Yes you are right in that these spikes can be in your favour, provided you are on the right side of them but then we are really back to coin flipping. I am trying to come up with a method whereby I can avoid them in my strategy. Yes I do have a setup that will be on the right side lets say 50% of the time but if Im wrong then I need to be out quick.
My first port of call is to avoid them where possible. This morning for instance is a morning where reversion/scalping algos should be turned off for the fdax given all the spiky news coming out of Europe.
I am avoiding Tuesday and Thursday in my trading of the Dax. These are the least predictible days in a full week.
Then I am starting ONLY after 9:30 CET for every trade PLUS avoiding big news in the afternoon (mostly 14:30).
Just some input
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Personally, I think you'll go nuts worrying about them too much, I've only had 1 spike which went 12pips beyond my 10pip SL recently and 1 spike go my way which made +34 so SL although sloppy and holding for the top manually to exit mean I'm up on spike slightly, so I ignore them.
Obviously I don't trade over news times, but news happens through out the day unexpectly.
Tuesdays and Thursdays are the best days to trade to my method, although I don't trade the start of a big move, I kinda trade the after chop with the direction, big fast moves scare me to much, too much of a gamble.
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On the topic of spikes and professionals - Another thing that is useful to know is that from 8-9 there is only futures trading. Actual shares in the cash market start to change hand at 09:00. At this point, bigger players start to act on the DAX stocks and things start to move more violently.
IMHO in order to trade the DAX successfully you need a setup + knowledge that allows you to read the order flow + supply & demand properly.
Only relying on TA can easily get you killed in the DAX.
I recommend to only use TA (MACD, RSI, etc) to try to see what the losers are likely thinking (in many cases it's the opposite of what you should be thinking) as they tend to rely on TA and the illusion of past price action predicting future price action instead of reading order flow and supply & demand.
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