CAFFEINATED MARKET
Many times you’ll see the market just start moving strongly. Typically you
see some long candles and a series of them. When this happens I refer to this
phenomena as the market is “Going For It”. Sometimes you’ll see even more
dramatic candles that are really “Shooting” up (or down), and these I refer to
as “Shooting”. I often refer to these phenomena as “Caffeinated” because to
me it seems like the market drank some coffee and woke up after a period of
slower movement. Take a look at these charts to see what I mean.
Notice that often these dramatic moves are temporarily paused with a
stagnation, and (as on the chart on the left) the stagnation can be a good time
to exit (joyfully taking your profits). The chart on the right is “Shooting”.
This chart is still what I would call “Going For It”, though it is certainly less
dramatic. Notice that it starts rounding off loosing steam near the top. This
one is certainly a nice rounded top.
You’ll often be in a trade when all of a sudden, without warning, it just shoots
up (or down). It is certainly a pleasant feeling to have made a few hundred
dollars before having a chance to blink your eyes (depending on how many
lots you trade), I personally love it when it happens (and it happens
often). Usually “Shoots” happen in the direction of the prevalent trend after
some brief pauses in the market.
Here is a shoot that happened for no apparent reason (no FAs were being
released, and this is at about 21:15 EST when nothing “should” be
happening. There was downwards moving consolidation, then all of a sudden
the market started “going for it” breaking through the consolidation
trendline. Then the market made a “Shoot” which is usually a good signal to
enter into a trade (to hopefully catch the Caffeinated momentum). The
following candle then proceeded to shoot up 20 pips in less than 60
seconds! Earlier in this eBook I mentioned that it is a good idea to have a
laptop computer dedicated to trading (so you can monitor the charts), and this
is one of those times that proves having such a computer is a good idea as
otherwise there is no way you would have caught this unexpected event.
I’m not talking about “Shoots” or “Going For It” that results from
Fundamental Announcements (which obviously precipitate them regularly but
unpredictably). Many times these seem to happen for no apparent reason (I’m
not aware of any news that might have caused it, but news could certainly
make it happen too), and often it seems to have no basis other than a strong
market sentiment. Perhaps these moves happen due to the market makers
wanting the market to move (because they profit from people trading, and
they are encouraged to do so when the market is moving rather than
stagnant). Often times (other than around expected FA or unexpected news
like a terrorist bombing – I lost a trade recently due to market surprise
resulting from the London bombings) there seems to be no reason for the
strong moves, but regardless of what the actual reason for them is you only
care that they happen because you can profit from them.
Sometimes when a “Shoot” occurs it just jumps a significant amount of pips,
but most often it happens gradually but quickly during the minute that the
candle is being formed. If you’ve been watching a reversal or a stagnation
and then see it beginning to “Shoot” in the direction of the prevalent trend
then you might want to quickly enter a trade to catch a ride on the “Shoot”
while the market is “Going For It” (earlier I explained the importance of being
prepared to enter a trade immediately, and this is one of the times that being
quick on the trigger is good to catch it early).
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