What creates spikes?

[VPhantom]

You're funny VP because I can't quite figure you out. I'm not sure if you're new to the game or not. On the one hand you're still learning you say, on the other hand, you sound like you really know what you're talking about!

Thank you! I tend to be somewhat of a chameleon and absorb a field's vocabulary and philosophy rather quickly. My bio: I day traded stocks full-time in 2003 (mostly breakouts, having been "mislead" into those), hated getting pulled away by my other business but had to, then looked at daily charts with Elder's approach around 2007-2009 but didn't get comfortable. Now since mid-2014 I finally have all the time I need, so I've been studying and planning without hurry, with some brief bouts of experimental live trading on small size to keep in touch with the feel of actual executions. I found my comfort zone (my own simplified blend of Morge and Wyckoff, intraday and daily) and will likely be trading live within the next few months after I finish Wyckoff's material, settle on instruments and timeframes, and go through enough months/years of replays to feel confident in my plan. (Switching charting packages will also be a learning curve...)

Okay, the short version is that I see myself as an "educated rookie" with under 5000 hours of screen time (incl. research) and less than 1000 trades under my belt. So my opinions should be taken with a big grain of salt.

To only report that a short was taken is quite misleading.

From an educational standpoint, I agree: it makes it look easier to manage than it may have actually been, especially if slippage is involved. "Scratches" as they seem to call them, should stay on example charts along with final movers; no shame in them so they can only help, at worst be useless. I don't plan on weeding them out of my charts if I ever did share such things, as I doubt they could reveal an oh-so-fragile edge on their own.

From a psychology standpoint, in real time it does make sense to immediately write off failures as uninteresting and move on so as not to miss the actual opportunity coming up.

This of course all comes back to my tired point about asking to see all trades.

It'd be neat for sure, I'd love to sit behind a pro price action trader's shoulder for a day or two, but at least for me it'd have mostly entertainment value. I think price action trading includes unwritten intuition, so the fastest way I can think of to acquire that experience is accelerated chart playback, which luckily one can get almost free these days.

 

[i am nobody]

I can only speak for myself. When I started out, I had no one to even talk to about TA. I was surrounded by bright people who believed in EMH. Imagine being a lonely TAer in midst of EMHers. I made a lot of mistakes -- paths I pursued thinking they were useful in my quest when they were not --, blown-up accounts, and eventually, by trail and error, found something that worked for me. When that happened, I realized that many books that retail traders rely on to help with their trading (which included me) were either out-right BS or assumed so much background knowledge that the author's intent was lost in "translation". Moreover, as I began to converse with other profitable traders, I began to realize that we are all doing the same thing even though our methodologies were not necessarily the same (this could be the reason why you think DbPhoenix and I seemly say very different things on the surface. Since our methodologies are different -- not that I know what he is doing --, our comments makes sense only when view within our frameworks. By comparing the two methodologies, you are comparing apples to oranges; you then go on to say, one says the skin of the fruit is red, while the other says the skin is orange. You then wonder who is right! You keep making this mistake, and I have pointed this out to you a few times, but to no avail.)

I come to ET, and I see aspiring traders make the same errors I made. It is out of a desire to lessen the learning curve, and to help them sift the wheat from the chaff that I post. I know how hard it is to break through in this business without any guidance. I have no desire to preach a trading methodology to anyone or to teach them my way of thinking. However, for aspiring trader who are willing to do the work, I would be more than happy to guide them so that they don't pursue a path that they think is important when it is not.

My intentions are no more or no less.

With that said, I will have to sign off from this thread. Thank you for giving me an opportunity to share with you the very little I know about markets and trading.

All the best with your pursuit.

Regards,
Monoid.

Monoid, what you posted here is like what a good father would do for his children: help them with good advice.
But as you know how children are, only many years later, when these children are grown up, they will realize the real value and appreciate what their father did and told them.

The same applies to you. Later they will think back of you and be grateful. You were the father and others were the children.

