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Question about very large, rapid whipsaw movement
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Question about very large, rapid whipsaw movement

  #1 (permalink)
Trading for Fun
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Question about very large, rapid whipsaw movement

Once in a while in gold (gc) or oil (cl) you'll see a very large, almost instantaneous movement of twenty or thirty ticks in one direction, followed by an equally large and rapid movement in the opposite direction. This isn't the normal trading movement. What is the reason for this?

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Market Wizard
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mwtzzz View Post
Once in a while in gold (gc) or oil (cl) you'll see a very large, almost instantaneous movement of twenty or thirty ticks in one direction, followed by an equally large and rapid movement in the opposite direction. This isn't the normal trading movement. What is the reason for this?

I happened to see one such event today on CL - my take for the almost instantaneous snapbacks is that they are algo-driven. Just some HFT programs, perhaps trying to profit from some temporary order imbalance.

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SpeculatorSeth
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The volatility creates a volatility vacuum in it's wake causing price to come back on itself. The initial move could be anything. News or just some big trader wanting to make a splash.

If you are certain about the direction you can wait to see reloading at one price when it comes back and catch an after she goes trade.

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Silver bullet
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xplorer View Post
I happened to see one such event today on CL

what time was it? Can't see it from my side or do you mean the 15min lasting $1 move?

I wonder whether the well positioned trap-orders outside the normal ranges could lead to such spikes. Orders one can see often in options and without limit people get caught there (but shouldn't be in case of futures)

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Market Wizard
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PK 1 View Post
what time was it? Can't see it from my side or do you mean the 15min lasting $1 move?

I wonder whether the well positioned trap-orders outside the normal ranges could lead to such spikes. Orders one can see often in options and without limit people get caught there (but shouldn't be in case of futures)

It happened at 12:09:20 GMT, for about 10 ticks. It spiked down from about 63.31 to 63.27 and then back up to 63.37 one second later.

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Silver bullet
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xplorer View Post
It happened at 12:09:20 GMT, for about 10 ticks. It spiked down from about 63.31 to 63.27 and then back up to 63.37 one second later.

Ok, this seems to be your case. Checking similar patterns today the volume is causing the bigger move related to the surrounding moves.

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Trading for Fun
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xplorer View Post
It happened at 12:09:20 GMT, for about 10 ticks. It spiked down from about 63.31 to 63.27 and then back up to 63.37 one second later.

Sorry, but that's not the kind of event I'm talking about. I'm talking about where the price goes about 20 ticks in one direction within a matter of a second or two. Then comes immediately back in as short a time.

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Silver bullet
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mwtzzz View Post
Sorry, but that's not the kind of event I'm talking about. I'm talking about where the price goes about 20 ticks in one direction within a matter of a second or two. Then comes immediately back in as short a time.

there can be sooo many reasons. Sometimes an action at the market can cause a spike which changes to a continuation towards the spike and in other cases stays a spike. Some CFD and MT4/5 Brokers liked to catch SL causing a spike only to be seen inside their pool. Also such trap-orders (how I call this / see above) could cause a spike. In a very liquid market there can be lots of transactions within a second causing the outcome of a spike. The example above gives you an idea how bigger volume (compared to the time before and after) can cause a short and strong reaction, sometimes resulting in a spike, sometimes continuation, sometimes stalling, ... Maybe not the best example of a spike but there are similar cases which indeed look like a spike.

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Take a look at the volume for that candle compared to the volume of the candles before and after.

1 minute candles on GC run a few hundred to a few thousand during the day. Once in a while there is a candle that is a few dollars from high to low and the volume in 5,000 or more.

Someone threw in a large buy or sell order.


Last edited by SteveJewels; February 12th, 2018 at 11:15 PM.
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