Fake News and Fake Outs in the Market “Fx Trade 777”

On Tuesday, January 16, 2018, there was a false alarm in Hawaii. The alert went out to the public that North Korea had launched a missile attack against the United States. Luckily it was a false alarm. Besides no attack, the financial markets were on a pseudo break since the day before was Martin Luther King Day, a federal holiday in the States.

Coming off a long weekend; it would have been a horrible way to start off the week, not to mention a new year. Recalling the old saying, “all is fair in love and war” in my mind made the rumor that much more plausible when I first heard of it.fxtrade 777

I wondered what would have happened to the financial markets had Monday been just another busy weekday in Tokyo or New York? Of interest was my open position in USD/JPY, which seemed, by the way, to have been unaffected by the sirens in Honolulu.

Intuitively, I expected to check my price charts and my account to find that I was either way up or way down for the day, but it was a flat line. Hmmm? I am now wondering if the whole North Korea vs. the USA steadily boiling friction is all just hype. If news and foreign affairs influence price action, shouldn’t the Japanese Yen have been run down to next to nothing by now. I mean considering that Japan stands to be dramatically affected by a war on the Korean Peninsula if not destroyed.

Given this reality, shouldn’t everyone holding Yen be dumping them for US dollars? That too appears not to be the case counterintuitively. The experts have said that the market has already accounted for geopolitical risk. The prices reflected in the foreign exchange market are not missing anything according to their calculations.

I tend to believe that the experts know what they are talking about, even when it does not add up. A glance at price action on the gold charts, as it traded through the day on “false alarm” Tuesday, demonstrated that people were selling their gold.

I have always read that at times of international turmoil you can expect gold prices to rise, no matter what. So, what explains this sharp drop in the price of gold through all this missile talk, and back and forth on twitter between President Trump, and The Supreme Leader of North Korea, Kim Jong-un?tradegbp.com

Could it be that the markets and their price action are all in our collective mind? Alternatively, is there something else going on here? I also remember reading somewhere that the smart trader buys on the rumor and sells on the news. However, what do you do when “the news is a rumor, and a rumor has become the news?”

Well, I don’t know about you, but I have decided to stop trading off the news. No more Bloomberg TV, CNN, or FOX Business. Not that they’re fake news. Rather, they seem useless at times like these. I mean technically speaking that is.