Physical intervention
A physical intervention is a term from the business , which at the stock exchange is used. It means that a direct or indirect market participant intervenes in the trade and influences a price level (or several) through massive purchases or sales.
Verbal intervention can be an alternative to physical intervention . She only tries to influence courses with words. This assumes that a market hears the intervener's words and gives them weight.
A physical action works best if it surprises the market (otherwise there are market participants who speculate on the intervention: "I expect that tomorrow Central Bank XY will buy massive dollars - so the dollar rate will rise - so today I buy dollars and sell them again tomorrow at a more expensive price ”).
Central banks repeatedly try to influence currency speculation through physical interventions.
There are also physical interventions in commodity futures trading .
Sometimes publicly traded companies buy back their shares to prop up their share price.
effect
The effect of physical intervention is highly controversial - especially when central banks resort to the means. As a rule, they only have very short-term effects that are quickly offset by the market. Critics often accuse the central banks of "gambling" on the market with taxpayers' money.
See also
Individual evidence
- Jump up ↑ The Americans' Double Raid - 500 posts per page. Retrieved March 13, 2017 .
- ^ Sun Chemical: http://www.hgcn.de/news2008_1.htm. Retrieved March 13, 2017 .