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Wednesday, November 30, 2016


“Can somebody help me get to the Y-Axis please?”
The pic above will give you a taste of what’s to come in the USDJPY tutorial; essentially, breaking it down into English, the “jump” or “switch” in polarity of “bull moves” up and “bear moves” down without any continuous process that takes you from one to the other. In trader terms, it’s finding the limits of up versus down moves inside a probabilistic process that can give us a very good guide as to the direction of the immediate near term momentum. In other words, it’s about making more money with less risk and being absolutely on the “right side” of any market move of any significance.
The pic above is a mathematical function that is “discontinuous”; there is no way to get any value on the Y-Axis. You are either in the first quadrant or the third quadrant; there isn’t anything else. In trading, we are constantly faced with momentum changes that see prices either going up or going down; if our trading algorithm isn’t fast enough, we end up buying the highs and selling the lows and getting “chopped” to pieces. When a bigger move comes that would have been immensely profitable, you didn’t take it because there was nothing there in the market to give you any indication that this move was any different from the previous 5 that were small losers; how many of you have faced this dilemma?
The quick and easy answer from most people would be to shorten your time frames and make whatever model or algorithm you’re using more responsive and thus catch the bigger move. However, as Newbies quickly discover, all you have done is exponentially increase the rate of “false positives” into your model; you suddenly are faced with more losing positions and smaller profit gains, and this is not having the positive affect on your account balance you hoped. For most, they run out of money before they can achieve an insight into what is really in play here.
Nowhere has this sudden and sharp difference been more “at play” than in FX, starting with the CHF debacle in January 2015; since then, market disasters have been more prevalent, chaos has increased, and the sharp swings in major FX pairs pronounced more than I can ever remember in my 40 years of trading. During this time also, we have witnessed a sharp deterioration in the volatility of stock indices; “they ain’t nothing like they used to be.” This phenomenon has been achieved through Central Bank manipulation by the major western powers into the interest rate markets, through various world “plunge protection teams”, and in some cases outright buying of equity shares to prop prices up for the 0.001%.
As in any system, artificial props can’t be sustained; “what can’t be sustained won’t be.” In today’s world marketplace, in my opinion, there are really are only 2 places [markets] where the system operates on any normal kind of marketplace; gold and USDJPY. Granted, gold is heavily manipulated on the sell side by the bullion banks and dealer community through various wishes of western governments; everybody knows governments totally hate gold because it can’t be manipulated through fractional reserve banking channels. That leaves the USDJPY market as a proxy for “risk on / risk off” in world financial trading; pretty much anything that happens financially in the world first feels the ripples in USDJPY.
With that kind of influence as the world’s largest primary financial market, doesn’t it make sense the “ripples” [sometimes waves] felt here can be swift, severe, and massively switch directions at the “drop of a hat”? Well, welcome to “discontinuous functions” in applied mathematics!
The key, of course, is creating an environment where “false positives” can be lowered and signals have a greater reliability of profit; since we “don’t get somethin’ for nottin’ honey” in trading, what are the downsides, i.e. the risks on the other side of the bell curve?
After studying this problem, my conclusion is that they are “mental” in the course of trading; meaning, being able to consistently switch your outlook on direction [buy/sell] without bias. For you newer traders, this is harder than it looks and will be a challenge for you going forward; why? Because most of you aren’t used to operating on such sudden shifts in sentiment in other areas of your life, and trading brings to fore weaknesses much faster, with very manifest changes in money as a direct consequence of your actions, than anything life throws at you in other business venues or professions.
I’ve “plugged” into the volatility algorithm the concept of “discontinuous functions”, and am using a function that I think is appropriate for our use; I’ve been trading it for some time now and am very happy with the results; all that’s left is writing the manual and tutorial for your use, and I’m hoping it’s done by the end of this weekend. “I think you’re gonna really like this.”
Turning to gold today … in Asia they … “Oh hell, you know the drill!’ … gold, of course, about 15 minutes before the New York open is hitting a new low for the day … THE Mrs. asks, “why don’tcha just catch the seemingly automatic rally in Asia every night and then leave it alone?” … [Oh God, when her logic as it pertains to trading starts to make sense, have the “Pod people” from outer space invaded overnight and I didn’t see them?]
An hour into gold, and again today, we see an upper exhaustion RM=1 move with the market below the white line … am wondering when real buyers [instead of just panicked shorts covering] are going to show up and start buying lower prices in gold? … who knows!
First trade of the day directly below.

