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Wednesday, November 22, 2017

WAIT … WHAT?

“Clearly, there was/ is a disturbance in the force”.

Another very sloppy, crap day in GBPJPY, volatilities running severely under the norm; from the European open, how many times to the low, then the high, and back & forth all frickin’ day? Words fail me to describe this kind of action, where it’s nothing but scumbag LP “hit jobs” on fills. “Why yes, I’d like some whine with my cheese”!

Seriously, hitting the liquidate button when the offer is in the 14’s, and getting filled in the 23’s? And that was just the first trade; add another couple of PIPS to the list on trade #2, and while I can take losing about $100, it doesn’t sit well with me when $120 of it was slippage. I’d complain to Turnkey, about this and the fact the LP raised the spread today, but they aren’t going to do anything, and of course the scumbag LP just laughs in your face. So, it is what it is.

Simply an incredibly frustrating day, with the market going nowhere [until Fed minutes, but even then not much], but the bids/offers reflecting a very nervous trade, with traders getting caught numerous times on the wrong side of the equation and that led to some nasty spikes, both up and down. You couldn’t buy it and you couldn’t sell it without getting into trouble; truth be revealed, losing $100 feels like victory … that’s how bad it was.

Tomorrow sees some U.K. GDP numbers in the early A.M., and then as the U.S. morning dawns trading comes to a halt for the Thanksgiving Holiday. Small post tomorrow, if I do anything … otherwise I’ll be here on Friday. I’m outta here … until tomorrow, or Friday. Onward & Upward!! PAMM spreadsheet directly below.


Have a great Thanksgiving Day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!


Tuesday, November 21, 2017

HOLIDAY WEEK TEACHABLE MOMENT

“… though, it doesn’t help much with financial markets!”

Directly below the M5 for GBPJPY today … “look & weep” as the classic “Flying Wedge of Death” [FWD] makes another appearance right before tomorrow’s big U.K. budget and MPC BOE meeting results [4:30 A.M. EST], and of course the Thanksgiving Holiday in the U.S., which will kill trading action on Thursday & Friday in New York.



This is day 7 of trading GBPJPY, and unless something “magical” happens with respect to price, today will mark the 6th out of 7 days where either the 8-hour range [08:00 – 16:00] is 30% - 50% less than normal, or the FWD has been spotted. Today offers a “classic” case of why the algorithm is structured the way it is, and why it is sooooooo easy for traders to get in serious trouble on days like this.

First warning flag up the pole is the daily range coming out of the Asian session; for a cross to have a day’s range in the 20’s [PIPS] is exceedingly small, and as a result of this reversals are easy to effectuate, with double reversals or the FWD definitely in the cards. It all starts innocently enough, with a small rally that runs out of steam about 30 PIPS higher; traders who want to “jump the gun” and buy the dip before the 5 & 9 cross, end up taking successive losses or “triple up” or worse. That all ends with their sell stop getting flushed to the low at 148.63 on the spike down, only to see a rally back over 149.00 within half an hour. “Now, here’s the $64,000 question; how do you make this back if you got whacked”? This is the conundrum of low volatility, and why all the statistics for the 6 markets are included [and will be updated as we move forward into the future]; it is to guide you through periods of high and low volatility, so you have some firm footing underneath your trading actions. If you don’t know what’s “high” or “low”, how do you expect to sidestep action that could potentially hurt you?

Everything in the algorithm is there for a reason, and especially when volatility drops [like now], not only from an intraday perspective, but from a daily & weekly candlestick chart perspective as well, everything collapses on top of each other and all it takes for changes in signals are very minute, often random, price changes. That leads to a significant drop in the statistical probability advantage the algorithm offers … basically everything becomes a “coin flip”! The 121 & 183 EMA’s point towards higher price momentum when prices fall, and point towards lower price momentum when prices rise; the 5 & 9 signal generator gets “gouged” with price spikes a high percentage of the time, and nothing goes anywhere … you’re lucky if you escape with a PIP before the market takes it away.

This, of course, shouldn’t be a surprise to anybody that has read and understands the algorithm manual; no matter your method of trading, you better understand, as my mentor Bert would say, “What’s the form of your destruction”?  And, if you somehow don’t think you have at least one … “well Skippy, you better head back to the demo and do some more research, cuz I’m here to tell you “straight up”, that whatever it or they are, they will manifest themselves soon enough and carve you a new donkey, simply cuz you don’t know what they are. How can you solve or sidestep losses if you don’t know what causes them”?

