is actually counterintuitive. I saw the co-founder of Oanda, Richard Olsen, at the last FXStreet Conference that they’ve had. I don’t think they’ve had one since then and Richard Olsen was the most interesting presenter, I thought.
I think there were five of us or whatever there. He was probably the most interesting one and what he had was tick data that went back like 30 years or 40 years. One of the interesting things I remember about his presentation was it was surprising how little volume it would take to actually move the market.
Now the caveat is that only happens quickly. In other words, if you said you had this fund and you want to move the Euro, you want to bump it up, you could do that. It wouldn’t take that much like only 10 Million or a Million. It wasn’t really a lot in that instant. The caveat is that it’s just in that instant.
It is possible to definitely push the market quite but it’s not one of those things where you have to work it out to get some follow through. The other interesting thing is I have another friend who works — he doesn’t anymore because he works for hedge fund now. He worked for an investment bank in Europe and what they said was, their forex test, their biggest trade for the year was when they paid everybody.
The company wasn’t based in England but they have a lot of people in London so they would have to move money from Euros to Pounds to pay everyone at their end of year bonus. What that meant was their forex test, of course, is aware when the company is going to do exchange Euros to Pounds.
And so, the forex test would actually piggy back on top of that move. Now that they’ve forex tested and trade EUR/GBP — they trade EUR/CHF because they didn’t want to get, they were worried about getting caught or something ...