Since the broker liquidity and spreads have returned to a bit more normal lately
I've noticed something also returning to normal and that is the tendency for price(s) to react
at popular levels in a manner more like I've grown accustomed to observing before things got whacked out
like they did the last few weeks/months (like they've done so many times before).
To describe this, let me give a typical setup example:
You see price turning down, you want to sell the break, not pick the top.
You enter your order to follow the momentum, say the break of the big figure.
Naturally, who are you selling to ? Brokers, bucketeers and banks who have no intention of
buying something that's going to drop 10, 15, 20 pips. They're taking the other side
in order to realize 20 pips profit, not give the market 20 pips. No thinking needed here.
They want YOU to give THEM the 20 pips, not the other way around.
So, the price briefly breaks the figure, sellers get their orders filled and B,B&B run the price upto
the figure plus 20 or 27 or 25 or whatever. A scalper's stop has already been hit.
Retail is getting nervous by this time and starts buying back what they sold at the figure.
Of course, they're buying back from the folks they sold to in the first place so our B,B&B got their pips,
they may even be short now, and you take away nothing but your stoplosses,
as the market proceeds down to break the figure and onward to your original limit, which is moot now.
Okay, so I've painted the picture of what might happen on a typical day.
The screwy part was/is that when things got whacked out for a while, there was no telling
what was going to happen on given setups. So any attempt at loss mitigation while scalping
entailed more risk than usual because you didn't know what these guys were gonna pull.
Remember, I'm not talking about typical trades here (unless you typically scalp).
Not the kind where you pick your entry, set a reasonable stop beyond S/R and a limit
commensurate with the RR and sit back and watch the trade for a while as it develops.
I refer strictly to those hit and runs where you grab those few pips and close.
Alright so, the point is, things are revolving back to past behavour to a certain degree and
now when you sell the break to follow the momentum, risk your stop and get stopped out,
a stop and reverse strategy (piggyback on the anti-momentum) to mitigate some of those red pips
has been less of a whip-and-chop that it was getting to be. My observation only.
So, I'm selling a number, placing the stop, letting it get hit, reversing the trade to go along
with the market, wherever it's leading, paying spread, commission or whatever..again.
and taking back atleast some of those pips, sometimes more than B/E if I can ride a spike.
and then re-assessing the next setup, looking for a re-break of the big figure and
likely riding it back down with a stop equal to the original risk. When all is said and done,
there's usually some pips left over for all the trouble and nearly 3 times the work.
If you can picture all of this, and relate to any of it first hand, I think I've told you something.
If not, it's okay, no problem, because in that case, this is not for you and likely will not work if attempted.
Always use what works for you, never what someone else tells you works for them, unless you test it
and see whether or not it will match you and your trading so it can potentially work for you too.
I've noticed something also returning to normal and that is the tendency for price(s) to react
at popular levels in a manner more like I've grown accustomed to observing before things got whacked out
like they did the last few weeks/months (like they've done so many times before).
To describe this, let me give a typical setup example:
You see price turning down, you want to sell the break, not pick the top.
You enter your order to follow the momentum, say the break of the big figure.
Naturally, who are you selling to ? Brokers, bucketeers and banks who have no intention of
buying something that's going to drop 10, 15, 20 pips. They're taking the other side
in order to realize 20 pips profit, not give the market 20 pips. No thinking needed here.
They want YOU to give THEM the 20 pips, not the other way around.
So, the price briefly breaks the figure, sellers get their orders filled and B,B&B run the price upto
the figure plus 20 or 27 or 25 or whatever. A scalper's stop has already been hit.
Retail is getting nervous by this time and starts buying back what they sold at the figure.
Of course, they're buying back from the folks they sold to in the first place so our B,B&B got their pips,
they may even be short now, and you take away nothing but your stoplosses,
as the market proceeds down to break the figure and onward to your original limit, which is moot now.
Okay, so I've painted the picture of what might happen on a typical day.
The screwy part was/is that when things got whacked out for a while, there was no telling
what was going to happen on given setups. So any attempt at loss mitigation while scalping
entailed more risk than usual because you didn't know what these guys were gonna pull.
Remember, I'm not talking about typical trades here (unless you typically scalp).
Not the kind where you pick your entry, set a reasonable stop beyond S/R and a limit
commensurate with the RR and sit back and watch the trade for a while as it develops.
I refer strictly to those hit and runs where you grab those few pips and close.
Alright so, the point is, things are revolving back to past behavour to a certain degree and
now when you sell the break to follow the momentum, risk your stop and get stopped out,
a stop and reverse strategy (piggyback on the anti-momentum) to mitigate some of those red pips
has been less of a whip-and-chop that it was getting to be. My observation only.
So, I'm selling a number, placing the stop, letting it get hit, reversing the trade to go along
with the market, wherever it's leading, paying spread, commission or whatever..again.
and taking back atleast some of those pips, sometimes more than B/E if I can ride a spike.
and then re-assessing the next setup, looking for a re-break of the big figure and
likely riding it back down with a stop equal to the original risk. When all is said and done,
there's usually some pips left over for all the trouble and nearly 3 times the work.
If you can picture all of this, and relate to any of it first hand, I think I've told you something.
If not, it's okay, no problem, because in that case, this is not for you and likely will not work if attempted.
Always use what works for you, never what someone else tells you works for them, unless you test it
and see whether or not it will match you and your trading so it can potentially work for you too.