This Is How a Currency Trader Actually Picks What to Buy and Sell
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Brexit Impact
The Brexit referendum significantly impacted the currency market, introducing a new layer of complexity for traders. explains that the announcement of the referendum date was a pivotal moment, as it introduced uncertainty and speculation about the future of the British pound 1. This uncertainty led to increased market volatility, with traders having to navigate a landscape filled with political noise and unpredictable economic data.
The market as a whole with regard to sterling, has been more about positioning than reacting to headlines or even data points for that part.
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Veksler notes that the market's reaction was more about positioning rather than responding to immediate headlines, as traders anticipated the long-term effects of Brexit 2.
Algo Challenges
Algorithmic trading has transformed the FX market, creating both challenges and opportunities for traders. Veksler highlights the reduction in liquidity due to the decline of traditional market makers and the rise of algorithmic trading, which has led to increased market noise and volatility 3. This shift has made it difficult for traders to maintain clear strategies amidst the constant barrage of political and economic headlines.
If you start buying into all of that, you're only going to end up running around in circles and not really get to the bottom of forming a view.
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He emphasizes the importance of filtering out the noise and focusing on substantial market signals to form effective trading strategies 4.