Beware the Hindsight Advice of Price Movements "Experts"
Hindsight is easier than foresight especially if you are an expert. Our weekly guest blogger explains here why it is

Vlad Gubernat is a full-time trader based in Romania who shares his thoughts on his blog, JLTrader.
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There are a lot of “experts” out there who will purport to know the reasons for every 20pip move in a currency pair or stock index. I just want you to think about it for a minute. You will see how impossible it would be for the analyst, strategist or whoever writes these pieces to ascertain just why those who bought or sold during the day did so.
In order to make statements like “a better than expected Ifo report drove the euro higher” with any degree of accuracy it would be necessary to get in touch with every buyer and seller for the day, find out their reasons for the trade and then strike a balance.
These buyers and sellers are all across the globe, from the traders with a $500 account to the big banks and hedge funds dealing in billions. It is therefore absurd to place any reliance on statements that this or that was the reason for the advance or the decline.
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This is not only to emphasize the necessity of taking these kinds of reports with a big grain of salt, it is also to prove that no one actually knows what produces these small moves. None of the known events (the ones you can find, for instance, in a forex calendar) in and of themselves move a currency pair.
If you spend enough time observing the market, you will notice that the price action cannot consistently be reconciled with the reasons given by the “experts.”
For example, if this month the Ifo is better than expected and the Euro finishes higher the day of the announcement, there shouldn’t be any surprise if next month, with a still better than expected reading, the Euro will finish lower.
It is not the news nor the actual readings, nor the officials’ statements that produce the fluctuations, but the effect of all these things on the minds of traders. Every buy or sell order has a reason behind it, a hope or a fear, and all the news, facts or officials’ statements have a certain influence on the minds of traders and investors, causing them to execute those orders. It is therefore not the day’s developments per se, but their effect on the minds of individuals which is the underlying cause of the price movement.
To better illustrate all this, let’s use the most recent example available, today’s opening gap in euro. Supposedly, the Greek parliamentary elections on Sunday had something to do with it.
It sounds plausible, but then why did the AUD/USD gap down as well? And why did the EUR/USD not only close the gap, but is higher at the start of the European session than it closed on Friday night? If we want to be sincere with ourselves, the answer is that we don’t know. And as traders, we don’t really have to know.
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Sigh, here we go again, another hardcore technical analysis extremist trying to impose his way of trading as if it were the only right one and trashing everything fundamental related as nonsense just because he does not understand it himself. This post contains so many inaccuracies and false claims even Pinocchio would be impressed. “it would be necessary to get in touch with every buyer and seller for the day” Really? You think that a $500 retail trader moves the market? It is the banks, institutions and large hedge funds that move the markets. So to know what moves the… Read more »
First of all, I’m not a TA extremist. If you missed the last part of this post’s title, it’s ##price movement experts## not ##fundamental analysis experts’. I argue in this post that whatever analysis one uses, there’s no way of knowing for sure why the price moved the way it did. To your points: 1. One $500 trader doesn’t mean anything, but the retail traders in aggregate are a factor. I agree that the big players that you mention are the principal factor, but how do you find out exactly what all of these are doing ? 2. Since when… Read more »
Thank you for your reply JLTrader, 1. One way would be to contact and learn and/or being mentored by people who are activly trading at a hedge fund for example. Another one would be to find a job at those institutions as a trader. (Amplify trading for example offers such an opportunity). 2. Saying you don´t know something is not arrogance at all, indeed. However you use the term “no one knows” a few times. That expression assumes that you apparantly know everything there is to know so you can make such a bold statement. 3. That depends on your… Read more »
If you go to work for a hedgefund or any other big institution, you’ll only find out at the most their position in the market. You’ll still be in the dark as to all the other market participants. Let me clarify once again what I mean by ‘no one knows’. In order to know for sure why the EUR/USD for instance moved in a timeframe (let’s say 4 hours) you would have to contact everyone who traded EUR/USD during those 4 hours and ask them about their reasons for buy/sell. Only then you could say for a fact that EUR/USD… Read more »
I have got to agree with FxJohn’s comments on this post. There is clear evidence that the FOREX markets are in fact controlled and manipulated on a daily basis by the major banks operating 24/5 around the world. They have sufficient liquidity to move the market in any given direction at any given time and off any given level they please. So YES there are those in the know. Further, impacts of fundamentals, of quantative easing, news, all impact the market. If you are a successful trader you will have studied the fundamental yourself, you will KNOW what to look… Read more »