 

[k p]

With that said, I will have to sign off from this thread. Thank you for giving me an opportunity to share with you the very little I know about markets and trading.

All the best with your pursuit.

Regards,
Monoid.

Sorry to have been a little blunt Monoid, but given that what you were presenting was so radically different (no volume/time charts, no understanding of demand as you claim, etc.), I was just looking for something a bit more concrete as an example of what you do. There is of course no requirement on your part to divulge, but its like when people come along and say all the TA traders have it all wrong, and that all the real pros don't even use charts, but then they don't offer any explanation as to how they trade, it just makes it difficult to follow their logic or the point they are making. So when you said that you were waiting to see how things played out, I was just curious about what you're looking for. Since its not demand, and since you were buying during a selling wave, it made this all the more mysterious.

I do appreciate reading about your history and seeing how you've struggled so thank-you for this background.

 

[Pager]

Some massive spikes in Asian futures at times, both up and down, Hang Seng is notorious for them, usually with big volume, had one last week in the SGX Nikkei just as the cash got going, spiked up about 150 points which is about the daily range most days then reversed by about 200 all in about 10 seconds, had been short off the open myself and was expecting bad slippage but a lucky break as my stop got hit just a few seconds before the spike and no slippage, then we had another in Taiwan just before Christmas, again huge volume drove that market nearly 10 big points higher for just a few seconds then it fell back down again, that’s $1000 per contract and that market very rarely does anything near that range ever.


Why or how these spikes occur is no mystery, its big volume hitting the market but the question is why all at one time?

 

[k p]

From an educational standpoint, I agree: it makes it look easier to manage than it may have actually been, especially if slippage is involved. "Scratches" as they seem to call them, should stay on example charts along with final movers; no shame in them so they can only help, at worst be useless. I don't plan on weeding them out of my charts if I ever did share such things, as I doubt they could reveal an oh-so-fragile edge on their own.

Thank-you! I just wanted to hear one person understand where I'm coming from. As you say, the worst that could happen would be that the info would be useless. But often in life, the things you don't see end up being the most useful/pertinent. I mean if this trading business is about taking each trade that sets up as per your plan, then showing that you do this, even if you have to scratch is helping the new trader see the discipline. To only show the one that works, when it looks obvious on the charts that other traders might have setup (unless there is some unknown magic filter to eliminate the others), doesn't actually help the new trading with building the trader's mindset which is to take every trade. So many people have pointed out to me that I am searching for the perfect trade, and my response to this is that I only mostly only ever see the perfect trades posted, so I've been in some respects misled by those trying to help that this is in fact possible.

From a psychology standpoint, in real time it does make sense to immediately write off failures as uninteresting and move on so as not to miss the actual opportunity coming up.

Oh I for sure agree. I am seeing now that the sooner I get out of a bad trade, the better off I am psychologically and the better able I am to take the next trade.

On Friday, I had two whole trades (I was napping during the eventual drop so only watched the first hour or so and then woke up after price was heavily down). I took this first long based on expected support, after 4 previous bounces, and was out quite quickly for a 2 point loss. And then I was very quickly able to take a second long based on what I thought was a more prominent support level. Yes I covered at a level that was just enough to cover the loses from earlier and hence end up $2 into profit, but just being able to take that second trade, based on sound reasoning, rather than either holding for a bigger loss or being too scared to do anything else is at least a step in the right direction.

I think price action trading includes unwritten intuition,

I think you're absolutely right. I call these the "filters" that aren't exactly written down in every person's trading plan, but ones based on years of screen time that have made their way into the person's brain. So once again, the trader might have a plan, and even if they shared that plan with someone else, this new trader might still not produce results nearly as good. The reason for this would be the filters. And once again, it would therefore be beneficial to see what the trader does via their actual charts versus what they say they will do, how they say they trade, because rarely do these match up I think. Only an automated system would actually follow the trading plan exactly.

I'd love to watch one of these guys too! But nobody is offering.

