Spikes: revert or run?

[Amanhasnoname]

After a sudden spike in price, scalpers face a choice: fade it, expecting a return, or follow it, expecting more.

The answer depends on the cause. A spike from a liquidity gap, a big market order in a thin book, tends to revert quickly. A spike from real news, with a genuine change in expectations, tends to continue or at least hold.

Telling them apart in real time is hard. Clues include the spread, which stays wide after a liquidity gap and tends to normalize when a real move settles in, and the follow-through in the next few seconds.

Also relevant is the time of day. Spikes in thin hours, like just after rollover, revert more often than those during the London or New York sessions.

Recording each spike, the cause if known, and the result over the next five minutes builds a useful picture. Within a few weeks, tendencies appear for specific pairs and sessions.

Which kinds of spikes have been the most reliable to fade, and which ones should never be touched?