Trump cheats at golf - the ONE and ONLY politics thread

Just saw this. Not paying attention to this thread. ... In this case, it was a lot of people covering bets they had already made -- to protect themselves in case. Markets, in general, were getting complacent factoring in a Clinton win. It has nothing to do with her "policies," as people on here see it. Markets prefer certainty and predictability, and it seemed certain she was going to win.

A number of currency trading desks had started playing the USD/MXN currency pair over the two weeks prior, which had been under pressure every time Trump opened his mouth for quite a time. They saw value there, and were factoring in that Trump wasn't going to win the election.

In the space of a few minutes with the FBI news, the odds of Trump winning jumped a bit, and that changed things. There were A LOT of traders potentially caught on the wrong side of trade that had the potential to spiral quickly-- and information was scarce at first. That leads to panic, or in the case of reasoned traders, a "get out and take your loss, rather than gamble." So people started to unload their MXN longs. When in doubt, get out.

That sent the Mexican Peso falling sharply, which was what I was watching. I didn't touch it -- it's not a pair I have ever traded, although the peso used to be the most liquid and widely traded emerging market currency (not as much the last year or two). But I had RSI (relative strength indicators) telling me it was very oversold, which would typically tell someone with the guts and an understanding of market psychology that it's the time to go against the herd. Some people call it "the puke factor." When a trade wants to make you puke, because it is scary, it is uncannily the exact right time to be buying (or selling).

For what it is worth, as the news has filtered through, that overreaction has tempered quite a bit. If you had sold into the frenzy, you could be exiting right now with a pretty nice quick-hit profit. It's not something I did, though. I was in other positions I was desperately trying to manage. I was just watching that and some other markets and shaking my head.