Skip to content
All library documents

Why Currency Prices Can Jump Across Candles in Thin Markets

Article Quant Q&A · Author: Matas Vaitkevicius
Read the original

Summary

The document considers an apparent rise in USD/TRY where the displayed candles seemed to show no prior close below the later price. The questioner wonders whether the move reflects a glitch or genuine price direction. The accepted explanation attributes the appearance to a very wide spread gap, which can make chart prices seem to jump even without a sequence of intervening closes at lower levels.

A second response suggests that sharp swings can occur in thin markets when a trader or algorithm buys without much regard to price until reaching a set limit. These are plausible explanations rather than a verified reconstruction of the specific chart: the excerpt provides no bid and ask data, trade records, or details about the chart’s price source and candle construction. It therefore illustrates how spreads and limited liquidity can distort a chart’s apparent path, while leaving the precise cause of the observed move uncertain.

Key ideas

  • A large spread gap can make a currency chart appear to jump between candle prices.
  • Thin markets can experience sharp moves when aggressive orders consume available liquidity.
  • Candles alone may not show the full bid and ask spread or the path of executable prices.
  • The excerpt offers possible explanations but does not establish what caused the specific USD/TRY move.

Tags

ForexMarket microstructure
Full text
# How can currency (USD/TRY) be going up without having a candle before that would close under it?


# How can currency (USD/TRY) be going up without having a candle before that would close under it?












I am having a hard time understanding how can USD/TRY be going up without having a period before that would close at a point under it. This is from today (2018-10-08 6:12 and 6:50). Is it moving up or down or is is a glitch?

## Answer by Matas Vaitkevicius (score 0, accepted)

https://quant.stackexchange.com/a/42508

I think I figured it out on my own, it was a huge spread gap.

## Answer by Chchboogie (score 0)

https://quant.stackexchange.com/a/42116

Most likely this is a computer/ algo or a person that buys irrespective of price until a set point. Wild swings happen like this in thin markets.

Shown in full with attribution under the source's licence. Licence: CC BY-SA 4.0 (Stack Exchange)

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.