When you understand the math of the non-Dollar crosses [do some numerator and denominator “what ifs” to prove this], you quickly realize that “low volatility” is not a high probability over time for crosses… and sure, like everything else, simply cuz it has to happen eventually in a “bell curve” normal distribution probability environment, there will be times it comes up and rears its head for all the world to see … this is “tail risk”; whatever your method, you got it … understand what it is and how to deal with it, cuz when it comes to trading you most definitely don’t get your cake and get to eat it to.

Problem is for most traders, and especially Newbies to trading, nobody out there [well almost, cuz I talk and write about it] wants to talk about “tail risk”, reward/risk profiles, situational awareness, & scumbag LP’s [to name just a few “unmentionables”] … and then how to use all of them to your advantage when possible. What you end up hearing or reading is, “it’s all roses & sunshine”, and everybody makes millions trading … just send $595 to … yea, you know the rest, and we’ll just sweep the unpleasant shit under the rug for you to find out about after you get whacked, and blame it on “shit happens” in the marketplace and move on … and you sit there, and don’t have a clue about anything except you’re substantially poorer, and then come to the conclusion, “well, the Pudding Business sucks, but this biz is bullshit”. MY RESPONSE: “well Skippy, remember college? Remember all the “genius” classes with the “genius” professors? Then you went out and got a job … how many minutes [no wait … seconds] did it take that first day, for you to realize that college was/IS the biggest scam in the history of the world? A retarded kitten could do your first job in corporate America, and you knew it; yet, you played the “get the degree” game and now here you are. I’m betting it didn’t even take you ‘till lunch time to figure out who to “schmooze” to get promoted, and who to ignore … well, trading is the same, only everybody is invisible and you’re matching wits with others like me, and of course the scumbag LP’s, who spend every second of every day trying to figure out how to screw with your account to their benefit … trading is simple; I never have said it is easy … your biggest problem is the space between your ears, and the delusional reality most people create in their heads about markets and how they should perform … they don’t, and coming to grips with making money in a probabilistic world that operates in “wave functions”, that aren’t at all like a regular paycheck, is most troublesome for a lot of people cuz they can’t wrap their arms around the math … and then, of course, they dwell on the “sizzle of the steak”, not wanting to think about the cut of the meat … well, there comes a day [usually sooner than later], and markets being predatory like nothing earth has ever seen before or since, you get eaten for lunch and it’s all over … back to the “Pudding Business” wondering what happened and why”.

Today, that early “sell stop flush” [to the new low] was a classic “fill you at the bottom” no matter where your stop was placed … orchestrated by dealers and large hedge funds [no doubt about this in my mind] to get themselves out of all the short positions at the bottom from your order, and now “goose” it higher and make you bleed. When it happened, I could hear the cries of anguish all over the world, it was so loud. The only thing that prevented me from getting long on the flush, was the fact the day’s range is so small … it doesn’t even come close to the 120 PIP range necessary from the “special situations” section of the algorithm manual … just because it looks, feels, and smells like a FWD, doesn’t mean it can’t go lower still; you have to respect the probabilities of success on this [low] when the ranges are small and not get caught up in dealer LP bullshit.

Coming into today’s trading, looking at the calendar for the U.K., Japan, and the U.S. [cuz it affects everything], tomorrow’s U.K. MPC [Monetary Policy Meeting], and release of the new year’s budget take center stage … that is a very big “red flag” that Cable action will be “choppy” and mostly position squaring today going into the events … expect some fireworks from one or both. Japan has been relatively “dead” for days now, and while adding some volatility, hasn’t been the driver of the cross these last couple of weeks. So, what else would you expect for today, other than a high probability for a FWD and/or “Doji”?

Late morning New York, and the LP’s and large hedge funds can’t help themselves, they just got to run stops … EXIT QUESTION: “What happens when you hit a new low inside a day with a relatively tight range, and the market refuses to lurch lower within about 100 seconds? Well Skippy, everybody is short and asking, “hey, where are the sell orders?”, and since there aren’t any … whoosh! … it’s up and away within seconds”. As I stated before, in the volatile crosses, you got no time to think … thinking kills. If you were short, your thinking should be, “stops hit off, no selling, I’m gone!” Sadly, there just isn’t time to stop things so you can make up your mind.

And so, on that late morning New York low, the 121 & 183 EMA’s finally turn south; and yet, when the 5 & 9 give the sell signal twice soon after, they both go nowhere or lose a few PIPS. Why? Cuz the range is less than 70 PIPS, and trading action is constricted. So far, in 7 hours, we’ve seen a new high, a new low, almost back to the high, a new low, and now a rally back to the middle … welcome to dealer stop hunts and position squaring ahead of tomorrow’s key events in the U.K.

