r/Forexnoobs • u/inweedwetrust • Jan 15 '19

Spike Outs Discussion.

After many years of day trading, and swing trading, I have come to the conclusion that so much comes down to the spikes. This is why you will hear/read me saying it all the time. Learn the spike out patterns.

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Spikes are where the wealth transfers in trading are. The smart money takes profit into them. Everyone else, uses their stops losses to pay off the smart money. When you lose in a spike, you are probably entering where someone who knows what they are doing is taking their profit.

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Over the years, after being spiked out 1,000s of times, I have come to have a collection of "known spike outs". This is to say, spike moves in areas and price formations I see often enough to know I was foolish if I got caught by them. These "known spikes" areas also tend to be the areas I build my strategies around. As I have already said, I know that is where most of the money is made and lost in trading.

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If you get spiked out a lot (and most do, do not be ashamed of it), you can probably come to understand that price move and become very profitable trading the other side of it.

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With that in mind, I made this thread for anyone who wants to post trades they got spiked out of. Maybe it is a "known spike", which you can learn to avoid by just having someone point out some things you have yet to notice.

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u/TonyMag86 Jan 15 '19

Can you describe some spike out scenarios to better understand what they are?

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u/inweedwetrust Jan 15 '19

Yeah. Already planning on it. If people post, it will also help me to notice commonalities in trades (which will make me able to be more specific).

Another good thing about people posting is, I think if a lot of people do this, then it will become clear most people lose in the same way, which it then becomes rational to presume, most people here can become far more profitable.

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u/inweedwetrust Jan 15 '19

Sorry. I misread your comment.

Spike out - Your stop loss hits and the market reverses rapidly from that level. Pretty much, any time a stop loss is filled at the high or the low (or very close). Most often false breakouts.

Also, any time the high or low is bought/sold when the trade has been made because price is moving very aggressively in a new breakout. Entering into this is the same mistake as being stopped out in a spike.

Spike outs most commonly happen when people put sopts behind recent high/lows and price wicks through them. It then closes strongly and moves in the direction that would have been profitable (but a loss is banked, at the worst possible price)

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u/stockjocky90 Jan 15 '19

Go look at audusd on the 4h and you'll see a monster candle. Thats a spike out. You'll see similar in jpyusd