Fundamentals and mechanics of price movement?

1
Greetings,
It has bothered me for a while not understanding the TRUE mechanics behind price movement and trade between sellers and buyers. If I have understood it correctly, going short 100 LOTS, lets say on USDJPY means, that I am selling USD for JPY. I am holding on to YEN(JPY) - correct?
Doesn't this means that someone has to buy "my" USD with YEN? '
Is this correct logic?

Now lets say that the prognosis, all data and news shows that USD will crash, a black swan is lurking around the corner and everyone knows this. So I short the USDJPY massively with thousands of lots.....who on earth buys the dollar then?

Now, lets imagine that I place an buy order on USDJPY that is worth 500 BILLION at market price. This order in it self will not move the price, but what moves a price is the "demand" for the currency. For example if asking price increases and buyers are willing to buy for that price, the price moves upward and same logic the other way around.

Then how come that sometimes as we all have noticed price can shoot up or down like a rocket from nowhere without news or anything. Its almost like orders are executed in nanoseconds - how is this possible?

Any light in this matter will be appreciated very much!
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Re: Fundamentals and mechanics of price movement?

2
fxchampion wrote: Thu Feb 20, 2020 11:13 am Greetings,
It has bothered me for a while not understanding the TRUE mechanics behind price movement and trade between sellers and buyers. If I have understood it correctly, going short 100 LOTS, lets say on USDJPY means, that I am selling USD for JPY. I am holding on to YEN(JPY) - correct?
Doesn't this means that someone has to buy "my" USD with YEN? '
Is this correct logic?

Now lets say that the prognosis, all data and news shows that USD will crash, a black swan is lurking around the corner and everyone knows this. So I short the USDJPY massively with thousands of lots.....who on earth buys the dollar then?

Now, lets imagine that I place an buy order on USDJPY that is worth 500 BILLION at market price. This order in it self will not move the price, but what moves a price is the "demand" for the currency. For example if asking price increases and buyers are willing to buy for that price, the price moves upward and same logic the other way around.

Then how come that sometimes as we all have noticed price can shoot up or down like a rocket from nowhere without news or anything. Its almost like orders are executed in nanoseconds - how is this possible?

Any light in this matter will be appreciated very much!
;)
When there is no news, the market is controlled by a market maker.
"Only the price on the chart can show the entrance to the deal..."

Re: Fundamentals and mechanics of price movement?

4
fxchampion wrote: Thu Feb 20, 2020 11:13 am Greetings,
It has bothered me for a while not understanding the TRUE mechanics behind price movement and trade between sellers and buyers. If I have understood it correctly, going short 100 LOTS, lets say on USDJPY means, that I am selling USD for JPY. I am holding on to YEN(JPY) - correct?
Doesn't this means that someone has to buy "my" USD with YEN? '
Is this correct logic?

Now lets say that the prognosis, all data and news shows that USD will crash, a black swan is lurking around the corner and everyone knows this. So I short the USDJPY massively with thousands of lots.....who on earth buys the dollar then?

Now, lets imagine that I place an buy order on USDJPY that is worth 500 BILLION at market price. This order in it self will not move the price, but what moves a price is the "demand" for the currency. For example if asking price increases and buyers are willing to buy for that price, the price moves upward and same logic the other way around.

Then how come that sometimes as we all have noticed price can shoot up or down like a rocket from nowhere without news or anything. Its almost like orders are executed in nanoseconds - how is this possible?

Any light in this matter will be appreciated very much!
Hi, if you are trading on a leveraged account you are not actually buying and selling currency and you wouldn't take delivery, you are trading contracts for difference which is a derivative based on the underlying currency pair. To buy a usdjpy contract you just need to find someone who is selling one which is where your broker comes in and if they can't in house they will ask one of their liquidity providers. During a 'black swan' event you may well not be able to find anyone to take the other side of your trade and so won't get filled, price may 'rocket' to a new level in nano seconds because there are no opposite orders to trade with which is slippage until price arrives at an area where parties are again willing to exchange.
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