Lots of times we know how market would react to news..right - WRONG.
There was a big build up for the ECB meeting today. Everyone knew about interest rate cut by Mario Draghi and bearish implications for Euro. As a matter of fact - Euro had come off sharply ahead of the event with lots of short interest in the currency.
The news confirmed what everyone knew in the market and there was a sudden drop in the Euro, as expected, but as it always happens aggressive profit booking kicked in and in no time, Euro made a sharp U turn and rallied and closed much higher for the day.
Initiate the Trade on Rumor and Close the trade on Reality.
So, anybody who would have gone short today even before the event would have squeezed out in no time. Also, look at the V shaped reversal - very little time to react. Trading on news on the news day is a very bad idea because you just cannot predict how market would react eventually to the trade.
The blogpost is purely for educational purpose.