Quite frankly, about 2 hours into this clusterfark, after the new high, then new low on “vapors”, and a rally back above 149.00, it was evident to me this is a day to leave the hell alone; quite simply cuz if you lose there is almost no way to make it back combined with the distinct possibility of making things worse … keep the powder dry for when it matters, not on POS position squaring days ahead of a major reporting event. It is what it is.

I am in the process of finishing up the 8-hour & weekly data for the other 3 pairs [GBPCAD, EURGBP, & EURUSD]; it won’t be long, and I’ll have all the data for viewing and/or download over in the “Download Links” section of the website. I will say this: in my own account I’ve been trading all 6 pairs, and am most impressed with the signal generation of the algorithm in EURGBP and GBPCAD. And while EURGBP lags a little in terms of overall relative volatility compared to the other crosses, it has 3 things going for it that make a huge difference; 1) signals generated make moves that can be captured without large spikes [although they do occur, make no mistake], 2) PIPS are in GBP, which means they’re worth approximately $1.32 per 10,000 you trade; that’s over 40% higher than PIPS in GBPJPY, and 50% in GBPCAD, and 3) the spread is excellent, coming in around 2/10th’s to 3/10th’s of a PIP most of the time, and often lower than that at 1/10th of a PIP. So, when EURGBP has a 50 PIP range, that’s about equal to GBPCAD having a 100 PIP range, and the cost of doing business is a lot less … there’s more in EURGBP than meets the eye on first glance, and don’t be surprised to see me trade it in the days ahead, especially if GBPJPY continues to sit and waste away in tight ranges.

Late in the day, and maybe things change, but I doubt it … this day is simply a waste until tomorrow morning, when all hell breaks loose at 4:30 A.M. EST. I’m not prejudging anything, but the promise of higher rates, inflation, and robust economic activity for the U.K. is a “pipedream” … it’s gonna be a long time until they see that scenario. Nonetheless, if the trade is short, along with MPC comments on rate hile possibilities, Cable could take off. I dunno, we’ll see … all I want is more volatility, and to see expanded ranges into the norm for this pair.

I’m outta here … until tomorrow. Onward & Upward!! PAMM spreadsheet directly below.


Have a great day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!


Monday, November 20, 2017

WHAT MATTERS ANYMORE?

“Just add water & watch me boil!”

News out of Europe over the weekend, had me thinking markets were in for a rough patch come today; “Nope dope … BTFD; just BTFD you idiot”! And once again, people everywhere are conditioned to BTFD, no matter the market or where it’s traded.

Which of course brings me to GBPJPY, where in 10 minutes very early this morning after Europe opened, Cable exploded to the upside and USDJPY sat there asleep in an approximate 20 PIP range; since then of course, it’s been back down to the European open (148.40’s) and back up to marginal new highs … a “modified” “Flying Wedge of Death” [FWD] so to speak. It’s been an excruciating trade, with very little volumes and flows outside of the spikes; pretty much every buy signal coming on a spike up that finds the market 5-7 PIPS higher in seconds.

And it all leaves me wondering if anything matters anymore to the world. I fully realize in trading it’s all about the “setup”, and I’ve talked about that before, but nothing … and I literally mean nothing … spooks any market anymore; about the only thing that matters is who is caught long or short and who is gonna get squeezed in the seconds and minutes right ahead of us. After that it’s simply rinse & repeat.

One trade today, and again I’m pleased with the fills; the liquidation fill was off the high for the M1 by 3/10th’s of a PIP on the bid; “can I get that in Cable”?

GBPJPY bid up early by Cable strength, and now holding near the highs on Yen weakness; cable really hasn’t gone anywhere since the early A.M., choosing to chop around in a 20 PIP range for the last 6 hours or so. USDJPY bid up now on stock market shrugging off the political news out of Germany and hugging its highs of the day, just a few index points in the SP500 of all-time highs. The manipulators simply won’t let it go down for more than a day or two MAX, and nothing more severe than -1% tops, and then its panic to the upside once again. When does this stupidity stop & SHTF?

Here in mid-afternoon New York time, GBPJPY drifting aimlessly around 148.90 … we started the European day in the 148.40’s; went to the 80’s in 10 minutes … over hours, dripped lower back into the 40’s … rallied to a new high above 149.00 on USDJPY strength via new daily highs in the SP500 … and that price got rejected quickly, and now we are meandering around without a clue … this is the 6th day of trading GBPJPY; the 8 hour data shows an average range of about 102 PIPS, and for 5 of those 6 days, the market has been anywhere from 30% - 50% under that amount; today being the latest installment of the market not being able to really generate the kinds of moves the algorithm is designed to capture. Part of this, I am sure, is political uncertainty, and the other part is the calendar … this is Thanksgiving week, and within a week or two we’ll be in the Christmas season … could be the reason for lower volatility, but the thing is, this pair can “blow up” at any time, so you can’t be “lazy” when trading this puppy.

