how to catch place a buy before it spikes
Forum on trading, automated trading systems and testing trading strategies
Do you trade or have you ever traded “Boom” and “Crash”?
Fernando Carreiro, 2022.10.03 20:12
For those that truly wish to understand and not be swayed by their “unfairness”, Boom and Crash are specifically designed to create and exploit “chaos”. As their names obviously state, they can and will suddenly “boom” (price spike), or “crash” (price drop), at the tick quote price level.
They create the illusion of a steady micro-trend and then suddenly reverse, knocking out any tight trailing-stop, while causing large slippage because of a single but large price change, sometimes larger than the entire micro-trend range before it. And there is no way of avoiding these large price slips. If you have an open trade with tight stops, they will be hit, with either a negative or positive slip, depending on what direction you are trading.
At other times, the micro-trend goes on for ages with only sporadic tiny single tick reversals, drawing the traders in, and then … suddenly several large reversals blow everything out of the water, acting as a statistical stop-hunt.
This is the allure (and the danger) of these two synthetics. It creates the illusion that they can be easily traded, but if you failed your college maths, or don’t really know your trading basics, you will be doomed. In other words, they are designed to attract the “newbies” and the inexperienced traders into letting go of their money on a promise of an easy profit.
However, there will be a minority of traders, who are wise to these “tricks”, that can see and appreciate the bigger picture. They will inevitably be able to factor in this very behaviour, in the statistical analysis and risk management to circumvent these dangers.
In my case, I’m still not there yet, but I can already see the light at the end of the tunnel. I still need more time to properly understand all of their mechanics. I have been doing this manually and not via an EA, because I concluded that there are some aspects of their behaviour that are influenced by the “traders” and by the dealing-desk trading against them. It is not entirely statistical, as I first suspected, but it is still mostly statistical, which allows for EA trading. If I were to use an EA to study them, I would not have been able to pick up on these nuances.
My next step is indeed moving to EA trading, which is what I ultimately want. I don’t want to trade manually long term. I’m only doing it to study them. And I will share some of the code I come up with when I get to that step. For now, observation and study are the keys to not be drawn in by greed.
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greetings
kindly assist I am a beginner and i have been studying BOOM 1000 and it difficult for me to spot a signal before it spikes, please help with the indicators that will make easier to place a buy.