A 22-basis-point move in the 10-year yield in a week: what do you do when no one can explain it?

Over eight trading days the 10-year Treasury yield fell from 5.31% to 5.09%, the largest move in this period coming on 15 October, the day after the US consumer price report (yields report, CPI report). News coverage will offer explanations, but the official data do not give a reason, and secondary explanations are often written after the fact.

Unexplained moves are where many traders are tempted to invent a story to justify a trade, and then to hold it past the point where the story stops making sense.

We would like members to be honest:

• Describe a time you traded a move you could not explain. What did you do, and what did you learn?
• How do you decide whether to act on a move without a clear cause?
• What rule do you use to exit when the reason you gave yourself stops being true?
• Do you write down your reason before the trade, so you can check it afterwards?

If you keep a journal, a note of the reason you gave for each trade shows how often the explanation was a story (how to keep a trading journal).

A reason you wrote down before the trade is more useful than one you invent after it. Did your recorded reasons match what the market later did, or did the story change once the price moved? How long do you hold a position before you review the reason behind it?

Please keep replies to your own experience. Posts that promise a direction or sell signals will be removed.