I kept this a little longer than I should have before liquidating at the orange arrow … it didn’t cost me anything of significance [about $0.50], but I should have liquidated 5 minutes earlier on the spike up … this is one of these instances where I had a little “wiggle room” on top to play with some profit … all in all took about $1 out of this puppy … “Meh.”
New highs in USDJPY for the day has not translated into anything in gold; hour before Noon in New York, and this is a clear signal to me that with an approximate $20 range today in gold, the day is over. I’m soooooooooo outta here! Until tomorrow …
Have a great day everybody!

Monday, November 28, 2016


“Paging June Cleaver … please call home immediately!”
Well, yesterday’s blog post sure produced a shipload of emails; it ran the gamut from “yip yip wahoo!” to “Yen? So what?” The “so what” is called “making money”, and I’m here after almost 40 years of professional trading [“I’m in my 20’s, but I use time travel to make things go faster.] to categorically state you can’t be a “one trick pony” and stay in this biz and make it a career. “You like the Pudding Business? Me neither, but it’s waiting for you if your plan B isn’t in place before your trading income starts dropping cuz your primary market has gone flat.” And the very last thing you want to be doing at crunch time is trying to figure out “on the fly” what you’re going to trade and how you’re going to trade it, and then putting it together very quickly; this is a recipe for disaster. The data is clear; sure, you can deny it all you want … that isn’t going to change anything in relation to what is actually happening, except you won’t be making money when you should be. “Hope & Delusion” are not trading strategies.

