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A little something everyone should read


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Check out the latest quarterly newsletter from GMO, there is a lot of interesting stuff in their, especially perhaps the admission of getting it wrong on Oil and missing the bust.  Also interesting is the assertion that the Us stock markets would end up in a bubble but aren't yet there (S&P 2300 is their target, will they get this wrong too?)

 

https://www.gmo.com/docs/default-source/public-commentary/gmo-quarterly-letter.pdf

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    • yeah, the 3 markets will be correlated but they each still have their own market participants who will be pulling one way or another in the short term and then correcting overall from time to time. After the US shutdown there is only Auckland and Melbourne were big boys are still playing but they don't command the same level of volume or, therefore, the best prices. I wouldn't worry about your broker acting to get your stops, it's just every other b*****d out there, everyone knows where your stop orders are, they're in the same place as everyone else's 🙂. A big player usually only has to cover about 25 points in order to collect 75% of the stops around a major level.  
    • I hear you I guess my only comment would be the lack of consistency across the three pairs that by their nature should mean they are not altogether different in character (EU, GU and EG) - one would have thought (and of course I accept I could be wrong) that if GU and EU are behaving normally with perhaps a minimally wider spread then there is little reason for EG to be both very spiky and excessively wide spread the cynic in me will always ask the question.  Its not unlike having that very special ability to place a stop on what turns out to be the very bottom tick and yet it never seems to happen with quite the same degree of accuracy or regularity with one's limits  I jest of course but I bet I am not alone in pondering that one...    
    • the problem is the time, 22:00 is start of 'out of hours' (after US close) and the biggest providers UK, EU and US shut down there main desks, note the that the average spread calculation is from 00:00 to 21:00 and so avoids the 22:00 uncertainty (making it look better) What happens is actually slippage such as can be seen at high volatility during an unexpected news event. IG suddenly needs to cast wider to find prices to offer clients, there will be a wider gap between the best available buy and sell at that time and could last for some time after. I don't trade that market anymore but if you do you should get a feel for what's normal over time though there will still be occasional surprises, I do know that slippage of 12 points on news is not uncommon even on the majors.  
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