I was looking at the market as it opened after the weekend and I noticed that my GBP trade that was open over the weekend was incredibly volatile and jumping up and down maybe 10 pips in less than a second. I went to the market watch window and all GBP pairs were doing this, but the rest were sluggish as usual at that time. Why was the GBP so volatile?
@chesterjohn That is what candlesticks look like when trading volume is low. Realize that GBP/CHF is a minor pair, one of the lowest volume of all of the minors, and this was during period of time where trading volume is naturally low anyways. Add all of those factors together and you can get paper thin trading volume with large spreads. You mentioned it jumping 10 pips, but it is entirely possible to see price bouncing much larger than that(100 pips or more) for the same reason.
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This isn’t just one pair, it is every pair with GBP involved.
But I guess it makes sense that there was very little volume, so no opposite sides to the trades. Thanks for the reply
Correct, it is still due to low liquidity. It occurred immediately at open and tightened up within a few minutes, which is pretty standard behavior. It doesn’t mean it will happen every time or on every pair, but when it does happen there is nothing unusual about it.