Market Games
The Market loves playing "games" with all types of traders. The official reason is due to there being a price zone or area were both the "bulls" and the "bears" are fighting over a support or resistance area.
This can lead to sudden price movements both ways - until one side "wins" and is able to carry on with the move - whether it be another 10-100+ pips up or down.
If you are a day trader and trade either intraday or just one trade per day - you have bound to have suffered seeing a nice trade go into profit by 20-50 pips - only then within less than an hr have your original stop taken out - or your trailing stop - which might only be 10-30 pips behind.
I have shown below an EU 2 day 10 minutes candle chart - with 3 obvious areas of were the bulls and bears have been having confrontation :-)
If you only trade daily and 4 hr candles you might not worry about the "noise" - ie 50 -70 pips either way and so might not be so aware that you normally get a false move one way - before a very quick move the correct way:-)
This happens officially because traders might be coming out of their trades as they hit their targets and new "contra" traders are at the same time entering for pullbacks. So you might have a "high" and then 15 or 30 minutes later price is 20-50pip the other direction.
Many traders call these type of moves "stop hunts". Other traders might call the other names - not quite as "nice" - I just call them "great opportunities" :-)
For a seasoned "scalper" or short term trader - you have an ideal opportunity to risk a 5 pip or 10 pips stop and make a quick 15-50 pips within normally half an hr.
Trades like these are just like the longer term or position trader - who end up with 250-300 pips over a few days - but as used a 70-100 pip stop - ie RR of 3 or 4 .
I would prefer the same or even a better ratio in half an hr - allowing me further opportunites to take more trades - using "free money" from part of my profit. ie if i have a RR trade of say 4 - i can use half of the profit on another money - and what ever happens - I am still up for the day.
Please remember - you will not catch every "stop hunt" type trade - but you really don't need to as the potential rewards of small stops are well worth the risk. Also I do advise you do try under 15 min charts to assist you in helping you understand what does go on :-)
All those traders today on the EU who took a new sell under 1.3115 hoping it would hit 3080 must have been really surprised when within half an hour it was back up testing 3180 high again.
What happened to that to that previous 12 hr down trend - and it even made a new monthly low :-)
Very strange - but then thats forex trading :-)
Have a great May
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Comment by No money on May 3, 2012 at 6:54pm -
A1. Thanks!
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Comment by Peter jcp on May 3, 2012 at 11:11pm -
ForeXmospherians will soon get to follow how it is possible to take their trading into a new "stratosphere". The Information is far too powerful and is the most advanced and "innovative" available to any experienced "different" Forex trader.
Only a a very few will ever get to see and understand it - ie less than 1% of all the present world wide retail forex traders- that should keep it fairly special :-)
Have a great trading month Sir G - but I need not really say that - because I already know you will :-) regards Peter
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Comment by Peter jcp on May 3, 2012 at 11:45pm
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laiceps strahc ta thegie snim dna 23 snims - but dont tell anyone Lisa ( promise me)
sti euqinu :-)
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Comment by SuB Zer0 {FX} on May 4, 2012 at 12:46am -
What a pair she has ! :O ... of lungs :P
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Comment by Sundaram on May 4, 2012 at 2:48am -
That's the benefit of a good massage, SuB, err..no?
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Comment by James Rolain on May 4, 2012 at 6:16am -
Peter is Jigsaw!!
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Comment by Keith Shaw on May 4, 2012 at 7:14am -
The market certainly does love playing "games" Peter especially on that pair (EU not Katherine Jenkins) and for the less experienced it's better to out of the "game" wishing you were in than being in the "game" wishing you were out. Else you will be like a small boat been tossed around in a stormy sea. ;-)
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Comment by Peter jcp on May 4, 2012 at 8:14pm
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For a so called "Freaky Friday" - the games today were fairly subdued - not like the good old days (3-7yrs ago).
When you think about it daily volumes are up over 50% compared to say 5 years ago - but now 30-40% of the trading is HFT - the big guys have been clever enought to realise there is more than "one way to skin a cat" so the old 150-250 pip rallies are not needed so much - they can actually use less capital themselves to "skin" the rest - and end up with even larger profits.
Remember - we are trading against the most talent guys in the world with endless resources and endless options of how to "pull out" more money and ways to try and beat us.
Mediocrity will just not survive in this "dog eat dog" trading world. Only the best and talented retail traders will survive - and the rest will slowly give up - only to be replaced by another few hundred thousand new traders every year. Its a shame - but thats just how it is.
Dont be one - keep studying - keep learning and over time it will then all be worth while ;-)
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Comment by talisman on May 4, 2012 at 10:25pm
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hi peter-lance beggs wrote an article recently about the importance of passion for charts in trading, and to be in it for more than the money. your article today certainly showed your deep interest in the charts and the entertainment you get from the market itself. good stuff, keep 'em comin'.
i m trying something different myself this week, trading from cafes in amsterdam. i told my wife its called trading spiro style ,named after my favorite guru and fx forecasting expert. she didn t get it but i know you will. good trading to you.
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Comment by Peter jcp on May 4, 2012 at 11:19pm
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LOL - yes Talisman, trading from cafe's in Amsterdam would certainly be entertaining- especially if you were on more than just the coffee :-)
I had not seen the Lance Beggs article - thanks Lisa for the link - and yes I would agree you have to have a passion and be able to find enjoyment in what you are doing. My main enjoyment comes from actually trying to learn more- I dont reckon I am half way there in terms of knowing exactly where every "single" pip will move to next ( not as though I need to - but its sure good fun when you can pick and choose on which way to trade in the next hour to give you the best RR with the minimum risk).
My next stage involves the actual mechanics of how all the trade entries are let into the market and the effect of pending entries have on market entries along with which brokers play the biggest tricks ( yes I am on that). Even just this afternoon my broker slowed my tick chart down by approximately 2 seconds allowing movements to appear on a 3 min chart prior to the tick and the ask and bid box ( max difference at one time 3 pips) It might not sound a lot but with 6+ full lots on - every single pip counts - just why do they and kid us ;-)
PS just on that subject in the UK British Gas add millions to their cash flow by having direct debits in advance - based on average usage - 90% of customers end up always paying slightly more than they need to every month - and then once every 3-6 months you get a rebate - obviously based on arrears -so by the time you get it - you are still up in credit - clever stuff.
For me its a case of "poacher turned gamekeeper" - - I have been involved in market game plan strategies for some Global products in the FMCG retail market on behalf of Pacific Dunlop - so you guessed - you need to know your market in "minute detail" to maximise your gains.
Have a nice weekend
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