 

[wrbtrader]

...I think you're absolutely right. I call these the "filters" that aren't exactly written down in every person's trading plan, but ones based on years of screen time that have made their way into the person's brain. So once again, the trader might have a plan, and even if they shared that plan with someone else, this new trader might still not produce results nearly as good. The reason for this would be the filters. And once again, it would therefore be beneficial to see what the trader does via their actual charts versus what they say they will do, how they say they trade, because rarely do these match up I think. Only an automated system would actually follow the trading plan exactly.

I'd love to watch one of these guys too! But nobody is offering.

Its impossible for a discretionary trader to explain everything they do that occurred in their brain for any particular trade on a chart or written in words at a discussion forum. Therefore, your hopes of seeing such on charts or a message post is not realistic.

Heck, today's computer technology allows individuals to study the exact body mechanics or kinetics of top athletes and individuals studying such still can not produce the exact same performance even if they are near perfect in duplicating the technique used by the top athlete because the technology can not reveal what's occurring in the athletes mind and experience in thousands or millions of different situations involving just one single body movement.

Therefore, us traders...after we gain access to the info about a trade on a chart or all trades on a chart or in-depth trade explanations in a message post...we will still be missing critically important pieces of the puzzle involving that particular trader and trade.

Simply, if you want to gain additional insight into how someone is "thinking" and "adapting" in a trade via the same trading plan that you've read...you can only gain those additional clues via in person watching over a long period of continuous time (e.g. weeks, months). Yet, its still not enough to be actually sitting in person in the same trading environment of that trader because when those synapses are firing...you just can't be inside someones head in real-time or hindsight for the purpose of learning exactly what the trader was thinking during a trade. http://en.wikipedia.org/wiki/Synapse

Regardless, if such is really important to you...go to ETs' hook up thread and post info about your location (city, country) with a request about what you're taking about. Hopefully someone can help you or you can post such as a signature or P.S. in every message post you make here at ET or any other forum in hopes of someone nearby your location can help you gain those "additional insights" (filters as you call it) that discretionary trading is unable to reveal in a chart or education message post...in person will provide much more info than a chart although in person is still not going to reveal "everything".

Thus, maybe nobody is offering such to yuo because you're not consistently advertising for such...in person learning.

The real edge is the trader even though the trader still needs a decent trading plan.

 

[k p]

Some massive spikes in Asian futures at times, both up and down, Hang Seng is notorious for them, usually with big volume, had one last week in the SGX Nikkei just as the cash got going, spiked up about 150 points which is about the daily range most days then reversed by about 200 all in about 10 seconds, had been short off the open myself and was expecting bad slippage but a lucky break as my stop got hit just a few seconds before the spike and no slippage, then we had another in Taiwan just before Christmas, again huge volume drove that market nearly 10 big points higher for just a few seconds then it fell back down again, that’s $1000 per contract and that market very rarely does anything near that range ever.


Why or how these spikes occur is no mystery, its big volume hitting the market but the question is why all at one time?

Those are crazy spikes. About the only time this happens in the NQ is during major news release, but since these news events are planned, you can certainly be flat during this time.

When you say that the spikes are no mystery because its big volume hitting the market, I think this is the case, but there is an important qualifier of why the big volume is hitting the market. I don't think its because all of a sudden traders are rushing to buy or sell, but rather that the automatic stop orders are getting triggered. In a way they do want/need to sell since a protective stop has been hit, but I don't think the intent is there. Put another way, if there was an intent on the part of guys who are long to sell, then this should mean the down move will be evident. But since these spikes often don't go anywhere and everything that is for sale is bought up at increasingly higher prices, then this big volume isn't really indicative of a strong move in the direction of that spike, which I guess in a way is what you'd think.

 

[k p]

Its impossible for a discretionary trader to explain everything they do that occurred in their brain for any particular trade on a chart or written in words at a discussion forum. Therefore, your hopes of seeing such on charts or a message post is not realistic.

Heck, today's computer technology allows individuals to study the exact body mechanics or kinetics of top athletes and individuals studying such still can not produce the exact same performance even if they are near perfect in duplicating the technique used by the top athlete because the technology can not reveal what's occurring in the athletes mind and experience in thousands or millions of different situations involving just one single body movement.

