A Trading Hazard

Discussion in 'Trading' started by Illini Trader, Jan 18, 2017.

  1. This attached chart of the EUR/USD currency pair for today, Jan 18th, shows what traders are up against. I see this all the time and it even happened in another pair today as well. What they do is to pick a time when a market is trending along quietly and smoothly, then they will smash it hard the opposite direction for an interval bar, then reverse it back to the original direction in a major accelerated move. They do this to shake out the shorts (in this case) with the large sudden move up, then move it really hard down.

    If I had been home trading today I probably would have gotten out of my short position (if I was short) and initiated a new long position. I would then have been mentally committed to the upside with this breakout to the upside. Then when they take it back down big I would not believe it at first, and hang on to my long position way too long. Then what Mark Douglas calls "Forced Awareness" sets in, and there is a panic frenzy to sell out the long position. This selling just further feeds the downtrend and then when you realize how far and how fast the downtrend has gone, you initiate a new short position way past the entry point providing them with a perfect market to cover their shorts while taking their profits and laughing at us all the way to the bank.

    It is a nifty racket they have and it is a trading hazard for us small retail traders. We just have to be aware and adjust.

    ScreenHunter_02 Jan. 18 18.56.jpg
     
    Last edited: Jan 18, 2017
    fourtiwinks likes this.
  2. Nereto

    Nereto

    Welcome to trading.
     
  3. I have been trading since I retired in 2002 and this type of action never ceases to amaze me.
     
  4. If you look at election night action .. it was basically the same thing.
     
    W.J. Feathermaker III likes this.
  5. helgen_1

    helgen_1


    From one trader to another:
    To change your perspective here is a documentary from the 80's that is worth watching.



    H.
     
  6. Handle123

    Handle123

    Everyone sees different patterns, I see a Double top to sell the close as trend is down. I see a cheap risk opportunity.
     
    iamnewuser911 likes this.
  7. algofy

    algofy

    So you'd sell the close of the big down bar?
     
  8. Handle123

    Handle123

    Upclose made possible double top and risk just above in a down trend. Usually like to sell under a higher low, but none nearby on 5M, drop down to smaller timeframe, also Janet Yellen was speaking which caused this, it wasn't like no one knew this was not going to happen, unless of course one is not checking reports or meetings. Any time she speaks, gets some activity.
    I use this to check for USA activity.
    http://mam.econoday.com/
     
    beginner66 and algofy like this.
  9. Tim Smith

    Tim Smith

    Your post exemplifies everything that is wrong with the retail trader.

    If a trade doesn't go in your favour, its never your fault, always the fault of your evil counterparty because they supposedly hunted your stops or made sure there was slippage on your trade.

    You're trading off a 5m chart, what do you expect ? Its full of noise ... increase your trading timeframe and relax !
     
    comagnum likes this.
  10. algofy

    algofy

    He wasn't blaming anybody he was just pointing out sole price action. Good grief.
     
    #10     Jan 19, 2017
    W.J. Feathermaker III likes this.