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!
Fundamentals and mechanics of price movement?
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- vvFish