How Often Does The Market Overreact?

[Nowler]

Perhaps confining this question to the most liquid FX market (EUR/USD) might be best, but if someone feels bold and confident enough, perhaps they can extend it to: EUR/USD, GBP/USD, USD/JPY and USD/CHF

How often does the market overreact? Let's exclude "slight to moderate overreactions" so that we are only dealing with considerable to extreme overreaction.

I realise that this may not be easy to accurately define... perhaps rating your answer on a scale of Rare, Somewhat Rare, Somewhat Often, Often (please include the market/s you are referring to).


- Gavin

 

[FXX]

All the time. The market is irrational and emotional.

 

[Nowler]

All the time. The market is irrational and emotional.

Stupid question really now when I think of it
I'm not exactly sure what it is I am trying to get at...leave it with me

 

[FXX]

Best thing you can do when thinking how the market will react is to look at it as a person.

 

[Nowler]

Best thing you can do when thinking how the market will react is to look at it as a person.

I have noticed people doing this but I wasn't really sure how to approach it...
I'm trying to be as careful as I can so as not to pick up maladaptive cognitions/behaviours but it's a minefield! And commonly results in me standing there, stumped

 

[tomorton]

It can't overreact and it can't be irrational. The market does what it does, it can only act - it is individual participants who can overreact and who can be irrational.

 

[Robbe]

Maybe I will never find an answer to this question. But in truth, that's our purpose of trading - to understand the market.

 

[tomorton]

Well, maybe not the ONLY purpose...........

 

[DFM8]

there is no purpuse to trading other than to try to make money to get by in this pissy system we live in