Do you know why this happens?

Discussion in 'Trading' started by qdz2, Mar 11, 2003.

  1. qdz2


    You may not agree with me. This is just my observation. In many occassions when the market is about to make a nice move, it pretends moving to the opposite direction. The length of time is usually less than two minutes. Do you know why this happens?

  2. IMHO, it's the MM's running stops and/or shaking out weak hands.

    Cheers !!:)
  3. prox


    Yeah, usually manipulation by big money ..

    and the fakeout helps fuel the move the other way.
  4. Sanjuro


    Yes, just liked today.

    It looked like ES was breaking out upwards from
    consolidation at 10:45 PT. Then it just turned around
    and dropped till the end of the day.

    It just pisses me off to get my stop kicked before the
    market moves in the anticipated direction.
  5. Yes, most traders with experience trust their gut regarding this fake-out counter move, but I think the question is still left unanswered, does anyone have verified PROOF that the mm's and big money are running stops? I mean, not everyone trades with the same time horizon or even directional bias when entering a trade. Has anyone ever read a book by an mm or large trader who specifically claims "we always run counter to the trend before a big move." I have never seen any proof of this in print and most everyone I know always refers to "them" when talking about running stops or manipulation. If small traders knew this for a fact, we wouldn't call the trader taking posistiins counter to the trend "them," we would know for sure.

    My point is, there just isn't proof that these tiny counter trend moves ARE the big bad market makers--it could just be dumb money.

    just my thoughts.
  6. the stops are what takes the market that way before the real move happens.
  7. You can also look at it this way: When you get a strong signal like the breakout today mentioned above, then lots of traders go long. Then comes the critical moment: After the initial pop, do the sellers retreat or do they stay? If they stay (like today), all the traders who are long think, Oh man, if this does not scare the sellers, then nothing will, I better get out. And that's what they do. That, of course, just reassures the sellers that they are right, so they become more aggressive.
  8. qdz2


    let me try to give you an explanation. my understanding is the two minutes holding privilege for the specialists at NYSE. They hold large orders from big money and know what's gonna happen shortly. If NYSE eliminates this rules, we should see much less occurrence of this phenomena.

    Cheers, rule these @#$!! out!

  9. Have you ever watched EBAY?
  10. qdz2


    No. What happened with EBAY?


    #10     Mar 11, 2003