That moment when … EVEN YOU … realized you could be a Senator!
I want to expand some from where I left off yesterday and reiterate that it is the concept of “the exhaustion lines” as I have defined them in the trading manual that give power to everything else; i.e., the rules and strategy of the volatility algorithm. Taking into account the different “personalities” of different markets, and by default adjusting some of the rule parameters for individual markets, theoretically the volatility algorithm should work perfectly in other above average volatile markets as well. When I’m done releasing the tutorial document on gold, I will start on the tutorial for the DOW30, the other “low net trading cost volatile market” where the evidence is as clear as it is in gold of highly successful trading during U.S. market hours.
Of course, anytime I release new information on the website I get a blizzard of emails; let me just say to those wanting more info on Gann’s “Square of Nine” and how to get it on your PC; 1) view online or download, from my shared files account at box.com [which is totally free, no sign up; just click to view or download from the links] the “components” document in PDF that goes into detail [In other words, RTFM (read the fucking manual)], or 2) for those that find that obstacle too much of a chore, follow the link directly below:
This link to Gann’s ‘Square of Nine” is a great tool I use often in my research; everything you need and want to levels you most likely will never get to, are available at the click of your mouse. Data I use in the manuals, and charts with commentary are derived from this link to the “Square of Nine”. [Note: if you are at all having trouble downloading or viewing my shared files by following the links I have in the “Download Links” section of the website, at box.com and getting some kind of error message that “file not found”, I need you to email me and let me know. Sometimes the links get corrupted at box.com and I will change them when necessary if they become corrupted and unworkable. Thanks.]
I can’t emphasize enough how important the concept of “acceleration” is to trading; math & physics people know well this concept, but for traders it is one that doesn’t get much attention [which is great, cuz I don’t want it to be “mainstream” and in some assclown’s book the Mrs. sees when we’re in a bookstore and she says, “Oh look honey … his ideas are just like yours!”].
Next time you see gold moving quickly up or down, think of the fuel [i.e. the intensity of the volume buy orders (up) or volume sell orders (down)] that is necessary to drive the market. That “fuel” will eventually [usually sooner rather than later] get used up and that my friends means an end to the up/down acceleration! And who is on the other side of that acceleration 99%+ of the time? That’s right, dealers & bullion banks, who are only too happy to now “bid it up” after a drop or “offer it down” after a rally. And while other popular technical indicators are always “lagging” because they need data to “confirm” a short term top or bottom, the volatility algorithm’s exhaustion lines are there in REAL TIME to get you out [or long] at the exact moment acceleration ends.
Search the world over fellow traders; scour the bookstores and financial pages until Jesus comes back; you won’t find any other technical indicator that EVEN COMES CLOSE to the algorithm’s exhaustion lines for predicting short term tops and bottoms with an accuracy & profitability [that I show via charts (hundreds) and prove via Excel spreadsheet] I prove in the tutorial PDF document you will have in your hands in short order. It’s that powerful and should lead every one of you to your own personal “Oh shit!!” moment. YOU WANT PROOF? I GIVE YOU PROOF!
Turning to the gold trade today, I see the
chuckleheads traders in Asia bid it up
last night about $6; some things never change. So, right out of the gate you
should know if you’re a regular reader, that’s a negative for prices in New York [at least
Ok, that didn’t take long for a buy signal; in @ about 1268.60. Chart directly below of this first [and maybe last] trade.
As you can see, market is above the daily calculated white horizontal line; that means “buy” on plum line slope change from negative to positive WHEN the plum line is below the yellow line. Stop here is below 1267.50. As the market starts going up, I have a choice to make; 1) do I look for any spike up to liquidate, or 2) do I hang with the trade and keep raising my stop level as it moves higher? Well, since the ranges are pathetic, and the Dollar amounts rather small, I chose on this trade to “hang with it” some and see what happens if/when it can make a new high for the day; are there buy stops above the current high that would give us a spike to get out, or the “bullion wall” of sell orders from dealers and bullion banks?