Therefore, us traders...after we gain access to the info about a trade on a chart or all trades on a chart or in-depth trade explanations in a message post...we will still be missing critically important pieces of the puzzle involving that particular trader and trade.

Simply, if you want to gain additional insight into how someone is "thinking" and "adapting" in a trade via the same trading plan that you've read...you can only gain those additional clues via in person watching over a long period of continuous time (e.g. weeks, months).

Thus, if such is really important to you...go to ETs' hook up thread and post info about your location (city, country) with a request about what you're taking about any hopefully someone can help you or you can post such as a signature or P.S. in every message post you make here at ET or any other forum in hopes of someone nearby of location can help you gain those "additional insights" (filters as you call it) that discretionary trading is unable to reveal in a chart or education message post. Thus, maybe nobody is offering because you're not consistently advertising for such.

The real edge is the trader even though the trader still needs a decent trading plan.

Thanks for this wrbtrader. Yes, I absolutely accept that its impossible to explain everything that occurred in the trader's brain. It would be interesting though if we could see a trader show their trading plan, and have a group of 5 trader's trade this plan, and each compare the results. I think the results would have a huge variance, which would mean that none of these trading plans are as written in stone as I think they appear to be. (with the exception of NoDoji I think... she says her's is 70 pages long and even includes diagrams of the setups! )

You advice is quite interesting, but I do believe that finding anyone local, who even trades the way I want to trade, is incredibly slim. I think that going forward, the only real answer is to become that trader that I envision is somewhere out there.

 

[wrbtrader]

Thanks for this wrbtrader. Yes, I absolutely accept that its impossible to explain everything that occurred in the trader's brain. It would be interesting though if we could see a trader show their trading plan, and have a group of 5 trader's trade this plan, and each compare the results. I think the results would have a huge variance, which would mean that none of these trading plans are as written in stone as I think they appear to be. (with the exception of NoDoji I think... she says her's is 70 pages long and even includes diagrams of the setups! )

You advice is quite interesting, but I do believe that finding anyone local, who even trades the way I want to trade, is incredibly slim. I think that going forward, the only real answer is to become that trader that I envision is somewhere out there.

Many traders and threads have shared their trading plan here at ET and the results of those using such have differed amongst as expected because one discretionary trader thinks differently than another discretionary trader using the exact same trading plan or trade strategy.

I'm just guessing...there must be several hundred such threads here at ET over the years and ET keeps a good record of such threads as a sticky note thread somewhere here in one of those top thread list. Simply, NoDoji is just one of many that have shared such.

Lets put it this way, if your goal is to trade for a living...you'll do whatever it takes to find someone local to help you or you relocate. Its that simple. In contrast, if trading is just a hobby to you or a way for you to try to make some pocket change or just an academic pursuite...probably not worth pursuing what I suggested.

Think about this...I remember when I was in high school and deciding on what career I wanted and that involved determining what university I wanted to attend. The university I wanted to attend and achieve my education goals was not local. Simply, I had to go to college out of state...I had to relocate with no guarantee I will graduate from college nor with a guarantee I will get my desire job in the degree I studied.

P.S. SAT scores and school activities had a major determining factor of where I could go. :eek:

 

[k p]

Lets put it this way, if your goal is to trade for a living...you'll do whatever it takes to find someone local to help you or you relocate. Its that simple. In contrast, if trading is just a hobby to you or a way for you to try to make some pocket change or just an academic pursuite...probably not worth pursuing what I suggested.

Very well put. I do want to trade for a living. I just don't believe anymore, based even on all the posts in this thread, that anyone who is actually profitable would want to help in such an "intimate" way. One very good reason of course might be to remain anonymous, which I fully understand. But it also seems like many are of the belief that they would lose their edge because they think the liquidity is not sufficient enough if someone else started trading the way they do.

(Shame you're on the east coast as I am on the west!)