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3 Dec 2015 ECB: EURUSD from near 1.06 to 1.0982, and what 380 pips does to a stop

Thursday 3 December 2015. The ECB announced its decision at 13:45 Frankfurt time, which was 12:45 in London, and Draghi's press conference started 45 minutes later.

The deposit rate was cut by 10 basis points to minus 0.30%, and the bond purchase programme was extended by six months, to March 2017, still at 60 billion euros a month. The market had been hoping for more than that. Euro shorts were caught out, and CNBC reported EURUSD hitting 1.0982 after the press conference. Reuters described the euro as leaping more than two cents, its biggest surge since March. A few hours earlier the pair had been trading nearer 1.06.

Take the arithmetic from roughly 1.0600 to 1.0982: that's about 380 pips, or $3,800 per lot. Suppose you were short 0.5 lot from 1.0600 with a 15 pip stop at 1.0615, risking $75. Thin liquidity after a headline can mean the stop is filled far from where you set it. A fill at 1.0700 turns $75 into 100 pips x 0.5 lot x $10 = $500, which is 6.7 times the plan, and nothing about the direction call had to be wrong for that to happen.

The calendar listed the rate decision and the press conference as separate events, 45 minutes apart. I'd count them as two. The decision gave a first push, and the move kept going through the press conference.

If the position can't survive a 100 pip hole, reduce it before the release, not after.

Looking at what the 380 pips means for a scalper's target helps. A 10 pip target is 2.6% of that day's move, so you needed roughly 38 such targets stacked to cover the same distance. On a normal EURUSD day a 10 pip target might be about a tenth of the range. On a day like 3 December the target is small and the stop is the part that gets tested. Traders who treat the day as one more scalping session apply the same lot rule and the same mental clock, and that's the mismatch to fix in advance, not on the day.

One practical rule: block out the event window. The decision was at 12:45 London time and the conference at 13:30. A rule such as "no new trades from 12:30 until 14:00, and anything open is either closed or sized to survive 100 pips" is easy to write on the calendar and hard to follow in real time. I like putting both times in the platform's alerts, so a notification appears 15 minutes ahead. The aim is to make the decision at 12:30, when nothing is moving, rather than at 12:46, with the price already jumping.

A line from the press conference is useful as a reminder of how the day was framed. Asked whether the cut was the lower bound, Draghi would not confirm that, and the transcript has him saying "The cut we decided today is adequate. Period." Whatever the exact reading, the market had priced in a bigger package, and the gap between what was priced and what was delivered is what moved the pair. For a scalper this is a plain lesson: before a release, ask not what is expected but what the move so far already assumes, because the reaction depends on the difference.

If you want to see it in your own history, open an M1 chart of EURUSD and scroll to 3 December 2015, then look at the hour from 12:30 to 13:30 London time. Note the biggest single candle, the number of pips between the lowest low and highest high, and what your usual stop would have been. Not every broker keeps history that far back, and the timestamps may be in the server's time zone, so check the offset before relying on the hour. Then ask what your position size would have been, and whether the stop would have filled at its level or somewhere lower.