Up at the top, the range was there, but the formation off the top was neither a bearish engulfing pattern, or the “three black crows” to make a short trade. While the algorithm did have a few decent signals, overall the approximate 50 PIP blast to the first high in 10 minutes took away a lot of the short covering fuel necessary for a sustained advance, to make long positions worth hanging onto for more than a few seconds … and until the daily & weekly charts stop looking “heavy”, I can’t see sustained advances in this pair with simply new long positions from the spec community. And now that we are into year-end, within a week or two, where is the buying power gonna come from Cable and/or Yen weakness to move this stuff substantially higher on fresh buys?

Overall, I can “feel” intraday volatility dropping some … that’s somewhat normal for this time of year … but, what that brings are spikes at the turns of the 5 & 9 signal generator, and that can be frustrating; however, you just can’t buy/sell on 5-7+spikes in seconds with a crossover … over time it will cost you money. Remember, when trading these pairs … it isn’t the profit you concentrate on, it’s “where’s the risk … where are the stops … how is it trading … when does it feel like it will turn? You literally got no time at the turns … it’s click and done, and don’t worry about what happens next”.

Now late in the day, time for dealer stop hunts … “who’s short and needs a fill at the new high of the day”? Some things never change … I’m outta here … until tomorrow. Onward & Upward!! PAMM spreadsheet directly below.


Have a great day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!


Sunday, November 19, 2017

SPECIAL SUNDAY UPDATE: USDCAD DATA POSTED

“There’s more here than meets the eye!”

Over in the right-hand column under “Download Links”, I have made available the 8HR (1/1/2017 – 9/1/2017) data from 08:00 – 16:00 Turnkey server time (busiest & most liquid hours of the day), & weekly data (12/31/2011 – 9/10/2017) for USDCAD (Appendix C to the Scalper’s Algorithm). All files are in Adobe PDF, and are available to view online and/or download to any platform, and of course are freely available for everybody.

One of the “slightly” correlated FX pairs I’m following is USDCAD; by “slightly”, I mean this pair correlates over the medium to long-term with commodity prices, specifically crude oil. There isn’t much in the way of day-to-day, tick-for-tick movements with crude oil, unless there are violent moves up/down in price; more likely, the general trend of USDCAD over weeks, months, and years can be somewhat correlated with the price of crude oil; therefore, it makes for a decent medium scaled volatility pair to trade.

I must admit, I’m pleasantly surprised by the data. While all of the other 4 original pairs to the “Scalper’s Algorithm” have 08:00 – 16:00 server time, as the “hot” hours to trade, the USDCAD data does not reflect data that happens in the North American afternoon; I specifically left it out because I want to compare “apples to apples” among the pairs so people can see the data for the exact same time periods over weeks, moths, and years. Having said that, I originally thought the data would reflect lower volatility numbers than it did, especially for the 8 hours under consideration. I was surprised to see that USDCAD was only “marginally” lower than GBPUSD by a few percentage points. If I had taken into consideration the afternoon trade in North America [EST], I think that difference would be made up rather quickly, and that you would see USDCAD as volatile as GBPUSD [even maybe slightly more]; before I ran the numbers, I did not have this opinion.

This is important information with respect to  two areas; 1) it allows you to trade a pair that is more “North American” in scope; meaning, you don’t have to get up as early as the European pairs to start your day to get the same relative volatility as GBPUSD and/or GBPJPY, and 2) it opens the possibility of trading the cross GBPCAD, and giving traders the opportunity [if they wish] to move themselves away from the YEN in GBPJPY, without giving up anything in terms of relative volatility during the course of the day.

All of which is the reason I’m adding GBPCAD to our list of pairs to trade, thus bringing the total to six; in the days/weeks ahead I’ll be doing the data for this cross [8HR & weekly]. When I have finished all 6 pairs, all the information will be highlighted in a “Summary Volatility Table”, that will be posted in the “Download Links”, updated each quarter going forward; with a click of your mouse, you can judge quickly & easily which pair is right for you and determine your reward/risk profile.

With the addition of USDCAD today, three of the six are finished and posted (USDCAD, GBPUSD, & GBPJPY); I’m in the process of gathering the data for the other three (GBPCAD, EURGBP, & EURUSD), and should be finished within about 2 weeks. GBPCAD has a slightly higher spread, coming in around 0.8 – 1.1 PIPS during the European / U.S. session, but the advantages of this pair outweigh the marginally higher net cost to trade. For some of you, who wish to escape USDJPY, this pair will give you all you want and then some, and can be quite volatile … in other words, it’s right up there with GBPJPY in terms of volatility … I haven’t run the numbers yet, so I can’t say for sure, but I think for a lot of traders (especially those in the U.S.), this pair could be a great fit. Hopefully, next week I’ll have GBPCAD finished, then it’s on to EURGBP, and finally I wrap everything up with EURUSD.

