Price shock: when the Swiss National Bank unpegged the Swiss franc from the euro
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The Swiss Franc CHF rose with an unprecedented speed in the first minutes after the decision was communicated. This seismic shift forex swiss bank not only occur against the Euro which was pegged at 1. Markets, price, traders, brokers, and banks were sailing in unchartered territory when the forex swiss bank was released. Traders and even some brokers were left empty handed during the chaos and it might still take a while before daily business settles back to normal.
Many claims will be made, amendments might be required, and a lot forex swiss bank communication will be needed before the events of Thursday are anywhere near resolved. And even then, many traders and perhaps even brokers and some banks could feel very annoyed about the events that took place on Thursday. But perhaps some best practices can be found. Here are a few ideas that might be worth considering when reviewing your forex swiss bank plan:.
Traders can never fully remove this event risk of course. But the above steps could improve your odds. With the forex swiss bank drop, liquidity was certainly scarce and in some cases seemed to vanish into thin air. Many brokers forex swiss bank platforms even stopped offering quotes. Anger arose with traders that were unable to close open orders or did not see their protective stop losses being respected.
Margin calls were certainly not exceptions amidst the turmoil. At times when quotes were available spreads had risen to unprecedented levels.
Some traders reported seeing spreads from up 1, pips. Here are a few ideas that might be worth considering when reviewing your trading plan: Choose a broker that was able to handle the Forex swiss bank Franc chaos. A broker that has shown capable responses and liquidity during the dramatic price movements, will have better chances of resolving the next Black Swan event. Keep your level of funds to the minimum needed for trading. Traders must remove any access funds on their trading account as soon as possible to reduce the losses in the event of a margin call.
Read more here about account management. Be very wary of trade forex swiss bank based on market intervention and central banks. Central banks have massive impact and do not inform you of their intentions. Taking trades based on the communicated and interpreted directions of a central bank leaves traders vulnerable to unknown uncertainty unknown unknowns as Donald Rumsfeld would call itwhich is basically an unquantifiable risk level. Be cautious on speculating during times with extreme volatility.
It seems appealing to jump in a trade when the market is moving pips a second. But when price is really chaotic the risk of spread, transaction costs, lack of liquidity, and forex swiss bank problems most of the time outweigh the advantages.
Be cautious of trading the Swiss Franc. SNB has already intervened twice this decade, so a third time might not be all that strange. Where were you when the statement was made? Please share your story with us in the comments section. Thanks for sharing and Happy Hunting! The following two tabs change content below. Winners Edge Trading was founded in and is working to create the most current and useful Forex information and training available on the internet.
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