In today’s post, I’ll show you how to avoid bad ticks so you’ll never have to worry about them again.
Friend of the list Maoxian sent me a DM the other morning:
Bad ticks this morning at 8am-ish. Lots of erroneous ticks in Trade-Ideas around 8am in HUBC, CADL, and AG.
Maoxian
Many traders just shrug their shoulders and live with them, believing that bad ticks are just part of the trading game.
But when you have trades triggered due to the bad tick, that’s a problem because even if you recognize the situation and exit the trade quickly there are still fees, slippage, and unnecessary risk that can easily add up.
Instead of just living with them, there’s a nice way to avoid these entirely using Trade-Ideas.
Take this example in HUBC that Maoxian pointed out to me. Notice the suspicious, wide-ranging bars that start appearing right at 8:00am:
How do you know these are bad ticks and not legitimate trades? Look at Time and Sales:
Notice how the last trade is so far from the current bid/ask price at the time. In this case, the last was 1.53 but the bid was 1.35 and the ask was 1.37.
If you had a limit order to sell at 1.50 at this time, it would NOT have been filled.
To set up Trade-Ideas to ignore these bad ticks, go to the list of filters here and search for Distance from Inside Market.
That filter allows you to control how far the last price can be from the bid/ask (that is, the “inside market”).
That filter can be applied to any alert window.
Here’s a screenshot of an alert window where I added the Distance from Inside Market filter as a column to show the value for the alerts that fired due to the bad ticks.
Add a max value for the Distance from Inside Market to filter out the alerts caused by these bad ticks.
If you’re looking to get started with Trade-Ideas, here’s a 25% discount you can use. When you check out use promo code TRADESMART25 to get the discount.