As the market makes its second leg up, I keep raising my stop level. After it hits a new high by 3 cents, what’s next? Well … nothing; if there are buy stops up here I don’t see ‘em getting hit off. Add to this we are now back in the low 1270”s again and the question pops up, “can you sustain this Mr. Market and go higher still?” My gut reaction to that is probably not; I want to see evidence that the daily ranges can be expanded back to normal [$15 -$20 +], and the pathetic $7 - $11 [tops] ranges done away with and forgotten like a bad dream. So far, I don’t see this happening, and until I see “proof” things [meaning volatility] are returning to above average “normal” conditions, I got a pretty fast trigger finger when it comes to trading & liquidations, especially if the first trade of the day is anywhere near acceptable profit wise. Because lately, after the first trade, it’s been nothing short of “chop city”.
So, when I see a new high by 3 cents and nothing after it in terms of additional buying, “red flags” are going up the flag pole quickly with a very big, fat warning that tells me there is a very high probability this move is over. So, I’m looking for the very first M1 that goes “red” to hit the liquidate button and close the position; this trade captured about $2.40 after commissions.
And although this move up didn’t hit the exhaustion lines, tying in what I said earlier about the tutorial that is coming your way, the spike up is in and of itself a mini exhaustion that the algorithm isn’t formally measuring, but is in fact occurring; it’s just that this move is too small for the algorithm to measure accurately. So, instead of ‘measuring it formally’, we can measure it visually by looking for above average spikes since the trade started and use that as our yardstick. Once I do that, I only have to continue looking at my screen for the next ‘red’ M1 candlestick to know when to liquidate. Since the market hasn’t officially turned yet, my liquidation fill should be Ok to decent with little or no slippage.
And so, the “rule” to liquidate on above average sized spikes [next M1 that is red] that do not “hit” the exhaustion lines, is in fact based on acceleration; however, the fact remains the algorithm can’t measure every single spike during the day and come to any conclusions. When the math is internalized and made visual for everybody [including myself] to see in real time on the MT4 … well, how easy is it to follow and make money now? [Hint for Cankles voters: Easy Peezee.] And it isn’t just this rule, the exhaustion lines are the foundation for all the others as well.
So, here we are half an hour later, and the chart below tells the tale of the tape.
Use the spikes up to sell, realizing not every spike is going to take you to the exhaustion lines; but also realize that every spike is to some extent an “exhaustion”; most during the day aren’t worth measuring because they are too small and not significant to the short term trend. But when we get ourselves into a long position, the momentum of the trade, by DEFINITION OF THE MATH, is on our side and we need to be cognizant of spikes up that mean the end of the upward movement, and just as importantly we have to liquidate in favorable conditions and not on the way down.
Dogs have a way of knowing how to “pay you back” don’t they? We get to the beach yesterday, and while I’m setting up the umbrella and lounge chair, along with his towel and bowel of water in the shade, off he goes to the first good looking babe walking on the beach with what looks like a bag of Doritos chips in her hand. I see this and I’m thinkin’, “she might as well be handing out $100 bills in a ghetto”.
And with that first chip, he’s now got a new BFF [until the chips are gone of course]. She walks over to me and says, “Can I pick him up … is he OK with that?”
And with that, I get the look from him below.
“Hey Boss, look what I found … Can we take her home?”
And I see this and I’m lookin’ back at him and speaking telepathically:
“Ummmm, yea … remember that other human female life form we got at the house? … yea, the one you run too when Mr. Cat kicks your ass – remember her? … I’m just sayin’ it won’t go over well … so fugetaboutit.”
And with that she runs out of Doritos chips … and that’s the end of that love affair. No golf today, the dog is already running around looking for his leash and nurfball cuz he knows trading is finished. The turquoise waters beckon; I’m sooooooo outta here. Until tomorrow …
Have a great day everybody!
OPEN A DEMO AND/OR LIVE ACCOUNT AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”