This business is about probabilities, not about finding the “Holy Grail”; if the “Holy Grail” of trading existed, some large firm would already have it and with it have all of the world’s money and there would be no market. In essence, throughout my trading career I have always wanted to be the “casino” and not the “customer”; you do that by placing historical probabilities on your side when making a trade. If you can follow directions, that makes you more money than you can dream.
And that dear friends brings me to USDJPY; I touched briefly yesterday on 3 points about this market that I want to expand upon today. The first is the sheer size of this market in relation to the world’s financial markets; every business day through direct US Dollar trades and the various crosses where JPY is the denominator currency [there are no pairs with JPY in the numerator] the world stares at about $3 trillion + Dollars worth of notional size, and the average size trade in the primary interbank institutional market is around $30 - $35 million notional size. Using the CME futures contract as a benchmark, that equates to about a 300 lot; when I was on the floor, nobody traded anything remotely close to 300 contracts at a whack like it was an “average” size trade. My point here, is that no matter who or what size account you trade, USDJPY can accommodate you with 1) speed, 2) liquidity, 3) very small slippage under normal trading, and 4) enough historical volatility to make it either a primary market to trade or a solid “Plan B”.
The second point I want to make is that unlike any other market, USDJPY trades actively in all 3 major world trading sessions; as long as you get past the 40 PIP threshold each day, it doesn’t matter where you live or what time zone you’re in, you’re likely to see adequate action to make money using the volatility algorithm. This is a huge advantage over other markets that are primarily based in their home market and gives traders flexibility in their trading other instruments don’t offer.
The third point is one of historical perspective; if I had taken data from 2008 to 2014, the PR’s from yesterday’s table would have been significantly higher due to much more volatile markets in that period; today’s markets are infected by central bank manipulation and the desire by financial elites the world over to one of “desired outcomes” rather than free markets. The result has been much lower volatility, especially in the stock indices, than in the past. For example, given the spread at ASSETS FX in the SP500 CFD, yesterday’s range in the SP500 equated to the spread being 5% of the day’s range; throw a round turn commission into the mix and you tell me how any client is supposed to beat this over time. You might as well be playing Keno in Las Vegas.
In FX, we have witnessed disaster after disaster in the majors the last few years; USDCHF, NZDUSD, and most recently GBPUSD; compared to USDJPY, these 3 are “chump change”. Please don’t misunderstand, that’s not to say USDJPY doesn’t have its moments of “stupid shit”; it most certainly does, but usually it pertains to things “Peter Pan” Kuroda says or does via the BOJ and monetary policy that takes the market by surprise. These events are usually known well in advance and can be avoided, but if you take a historical perspective into consideration with both gold and USDJPY, over a 10 year period the PR’s would both be easily 5.0+.
What you can do in gold, you can easily do in Yen; the same cannot be said the other way around. If you are a very large trader, you will suffer significant slippage in gold on a regular basis from either the futures market or with the LP trading spot; unless there is news, this doesn’t happen in USDJPY.
The problem with the stock indices today is one of intraday volatility; some days it’s so low you think you’re trading corn spreads, and then the next day the DOW30 has a 250 index point range. It’s been very difficult to get a handle on these markets without getting chopped to pieces in dull sessions. And just as a point of comparison, gold is operating along these lines as well; one day a $40 blowout range, and then the next day $9.
My whole point in bringing all this research to you via the website and downloads is to give you options and flexibility so you can make intelligent decisions for your trading. As I have said before on many occasions, I’d trade dirt futures if there was consistent money to be made; I have no agenda for any market. Ultimately, it’s about “escaping to success”, and nobody ever suggested it’s a four lane superhighway with no speed limits and no traffic to get you to your financial destination. Complex systems contain degrees of uncertainty and chaos, and what I’m providing you is a "road map" to not only defeat these features, but thrive in them like others can’t. This is what professional traders do.
Turning to gold today … higher in Asia … all of that gone now, and hitting new lows for the day 30 minutes to the New York open … seriously, what can I say I haven’t said before about these Chuckleheads?
Basically a few hours into this, and all gold has to show for itself is an RM=2 upper exhaustion move from below the white line that negated any buy signal; other than that it’s been … crickets.
Earlier I made a few USDJPY trades, so for me I’m not crying any tears missing the gold move; and overnight I decided the USDJPY manual and tutorial are far more important right now than the “chop-chop” action in the stock indices that is producing very little in terms of cumulative daily profits. In other words, intraday action in any of the stock indices since the election [where of course for 2 days the VIX went into another dimension but has since crashed] has been miserable right along with gold for the most part.
I’m going to have the USDJPY manual up by the end of the upcoming weekend, with the tutorial not far behind; yes, I think it’s that important. There are some radical changes in the volatility algorithm for USDJPY that 1) reduce “false positives” on the M1, and most importantly 2) give a much faster trend change for initiating buy/sell signals. The math is “rock solid”, and your probability of success in a 6 hour trading session is “off the charts” given algorithm rules. The biggest advantage USDJPY has over gold is far less slippage in market fills for bigger traders; in USDJPY, it’s almost impossible for retail spec traders, with an account less than $5 - $10 million in equity, to move this market or have any affect on pricing with market orders. Sure, if you go to sell 10 million in a down moving market maybe you get clipped for a few tenths of a PIP, but that’s a whole different ball game than what would happen to you in gold. In any event, I’ll get to the stock indices manual after I do the Yen this weekend.
It’s a “Chamber of Commerce” day here in Paradise; dog and I are outta here to the beach. Until tomorrow …
Have a great day everybody!


“It’s so bright you’re gonna need sunglasses to handle it!”
Over the long Holiday weekend, I spent a lot of time on a table I’m going to show here in a second; it just might be the most important trading table you’re ever going to see. After I finish the stock indices manual here shortly, I’ll be doing a “manual” and “tutorial” on USDJPY, the only FX pair worth trading in my humble opinion in today’s FX paradigm.

