【Why did the dollar-yen jump from 5:30 in the early morning?...
[Why did the dollar-yen exchange rate rebound from the early morning at 5:30?]
In FX, you need margin (balance) to hold the position you ordered. The margin maintenance ratio is always calculated while holding a position, and when the margin maintenance ratio falls below 100%, a forced margin call becomes imminent.
A forced margin call is executed when the margin maintenance ratio falls below 50%.
However, when the NY market closes and position holders enter the next business day with a margin maintenance rate of over 50% and less than 100%, they must choose one of the following:
- Payment of additional margin
- Stop-loss of the held position
- Recite prayers until the time of forced loss-cut execution on the next day (around 5:30 after the NY market closes).
* This is only applicable to the Japanese fx.
✅ Payment of additional margin
✅ Stop-loss of the held position
✅ Recite prayers until the time of forced loss-cut execution on the next day (around 5:30 after the NY market closes).
You must choose one of these three options. * This applies only to Japanese fx.
In this case, it seems that there were more short positions before the Bank of Japan monetary policy meeting. Many people were expecting the yen to strengthen after the Bank of Japan monetary policy meeting.
As a result, the yen weakened, and the USD/JPY rose by about 3.5 yen, which continued to gain momentum even during the US time.
Did traders who couldn't control the situation end up in a situation where their losses didn't change even if they cut their losses or had forced loss-cut execution?
As a result, many traders (who chose to execute a forced loss cut) placed their hopes on the decline of the USD/JPY after the close of the NY trading session, and it is believed that significant volatility occurred in the USD/JPY at 5:30.
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