Have a great rest of your weekend everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!

Friday, November 17, 2017

LESSONS FROM A NOTHING WEEK

“Recapping the week in GBPJPY: “Tech analysis SECRETS uncovered!”

Yea, I know, it’s Friday and you want to ditch anything & everything market related, political, and/or lectures from Hollywood SJW’s. But, there are some mighty lessons to be learned from GBPJPY this week that can’t be ignored … especially if you got caught in one of the many “moonshots and/or waterfalls” from the week’s pathetic trading action.

Lesson #1: Extreme spikes [up or down], usually occurring when the 121 & 183 EMA’s are flat, and then change the slope of the EMA’s, don’t produce very good or reliable trade signals when the 5 & 9 EMA’s finally cross. It’s much better and statistically profitable when the moves up or down are 1) relatively orderly, 2) happen early in the day, and 3) occur when the day’s range is relatively small, so there is room to move. What we’ve seen this week, is anything but, with some exceptions, but for the most part the moves up/down come quickly and then evaporate quickly as the market retraces and then does nothing.

Lesson #2: Especially for Newbies to trading, or even those who have less than 5 years full-time trading experience in the non-dollar crosses, do NOT let congested time periods skew your thinking into one of, “well, it’s settled down now, so I can give it a little more room … or, it’s not doing much, so I can triple or quadruple up onlosers cuz it’ll come back I’m pretty sure”. As I stated before, they don’t call it “The Dragon Trade” for no reason.

Lesson #3: Understand fully, why you can’t sell spikes down or buy spikes up for entry into a position; if you do, they’ll carry you out on a stretcher. During very volatile weeks [400+ PIPs range], yea maybe you can get away with it … but when weekly ranges constrict [like this week (so far) and last], you will not be able to recover from the rotten LP fill you will get. This week has been a case study in stop hunts by dealers and large hedge funds, with zero follow-through in price action.

Lesson #4: Finally, understand what large spikes do to the algorithm, and how they affect market psychology; namely, they are “blow-outs” of stops that “clean out” the dealers order books, and make it very tough once they retrace to have an effective buy/sell signal that goes anywhere. Today’s trading points this out in “spades”, with both downdrafts [both approximately 60 PIPS] coming out of nowhere, and when done going nowhere for hours; signals generated after these two yielded very poor results, simply cuz the pressure is off the market, and many traders who missed the contra move back up were still short and needed to cover on any declines. On the other hand, relatively “orderly” moves without large spikes, simply continue to grind up those caught the wrong way.

Lesson #5: Understand why the cross [today GBPJPY] is acting the way it is; namely, is it cuz 1) USDJPY is going up/down, 2) GBPUSD is going up/down, 3) they both are moving relatively together in the same direction [i.e. Dollar bullishness or dollar bearishness], or 4) they’re moving in opposite directions for the day [Pound up/Yen down or Vice versa]. Today, we had the biggest range of the week [so far approximately 135 PIPS, but who knows what the NY afternoon will bring as we move to the close], and basically, both pairs moved together in fits and starts. That tells me that any stop hunt that takes the market sharply higher or lower, once we’ve pass the threshold 120 PIP range for the day mark, can be faded with a trade.

Moving right along with today’s market action, today’s move lower in GBPJPY, almost impossible to hang on to short positions, as the “3 steps down, 2 steps up” with the “Flying Wedge of Death” [FWD] all week long, giving any position true heartburn … profit there one second; the next second you’re down 5 PIPS … “whaddaya gonna do now Skippy”? I will agree, that if you’re willing to risk 30+ PIPS on a trade, then yea, you could have probably stayed short in one of the short positions … but to me, this is way too much to risk for a market that the last 2 weeks has had sub-200 PIP ranges for the entire week.

Both big moves lower, from the European open, skewed the algorithm signals, and the signals today either had the 121 & 183 EMA’s flat when it broke lower, or the spike lower meant your short signal was skewed by a large spike down; neither allows for a short trade. Instead, today was the first day I’ve used the “special indicators” section of the manual to attempt to buy a bottom … the setup was there, the trade was profitable. Directly below is the trade off the recent bottom.


