In the world of trading, there are obvious and well-known factors that influence the markets, such as economic reports, geopolitical events, and quarterly earnings. But besides these tangible factors, there are hidden and mysterious influences called âmarket ghosts.â These influences may not be visible to the naked eye, but they play a major role in moving prices unexpectedly, leaving traders in a state of confusion.
What are "market ghosts"?
The term âmarket ghostsâ refers to movements or patterns that occur in the market for no apparent reason. Traders may feel that there are unseen forces or mysterious players influencing prices, but there is no direct information or evidence to explain these movements.
These âghostsâ may be the result of complex strategies used by large institutions, such as hedge funds or high-frequency trading (HFT) firms. They may also be the result of insider information leaks, or simply large movements of funds that are not publicly announced.
Main effects of market ghosts
1. Sudden price movements: Large price fluctuations can occur over a short period of time without any clear news or events to explain them. These movements can be intimidating to new traders who may think there is a problem with their strategy.
2. Lost or sudden liquidity: Liquidity may suddenly appear or disappear in some markets or stocks, making it difficult to execute buy or sell orders at the desired price.
3. Automated trading and its hidden impact: High-frequency trading algorithms can execute millions of orders per second, leading to rapid fluctuations that ordinary traders cannot predict.
How do traders deal with these ghosts?
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In order to avoid falling into the trap of the movements of the "market ghosts", a trader must be careful and follow risk management strategies carefully. It is better not to over-risk during times of unjustified volatility. Technical indicators can also be relied upon to support decisions, but it should always be kept in mind that the market contains many undeclared factors.
Ultimately, âmarket ghostsâ are part of the trading game, and traders need to be prepared to deal with the unknown.
