Any charts showing people getting stops triggered, making the move stronger?

iamnewuser911 · Sep 3, 2016

Is this right?

http://prntscr.com/cdmmt4

I have another question.

When price spikes up hard, then comes crashing down, why does that happen? I know there are some profit takers, but I have heard because of "Lack of liquidity".

What does that mean? Can someone illustrate with an example on the levels?

Does price reverse because of sell orders or lack of buyers? How do I spot the difference? I know sell orders are all clustered on major levels, like SR etc

Also, pullbacks in a trend are because of "Lack of liquidity" (I know because some profit takers but aren't there other reasons? People fighting the trend is another one)

What are the different characteristics of different sessions in FX market? Does different sessions have different sentiment or is a continuation? Higher volume?

How far does a news event makes price go?

Should I still enter on a beautiful technical level after a news event that came out with good figures but it plunged to that level?

iamnewuser911 · Sep 3, 2016

Edit button is gone.

Want to add: So how do you take advantage of news events? Use them as a indicator? Volatility?

Laissez Faire · Sep 3, 2016

First things first.

What is a stop loss?

It is a trigger at your broker where a market order (or limit order) is triggered when price prints a pre-defined price at your own discretion.

So, if there's an area where stops are clustered, this means that once price trades there, that side of the market may get crowded (meaning an imbalance between buyers and sellers) since there's many stop orders to get filled. That may or may not happen.

Also, market imbalances are not dependent on retail traders stops being clustered at some stupid or random level.

I wouldn't waste my time...

iamnewuser911 · Sep 3, 2016

Laissez Faire said:
First things first.

What is a stop loss?

It is a trigger at your broker where a market order (or limit order) is triggered when price prints a pre-defined price at your own discretion.

So, if there's an area where stops are clustered, this means that once price trades there, that side of the market may get crowded (meaning an imbalance between buyers and sellers) since there's many stop orders to get filled. That may or may not happen.

Also, market imbalances are not dependent on retail traders stops being clustered at some stupid or random level.

I wouldn't waste my time...

For sure bigger boys will place their stop losses too?

Laissez Faire · Sep 3, 2016

iamnewuser911 said:
For sure bigger boys will place their stop losses too?

I don't know. Do they?

The point is that the reason why isn't relevant to your success. A fast price move could be a cluster of stops or it could simply be a large order or multiple large orders entering the market for some reason you're oblivious of. And even if you knew the reason, it wouldn't matter anyhow.

The only thing that matters to you or anyone else is to be positioned to profit from these moves and recognize them when they happen.

Apophenia · Sep 3, 2016

Trading isn't top down. It's bottom up. Stop with all the rationalizations. James Simons (Rentech) once said that his systems usually do not make sense. It doesn't have to make sense. It has to be profitable. My system doesn't make sense neither. You'd laugh at me if I told you. But it works. I could sell you some arguments for it. But it's not the point. It has to be profitable.

Abundance Magnet · Sep 3, 2016

Laissez Faire said:
I don't know. Do they?

The point is that the reason why isn't relevant to your success. A fast price move could be a cluster of stops or it could simply be a large order or multiple large orders entering the market for some reason you're oblivious of. And even if you knew the reason, it wouldn't matter anyhow.

The only thing that matters to you or anyone else is to be positioned to profit from these moves and recognize them when they happen.

Can you see stops? I spoke with rep at IB and was told that stops do not show up because they are held on the system until the event triggers it.

I have also heard that ppl/big boys who trade a particular stock/instrument will know where ppl will typically place their stops.

I've also read that the big boys do use stops (best way to protect yourself and manage risk), but they careful where they put them. Ie, not at typical spots, or further out.

dealmaker · Sep 3, 2016

iamnewuser911 said:
For sure bigger boys will place their stop losses too?

Not necessarily, institutions have risk parameters but they think in the context of the current environment thus their stop losses fluctuate and as they always have a man on duty their stop losses are not physically placed so others can run it....

https://www.elitetrader.com/et/threads/aaron-brown-interview.301634/

Turveyd · Sep 3, 2016

A spike up day is a ahort term absence of sellers, it'll attract sellers and generally reverse, ofcourse sometimes it'll keep going.

Obviously a killer for anyone with tight SL as death by a 1000nd cuts sucks.

Abundance Magnet · Sep 3, 2016

Turveyd said:
A spike up day is a ahort term absence of sellers, it'll attract sellers and generally reverse, ofcourse sometimes it'll keep going.

Obviously a killer for anyone with tight SL as death by a 1000nd cuts sucks.

Yep, understanding your own risk management is key to becoming a top trader. Know thyself. Then the stops will be placed properly. We can't win them all.