I didn’t stay in this trade very long, for the simple reason I was too far away from the signal price on the 5 & 9 EMA’s, and after I got long, price really stopped moving up … when I saw that bid above 148.170, I hit the liquidation button, and got filled at 148.173 … which, by the way, was the high bid for the M1 … “you think I could have gotten this in GBPUSD”? [To ask the question is to answer it.] In retrospect, this was the first of 3 moves lower that put in bullish engulfing patterns off the bottom; it’s Friday afternoon, and while I’ll take the first one, the others I’m leaving alone cuz I don’t want to get stuck in late New York trading with prices drifting … and if I’m wrong, where do I go?

One thing of note; I’ve changed my thinking, and am lowering the range from 140+ to 115 – 120+, in order to use the “special indicators’ section of the manual. What I want to see, is some kind of “flushing” the stops, and a relative disorderly bid/offer for a few seconds … I don’t want the market to go smoothly, rather I want to see it “gap”; this tells me stops have been flushed, dealers taking the other side, time for the market to go the other way. And, if I don’t see this, I don’t make the trade.

Next week is Thanksgiving week in the U.S.; I would expect after Tuesday, everything from the New York open + about 1 hour, to see the markets die down rather quickly. With what’s going on in China, I don’t think GBPJPY goes into a “shell”; if anything, market action should pick up some. If today’s range holds up through to the close, the weekly PIP range will be approximately 163 PIPS … this is after last week’s range of approximately 193 PIPS … both rather pathetic given the news flow, especially since many Wall Street investment houses are looking for much greater volatility in GBPUSD going forward into 2018. We’ll see how that works out, but the “structural” problems Cable has with inflation & “Brexit”, make it hard for me to envision any kind of massive rally in Cable … could happen, of course, but I don’t see the volatility to the upside getting out of hand … on the other hand, the downside is “wide open” for Cable, and since USDJPY has the “safe haven” flow attached to it [why I don’t know, but it does], GBPJPY has a lot of room on the downside if things turn south in FX land. Only a general Dollar meltdown, or the U.K. starts hiking rates aggressively, will in my opinion start to see Cable to the upside with “legs” … not predictin’, just sayin’.

Overall, given the week’s extremely sloppy & choppy action, especially after the European open, the algorithm did a very good job of keeping everybody out of trouble, which by the way is its primary objective. Yes, like everybody else, I had hoped for bigger ranges and higher volatility this past week with better signals, but our “wants & needs” don’t matter … we take what the market gives us, or we get “stomped on”; markets are “predatory”, none more than GBPJPY. Trust me, it won’t stay like this for long.

I’m outta here … until Monday [if I get USDCAD data finished, I’ll post it Sunday night]. Onward & Upward!! PAMM spreadsheet directly below.


Have a great weekend everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!



Thursday, November 16, 2017

MR. MARKET: “PROVE ME WRONG”!

“Meet Mrs. GBPJPY: You’re just gonna love her!”

“Oy, on steroids: I think I hear the recruiter for the circus calling, although last time, they told me my trading background disqualified me for any position that required dealing with the public”. Can the trading action this week be any more 1) choppy, 2) treacherous, 3) temperamental & “bitchy”, or 4) all of the above? No doubt, I’m voting for #4; while not quite another “Flying Wedge of Death” [FWD], today is no “winner winner, chicken dinner” either.

Today, we can thank none other than one of the political hacks in Brit “quasi-government” [that would be the BOE], who in a speech to college students to no doubt extol them on the virtues of government service, basically “lectured” the financial community for not taking future rate hikes more seriously. Wait … what? I find it highly ironic that a BOE voting board member thinks “analysts” don’t take rate hikes seriously, when for the last 10 years the entire FX analyst community has been wildly bullish on rate hikes each and every month, all the while being wrong every month since the BOE, up until a couple of Thursday’s ago, hadn’t raised rates since 2007! But seriously, don’t let kids growing up read any of this garbage, cuz it could stunt their brain development.

Well, a market very much in “need” of some kind of catalyst for screwing with stops [as is always the case with the crosses], it immediately finds one in the Brit Pie Hole’s comments, and so in 38 minutes, from 9:29 to 10:07, GBPJPY rallied smartly up about 50 PIPS. And guess what? Yup, you guessed it, the rally can’t hold, and we start the slow, tortuous descent from the day’s high to where we are now, which is hovering just below the day’s 50% retracement range level … “Oh joy, what the hell am I supposed to do with this? Another 30+ PIP move that can’t be sustained, just like all the rest of ‘em the entire week. No, it’s not a FWD [yet], but very much another small range day that has no impetus to go anywhere for longer than 5 minutes without wanting to reverse smartly and head back the other way”.

For one of the few times this week, we did get a good algorithm buy signal off the first move down after the rally. Directly below the trade.



