By Abdul H. Jaffar It’s normal, when every now and then, once in a blue moon; your terminal is frozen cause the exchange couldn’t process your order for what ever reasons. Maybe there were just too many orders beyond the handling limit, redundancy malfunctions, or who knows what. But, it’s not normal when the problems that happened in Japan, also happened in New Zealand, and today in Europe. That’s just not normal.
Earlier today around 8am London, 4am New York, Deutsche Boerse (DB) issued an alert in it’s platform Xetra that its automated auctions system failed and many instruments were left hanging without cash market closure. Two hours later DB issued a statement that the causes had been identified and problems were resolved. Reality is, till end of the trading day, many of it’s user still have trouble to finalize orders. To me, this signal troubles ahead.
Why? Cause in the world of trading, there are always two parties involved. For every sales, there must be purchases and for every buyer, there must be seller. We all know that. Now what if almost everybody want to sell and no one is interested in buying? or vice versa. What will happen when that kind of scenario develops? Something like in the chart above.
Why do you think market crash happened? Because there was not enough buyers left to keep floating the market. Because if they keep buying at such price at that particular point in time and the market is deemed for a correction; then it’s going to be a very long time before they ever see their book in the green again cause not everything can be perfectly hedge. By the way, our Aussie short went on as planned and 0.7125 is our new stop loss.
Disclosure:
All views and opinions expressed are of personal in nature and do not represent any of the institutions mentioned. All information and data provided are for educational and information purposes only. None of our views and opinions, anywhere published should be construed as a recommendation of solicitation to invest and/or trade any financial instrument. Please consult any licensed investment advisors before you commit to any financial decision.
RTC Team