What caused this unexpected move?

#1
Hi all,

Today I experienced an inexplicable move (at red arrow) in HDFC Life.

Screenshot 2021-01-18 at 6.20.34 PM.png


It was giving me +1.7R in first 3min itself. I held on. But then it reversed sharply in second candle, and hit my SL (-1R). But then I entered again and gained +2R. But why did it first hit my SL? How could I have known it?

My theory: I think it happened because it went down too fast in first 5-min candle. This may have led to profit booking and then a belief that trend was reversing.

Can anyone tell me his view on why this would have happened? I am looking for specific answers to a specific question. Thanks!
 

TracerBullet

Well-Known Member
#2
My theory: I think it happened because it went down too fast in first 5-min candle. This may have led to profit booking and then a belief that trend was reversing.
The only way to test your theory is define it ( so went down too fast in first 5m candle - perhaps can refine further) and then test it over large sample. Market are a lot fuzzy and noisy and edges work with probability and not certainty. Things happen. There is no holy grail, your stops will get hit and its not predictable which trades will work and which wont.

Most people are probably not looking at charts and certainly not looking at it in the same way as you do.
Perhaps there was selling that dried up leading to bounce and then same people sold again. Perhaps some one was late by 5m in buying for his institution because he got stuck in traffic and so he bought after 5m irrespective of price. Perhaps someone made mistake and added some extra 0s in his selling or buying. Perhaps there was a large stop order at that price and not much liquidity to support so price crashed and then recovered Or vv. Or more likely its just a combination of random things happening, these are liquid stocks.
 
#3
The only way to test your theory is define it ( so went down too fast in first 5m candle - perhaps can refine further) and then test it over large sample. Market are a lot fuzzy and noisy and edges work with probability and not certainty. Things happen. There is no holy grail, your stops will get hit and its not predictable which trades will work and which wont.

Most people are probably not looking at charts and certainly not looking at it in the same way as you do.
Perhaps there was selling that dried up leading to bounce and then same people sold again. Perhaps some one was late by 5m in buying for his institution because he got stuck in traffic and so he bought after 5m irrespective of price. Perhaps someone made mistake and added some extra 0s in his selling or buying. Perhaps there was a large stop order at that price and not much liquidity to support so price crashed and then recovered Or vv. Or more likely its just a combination of random things happening, these are liquid stocks.
Thanks for your detailed answer.

At least for some time I am going to test the hypothesis that markets is not a combo of random things, and that there is some science some commonality behind the apparent madness..
 

Romeo1998

Well-Known Member
#4
Thanks for your detailed answer.

At least for some time I am going to test the hypothesis that markets is not a combo of random things, and that there is some science some commonality behind the apparent madness..
nothing is random in stock market, i would suggest u to learn elliott waves, use trendlines n channels of waves... n combine EW with some other study like OI, ema, rsi, MA, pivots, etc...
on nifty hourly, there is perfect wave count... wave 2 was 78.6% retracement of wave 1... wave 3 was 161% extension of wave 1..... wave 4 was 38.2% retracement of wave 3.... n now wave 5 is going on which will be 100 % or 161% extension of wave 1..... :)
good luck :)
1610979116698.png
 

Romeo1998

Well-Known Member
#5
n this is the 15 min chart of nifty.... the 4th wave's target and the 4c wave's 161% extension target, both were exactly at 14400, n oi was also suggesting CE reduction in strike of 14400.... that is y we saw today a spike till 14400, which was nothing but the C wave of the 4th wave :)
1610979458548.png


sometimes oi is manipulated very nicely, but oi n ew both cannot go wrong :)
 

travi

Well-Known Member
#6
Hi all,

Today I experienced an inexplicable move (at red arrow) in HDFC Life.

View attachment 45268

It was giving me +1.7R in first 3min itself. I held on. But then it reversed sharply in second candle, and hit my SL (-1R). But then I entered again and gained +2R. But why did it first hit my SL? How could I have known it?

My theory: I think it happened because it went down too fast in first 5-min candle. This may have led to profit booking and then a belief that trend was reversing.

Can anyone tell me his view on why this would have happened? I am looking for specific answers to a specific question. Thanks!
It was Sumo bhai's fat finger :DD

PS: @sumosanammain
 

travi

Well-Known Member
#7
n this is the 15 min chart of nifty.... the 4th wave's target and the 4c wave's 161% extension target, both were exactly at 14400, n oi was also suggesting CE reduction in strike of 14400.... that is y we saw today a spike till 14400, which was nothing but the C wave of the 4th wave :)
View attachment 45270

sometimes oi is manipulated very nicely, but oi n ew both cannot go wrong :)
Pitai shaadi se pehle hi hojayegi :DD
 
#8
n this is the 15 min chart of nifty.... the 4th wave's target and the 4c wave's 161% extension target, both were exactly at 14400, n oi was also suggesting CE reduction in strike of 14400.... that is y we saw today a spike till 14400, which was nothing but the C wave of the 4th wave :)
View attachment 45270

sometimes oi is manipulated very nicely, but oi n ew both cannot go wrong :)
Thanks this is very useful. Increases the font size of EW in my mind. I have been using Fib till now--which also works quite well.

Trading IMO is a game of perceptions, and a lot of self-fulfilling Nash equilibriums exist on the way.

My question then is: Which one is used by traders more: EW or Fib?

Why I ask this: coz my core belief is: I need to put my tea shop on the railway platforms where most of the passengers are!
 
Last edited:

Romeo1998

Well-Known Member
#9
Thanks this is very useful. Increases the font size of EW in my mind. I have been using Fib till now--which also works quite well.

Trading IMO is a game of perceptions, and a lot of self-fulfilling Nash equilibriums exist on the way.

My question then is: Which one is used by traders more: EW or Fib?

Why I ask this: coz my core belief is: I need to put my tea shop on the railway platforms where most of the passengers are!
fibonacci ratios are used more bcoz they r used in many other studies too, like gann squares, harmonic patterns, etc. :)
 

Zerodha – Open Paperless Account

Open online account with Zerodha. Free delivery trading and Max Rs 20 for Intraday, F&O, Currency and Commodity Trading. Intraday High leverage with MIS, CO and BO.

Name:Phone:
Email:City:
State:
Are you a day trader?