What guided me in this trade was the following: “prove to me Mr. Market, that you can move somewhere, and not just chop around randomly … go somewhere with authority”! And the market just yawned and said, “I don’t think so”. When the market broke down below 149.20, I had the same feeling I have gotten all week on these retracements; “Oy, that’s all folks”! And here we sit hours later sub-149 again; all the while the SP500 has recovered 20+ handles from overnight lows, so don’t anybody tell USDJPY, which isn’t playing along today and has gone below 113 [again], and sits at 112.90 as I write.

In the macro picture, take a gander at the weekly GBPJPY directly below for some perspective. The chart sums things up nicely.


It isn’t often you get 3 weekly “Doji’s” in a row, especially where no Holiday period is in sight, and I might add, after the first rate-hike in 10 years.

As I wrote yesterday, it’s very easy to fall into the trap of thinking GBPJPY has died for the day, so I’ll just buy the dips and sell the rips and make some easy money; that works until it doesn’t, and when the “doesn’t” shows up, that trade you’re in is gonna cost you 50+ PIPS [if you’re lucky] … the other 9 that you made 5 – 6 PIPS in, is now down the drain, and you’re breakeven. “Guess what? I can get break even by just sitting here and avoiding the mess with zero risk”.

Tomorrow sees no data release for Japan or the U.K., and very little in the U.S., so I don’t know what drives this stuff that could possibly break the “Doji swamp” we find ourselves currently in via the weekly charts. But, it is what it is, and we deal with it.

I’m outta here … until tomorrow. Onward & Upward!! PAMM spreadsheet directly below.


Have a great day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!



Wednesday, November 15, 2017

“SLOP OPERA”, PART DEUX

“Do I trade GBPJPY or mop the floors? Paradise can be confusing”!

Remember that element in the “periodic table” called “Oy”? … yea, me too, and it’s yet another day of the “Flying Wedge of Death” [FWD] in GBPJPY. Where do I start with this POS? Ok, first the Japan data dump & then the China commodity carnage … all of which quickly led to Yen appreciation, Cable doing nothing, and the cross sliding quickly … once that’s over, it’s “dullsville” to the European open and the release of some Cable data on employment, where once out, USDJPY broke out to the downside on SP500 weakness, along with European stocks, and GBPJPY went south quickly yet again.

Well, we’ve seen the script to this movie before, haven’t we? Sell stop rips to the downside, and then no follow-through whatsoever … pick any day this week, of any move greater than 30 PIPS, and with multiple attempts to rip stops [and wasn’t that mystery tick low today of 148.081 a thing of beauty? … next millisecond it’s 148.21 bid, and blink your eyes and it’s 148.30. Somebody got a new donkey courtesy of a bunch of scumbag LP’s, and got their sell stop filled at the low, only to watch it rally 50 PIPS within about 10 minutes.

And so, once again, for the third day in a row, it’s the FWD killing accounts with abandon, and once it nudges up some, it dies and starts sliding back on disappointment it can’t hold any rally. No comfort to those short, of course, who for the 4th day in a row see blistering rallies come out of nowhere to literally blind-side a position; hang around a second or two too long [pun intended], and it gets ugly when buying a rally to get out. All-in-all, from the European open, it’s approximately a 70 PIP move down on data, a 5 hour plus clusterfark  “chop-fest”, and then a rip higher to get back the 70 PIPS [“Oh, never mind that drop, OK”?]. And of course, no follow-through to the rally, and we find ourselves right where we were 10 hours ago, the only difference being a shipload of accounts poorer for the experience.

All of which leads me to a comment from yesterday’s post, where “Anonymous” asks if the FWD might be here to stay, and so, maybe it should be considered “normal” and therefore can we plan for it and profit from it? A great question, but one that needs to be looked at in terms of probability theory for the correct answer.

As I have repeatedly stated, over time [months, years, decades] EVERYTHING HAS TO HAPPEN; “the “crazy” double reversals, tiny Doji’s, and 1000 PIP moves; it’s what makes up the “tail risk” portion of the probability distribution “bell curve” on both ends, from the insane ranges to the tiniest Holiday “chop-fests” you shouldn’t even be watching. They all come up at some point; EXIT QUESTION: WOULD YOU CONSIDER FLIPPING A COIN to make a trade? If the answer is no, how come? … it will go on “winning streaks” won’t it”? Ok, so how come you don’t want to do that? Of course, cuz you know the “luck” of the flip won’t last, and it will have some lovely losing streaks as well, that you know you have to avoid.

