Volatility / Random spikes

iota · Mar 25, 2011

For the third time this week I've got a signal, waited for the setup, traded it and then got fu**ed by a sudden spike in price that promptly retraced and continued on it's merry way.

I'm now just above break even for the week.

Aside for setting ludicrous great stops, is there any way to deal with volatility, or does it just up and f**k everyone and it's part of the game?

Martinghoul · Mar 25, 2011

Ignore it...

Wile E Trader · Mar 25, 2011

I have the same provlem as well so it will be interesting to hear how others have handlled it

One thing you may wish to look at is ATR based stops, so its a volitility based stop loss.
but then true this will not help with a sudden spike over the volitility ATR Range.

wackypete2 · Mar 25, 2011

Happens to all of us. It's part of the game. If the spike is caused by known news events like economic or financial data releases then just avoid trading around those times or make some adjustments to account for it. Otherwise, no mater what timeframe you are looking at, if the candle that spiked you out retraces enough to start looking like a pin bar (> 50% retrace) you can generally re-enter your trade at that point if all else still looks good.

If you are trading forex here's a link to an economic calendar: http://www.forexlive.com/economic-calendar

You can google to find similar for equities and futures.

Peter

iota · Mar 25, 2011

Martinghoul said:
Ignore it...

Ignore being stopped out?

wackypete2 said:
Happens to all of us. It's part of the game. If the spike is caused by known news events like economic or financial data releases then just avoid trading around those times or make some adjustments to account for it. Otherwise, no mater what timeframe you are looking at, if the candle that spiked you out retraces enough to start looking like a pin bar (> 50% retrace) you can generally re-enter your trade at that point if all else still looks good.

If you are trading forex here's a link to an economic calendar: http://www.forexlive.com/economic-calendar

You can google to find similar for equities and futures.

Peter

No I'm running a squawk, it's not news/announcements, I'm talking genuinely random spikes. Thanks anyway.

wackypete2 · Mar 25, 2011

iota said:
Ignore being stopped out?

No I'm running a squawk, it's not news/announcements, I'm talking genuinely random spikes. Thanks anyway.

Then use a re-entry strategy. Sometimes very large orders go through causing spikes. Barring anything else then price will normally revert back to the price before the spike or close to it.

Peter

iota · Mar 26, 2011

wackypete2 said:
Then use a re-entry strategy. Sometimes very large orders go through causing spikes. Barring anything else then price will normally revert back to the price before the spike or close to it.

Peter

Oh I know, I've had some easy pips on retraces like that as well as some bleeding fingers.

Volatility / Random spikes

iota

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Martinghoul

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Wile E Trader

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wackypete2

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iota

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iota

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