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2016-10-06 · GBP/USD

The Pound Flash Crash

A 6% drop in two minutes during Asian hours

MarketGBP/USD
Biggest move-5.5%
Extreme at (UTC)23:00
Difficulty★★★★☆
1.186941.210461.233981.257501.28102-5.5%Decision pointWhat happened next →

What happened

In the quiet of the Asian session on 7 October 2016, GBP/USD fell about 6% in two minutes and recovered most of it shortly after.

Thin liquidity plus automated orders turned a normal sell-off into a crash: a lesson about trading outside the main sessions.

How to survive a day like this

  • Check the economic calendar and the news before you trade: these days were announced or brewing for hours.
  • Reduce your risk: on extreme days, 0.5% per trade is plenty, because stops can slip far beyond where you placed them.
  • Do not fight the first move. The first candles of a shock set the direction for the rest of the session more often than not.