Why was the EUR/CHF inactive in 2012?

[chaSoto86]

I am curious to know why the movement of the price of this torque was practically dead throughout 2012. I just began to analyze more pairs of currencies and I found this.The price action in 2011 seems normal, and so far in 2013 the torque is moving within a decent range, but 2012 was completely different.I would like to listen to your opinions."Every day, common people do extraordinary things"

[esaxSvora]

As far as I know, the Swiss National Bank set the CHF exchange rate with the EUR in 1.21 during that period.

[chaSoto86]

You are right, Almond!Here is an article that explains the reason behind this.[http://www.dailyforex.com] (http://www.dailyforex.com

[JaesnGNesbres]

Basically, the Swiss National Bank was placing purchase orders in 1,201, because in 2011 everyone and their grandmother were buying Swiss francs with the idea that the end of the world was coming.This massive flow towards the CHF caused the pair to shoot, which represented a threat to the Swiss economy.

[chaSoto86]

The intervention of the Swiss National Bank (BNS

[odiesrda.TSeszes]

The funniest thing is that many people at that time thought that EUR/CHF was going to shoot because "the BNS could not sustain the intervention forever."Well, reality was another.They kept the floor for years and only in 2015, when they removed it, we saw a real movement.If someone operated this pair in 2012 waiting for volatility, I really didn't understand what was happening.The market was fully manipulated by the Central Bank and there was no way to move freely.It was a book case about what an extreme intervention can do.

[chaSoto86]

I don't know why people are so surprised about what happened in 2012. The history of central banks is full of similar interventions.Does anyone remember when the Bank of Japan did something similar to Yen?The same, but with different currency.What they should wonder is what other pairs are at risk of intervention in the future.Any shelter currency in times of crisis is susceptible to the Central Bank putting the hand to control the chaos.

[DEsNJAR]

It seems to me that people underestimate the influence of central banks in the market.Most retail traders believe that Forex is a "free" market, when in reality the big players manipulate prices all the time.The case of the EUR/CHF in 2012 is the perfect proof that if a central bank wants to set the price of a pair, it does and period.No matter how many people try to operate against, they always have more money and more power.

[chaSoto86]

Operating the EUR/CHF in 2012 was basically wasting time.There was no volatility, there was no momentum, there was nothing.It was a completely flat graphic, without real opportunities.If someone tried to make scalping in that period, he sure ended up tear his hair from frustration.The lesson here is clear: you never operate an intervened pair unless you are 100% sure that the intervention will break.And even in that case, it is a huge risk.

[esSbortuTk2716]

Worst of all, there were "gurus" saying that the pair would move sooner or later.Myself fell into the trap and maintain open operations waiting for the market to react.Serious error.The only thing I learned from that experience is that when a central bank sets a price, it is best to look the other way and operate a different couple.Losing months waiting for a break that never arrives is not an intelligent strategy.

[chaSoto86]

In 2012 I saw the EUR/CHF chart once and I immediately knew that it was a deadly trap.Literally did not move.You could go on vacation for a month and return, and the price was still in the same place.If there are still people wondering why the pair was inactive, the answer is simple: the BNS had a wall in 1.201 that no one could break.So simple.

[ciruoS]

Many people make fun of central banks, but the truth is that without their interventions, markets would be much more volatile and chaotic.In times of crisis, sometimes they need to put hand to avoid major disasters.The problem is when they keep interventions for too long.In the case of EUR/CHF, the lack of volatility ended up frightening most traders, which affected the liquidity of the torque.

[chaSoto86]

The most ironic thing is that when the BNS finally withdrew the intervention in 2015, people were not prepared for the chaos that were unleashed.The price collapsed in seconds, leaving accounts destroyed everywhere.It is curious how we go from a sleeping market to one completely out of control in 2015. If that does not demonstrate the power of the central banks, I do not know what it will do.

[Chis17041970]

I have always wondered why the BNS chose exactly 1.201 as a level to defend.Was it an arbitrary number or was there any logic behind?I imagine that they took into account the levels of economic competitiveness and the pressure on their exports, but still, I intrigued to know more details about their decision.

[chaSoto86]

More than the exact figure, the important thing was that the Swiss Franco did not overvalue too much.Its economy depends a lot on exports, and a strong Franco was a direct blow to its competitiveness.If they had not intervened, the EUR/CHF would probably have fallen much more, affecting the Swiss companies.From his perspective, it was a pragmatic decision.

[Sesirescessos90]

Interesting point.There is always talk of intervention from the perspective of trader, but few think of the real impact on the Swiss economy.If the BNS had not acted, many Swiss companies would have broken.Maybe it was upset for traders, but from a macroeconomic point of view, it made sense.

[chaSoto86]

It is easy to criticize BNS now, but in 2011 and 2012 people were terrified with the crisis in Europe.Everyone wanted Swiss francs, which was destroying their economy.If they had not intervened, the crisis would have been even worse for Switzerland.For them, what they did was not a whim, but a necessity.

[kovunsiesn]

So what is supposed to do when there is such an intervention?Simply ignore that pair and look for others?I guess yes.But it is also true that in some cases the interventions do not last so long and end up generating unique opportunities when they collapse.

[chaSoto86]

It depends on the type of intervention.Some, like this, are held for years.Others last only a few months and end up breaking quickly.The trick is to know how to differentiate between a strong and temporary intervention.If you enter the market waiting for the Central Bank to fail, you better have enough patience and capital to endure.

[CesTrudess]

I wonder if we will see something like that again in the future.Will there be another central bank that sets an exchange rate and creates a "dead market" such as EUR/CHF in 2012?I think it's very possible.Every time there is crisis, central banks are looking for ways to intervene.If another serious financial event occurs, I would not be surprised to see something similar again.