My entire trading career has been one where I have actively sought out the LOWEST probability occurrences in trading, and as my mentor Bert used to say, “choose the form of your destruction”. In other words, don’t let the market destroy you; you pick how you get hurt or lose money, and then by how much. This is trading by “your rules” and not market happenstance. Well, the form of my destruction [not in a literal sense, but metaphorically] are very low probability events that sneak into trading now & then; you have to know what they are and what to look for, and then sidestep them.

The FWD tends to “cluster” in markets; we’ve seen it 3 days in a row in GBPJPY, and then it’s just as likely it won’t be back until 2025, not counting Holidays. The problem in trading it, is that your potential reward for this low probability event is LOWER than the exponential risk you take by fading the trend while it’s under the 50% retracement line; you may think you’re only risking 7 PIPS, for example, when in reality it’s more like 30-40 PIPS. Simply look at todays lunge lower to 148.081 for the low; that low was put in from 30 … a stop at 23, and you’re filled at 08 … you don’t lose 7, you lose 22. Add ‘em all up, and the times the market works out for your risk taking, and you’ll need every penny to make up for the shellacking you take on the other 80%. Problem here is twofold; 1) you won’t save the money, you’ll spend it, so it isn’t there, and 2) what happens when you lose 10 in a row, and get a little “gun-shy” on trade #11, or #13, or whatever [pick a number]?

The fact of the matter is, from a statistical probability standpoint, reversals [or those very close] don’t have a very good track record at extending gains once they blow out the dealer order books … there simply aren’t any others that want to play at the new prices … and that leads to everybody being on the wrong side of the trade at exactly the wrong time, and it leads right back to the middle of the move … sometimes slowly, sometimes violently.

Hindsight is a wonderful technical indicator … it’s easy to look at an M1 chart, see the turn, see the buy signal at say 35 [from today], and get long and start counting the money in your head … what you’re not seeing is getting long at 35 on that signal, and the bottom falls out of GBPJPY and we head lower and take out 148.081 in 15 seconds on our way to 147.75 on sub 148.000 sell stops … your sell stop gets filled … natch, at the bottom … and now, the market can rally back to 148.500 and piss you off to know end. What looked so great has turned into a 60 PIP loss on something seconds before looked like gold. And that’s the position you put yourself in, when you make trades like this … cuz the reality is most of the time it’s going to be the loss, simply cuz the range isn’t that big; if we were staring at a 150 PIP range, then use the “special indicators” rule in the manual. Now, you’re back to being statistically positive in getting long.

Remember, when you trade any crosses that are non-dollar denominated, “it’s not what you profit that matters cuz it will take care of itself; what matters is what you don’t lose by getting whacked; you simply have to seek out, show patience & discipline, and wait for the proper trades. Randomness has a way of making you think a “trend” is starting to develop, and if you buy into that “trend” [here, that would be the FWD, and trying to trade it], what’s going to happen is that you will get mauled for the reasons I’ve already stated".

And I hope, my answer gives some insight into what the proper procedure is when you see the FWD start to develop; “sure, a lot of traders will disagree with me on this … that’s fine … what I know, and what I’ve seen over my career when it comes to the FWD, is that more people have returned to the “Pudding Business” cuz they’ve gotten literally destroyed on a “do-nothing” day … buy the short-term highs multiple times, and sell the short-term lows multiple times, looking for the volatility breakout via a larger range that doesn’t come; all on bigger volumes and leverage with each trade … “cuz damnit!, this time it just has to work”! … and of course, it doesn’t and it’s “buh bye” Skippy”.

Today’s action saw the range put in with that “mystery tick” of about 123 PIPs, from the Asian session high to the U.K. employment numbers low. For GBPJPY, you need to see ranges above 140+ PIPS before you even start to think of potentially buying near the low, or selling near the top; and you need one of the two candlestick formations off the bottom/top in addition to that. Unfortunately today, like Monday & Tuesday, have seen sub-par ranges; if you buy/sell to soon, i.e. on a smaller range, you run the very real risk of getting your stop loss hit and getting filled someplace that sees a loss way more than you envisioned when you took the trade. When you view trading as “avoiding risk”, instead of “where’s my profit”, you find yourself in a much better position.

In what can only be described as a “senior moment”, today’s trading saw me get short 0.05 lots … wait, what? … flying through the order ticket, I thought I had clicked on 1.0 lots for volume … apparently, I missed the mark, and clicked the volume right above 1.0 lots, and that’s 0.05. So, you can thank me for the $0.42 later. “And if you put me in the “home”, just make sure I get the strawberry jello with bananas and whipped cream … cuz if I get the lime jello with pineapple bits, I’m breakin’ out”!

I’m outta here … until tomorrow. Onward & Upward!! PAMM spreadsheet directly below.


Have a great day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!