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| First of all, most traders reading reports want some fundamental reasoning why markets are moving a certain direction with many hoping to find reasons markets are trading the way they are positioned. A trader who has been selling wants to find the majority of the news as bearish and a trader who has been buying wants to read bullish news. Technical traders want to find other technicians that coincide with their outlook. Markets moved because big speculative computer driven money entered the market. It is formula, algorithmic or computer driven trading or as it is often called frequency trading. Trading based on mathematical formulations and traded by computers so fast and sophisticated the reactions are done in milliseconds. Now billions and billions of dollars from traders and sites throughout the world are flowing to programmer traders. Frequency trading, as it grows, it will become a larger force due to the fact it is almost a pure method of trading. Now when trades can be originated and initiated any place in the world at the speeds only limited to the fastest computers and when formulas written in similar language react at similar speeds, commodity markets can and will in the future see movement similar to the changes we saw this week. With all the tools available to protect extreme market movement and volatility for especially hedgers from simple forward contracting to using futures and options along with cash trading tools and strategies speculators and producers have available, market "surprises" can be alleviated. Farmers also need to become everyday students of the basis....................... | |
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Wow talk about market volatility.
