Another question for the experts:
What causes a ‘Spike’ in the market?
I have been looking over the charts for most of the pairs available to me to trade and I have noticed that it seems to happen on only a few of them BUT more often than one would like.
I was surprised to find one on my trading system on the USD/CHF Daily Chart (on 31 Jan 2007). Of course when there is a spike this totally messes up the experimentation that I have been doing with the Parabolic SAR indicator. As a matter of fact it messes around with most of the indicators for a while after the spike.
I have been led to believe that it is the dealer doing this but I’m not sure about this. I noticed the other day that during some or the other news break that it was NOT my beloved GCI but the whole market. I know this because I am thinking about opening another account at MB Trading who are supposedly a non-dealing desk broker and I had their demo open at the time and they had the same ‘Spike’ on their system as GCI had at that time so I know that it was not just GCI. This I suppose was not a ‘Spike’ in the true sense of the word just ‘Stop Hunting’.
Anyway - what causes a real ‘Spike’ - like I have on my chart as desribed above? The ‘Spike’ to which I refer made the price drop from 1.2524 to 1.1278 - nice if you had a short and could close the position - but highly unlikely to happen!!! Not to mention the fact that if you did not have ENOUGH MARGIN it could very well have resulted in a margin call!!!
By the way - could someone PLEASE have a look at my other questions. I’m starting to feel invisible on this board. Please don’t make me go to Forextown - they seem to be very intolerant of noobs over there!!!