I really needed the time over multiple days to compile and finish this data and put it into a comparison table; I think the results of the data will amaze you at the very least. Directly below is the table, and below the table I will explain the significance of each column as it pertains to our trading.
The first column is all of the “tradeable” markets on the MT4, which according to our statistics, meet the criteria for trading the volatility algorithm on the M1; if you don’t see it on the list, in my opinion it isn’t volatile enough over time to be considered reliable for everyday profits. There simply are better markets to trade and make money, and I don’t trade [and neither should you] because I’m emotionally connected to some market that has a special place in my heart. This biz is about money, nothing more nothing less. There are 3 stock indices, 2 FX, and a single shares CFD; crude oil and the DAX30 are not on the list for 2 reasons; 1) while there are algorithms for both, when they “go dead”, they go dead quickly and can stay that way for a long time. As long as they are volatile, they can be traded, thus both are good “plan B” choices if other markets are slow [not likely but it happens sometimes], and 2) in the case of the DAX30, it is closed overnight and thus the data is “skewed” compared to other markets which basically trade 24/5.
The second column is the number of trading days in the sample set where data was collected and analyzed; the Russell 2000 stock index and the CFD for Amazon have smaller sample sets than the other 4. The Russell 2000 has only been available since June 2016 on the MT4, so I collected all the data for this market, and Amazon only starts at the beginning of 2016 because its share price is so high, you can’t use the same numbers for it when it was half the price it is now and expect volatility to be anywhere near the same level. The other 4 markets all have large enough sample data to reflect a 98% confidence interval over the entire life of the market with ± 3% margin of error; the data here is statistically “rock solid”.
The third column is the MOST IMPORTANT; this gives the “profit ratio” [PR] of the market over time. The higher the PR, the easier it is to make money. When we get a buy/sell signal from the algorithm, in any of these markets, the PR is the probability of success of the signal over and above the 50/50 chance of success given by “random walk theory” and “modern portfolio theory”, which says markets are completely random and can’t be predicted. For example, in USDJPY, the PR is 4.3; what that means is that the buy/sell signal has a 430% better probability of success than a 50/50 chance predicted by “random walk and/or modern portfolio theory”. In essence, when you do the math, it breaks down to having 4 losing days out of 1,000 market days traded; THAT EQUALS ABOUT 1 LOSING DAY PER YEAR WITH A 50/50 CHANCE OF LOSING MONEY. “Thank you! I’ll take that every day of the week for life!”
The fourth column is the PR of the days where algorithm rules prevented you from trading because the market did not meet the threshold for trading that day; in other words, the algorithm identified “chop” and kept you away from the action. As you can see, the PR for each market is significantly less for these days than it is when you are trading via algorithm rules; these are exactly the kinds of days we don’t want to be trading.
The fifth column spells out exactly what this threshold is for each market. For example, in USDJPY it is 40 PIPS and in gold it is $6 per Oz.; from the days open in Asia, the market has to be a minimum of 40 PIPS or $6 per Oz. FROM THE OPEN in order to trade for the day. No matter when you sit down to trade, night or day, if it hasn’t met the minimum set forth in the table, your probability of getting “chopped” and losing money is significantly higher than other days. Know the minimum for the market you are trading!
The sixth column is the actual number of days in the data set where either the daily threshold was not met, or we had a market “one off”. In 2015 and 2016 we had 3 “one offs”; 1) the “flash crash” in August of 2015, 2) “Brexit”, and 3) U.S. elections. The data for these days has been exempted because they abnormally “skew” the data from normal days, and thus give a higher PR number than normal due to abnormally high ranges for the day. In addition, if I had gone back farther than the last few years, the data would also have raised the PR’s for each market. In essence, what you’re looking at is “worst case” profitability over many, many years of data!
Columns 7 and 8 are the percentages of tradeable days either not traded [7] or traded [8], according to the data.
Columns 9 and 10 are the “net” trading cost at either ASSETS FX or LMFX to trade these instruments. Share CFD’s, like Amazon are not offered at ASSETS FX, and the Russell 2000 stock index is not available at LMFX. The “net” costs are pretty close to each other, with a slight edge to ASSETS FX in USDJPY; gold is relatively the same.
The last column is my subjective ranking as to the best market to trade, and the surprise here[as many people have told me] is that USDJPY is clearly the best market to trade; it has the lowest cost of doing business of any market [on a par with exchange membership in the 80’s & 90’s that cost $500,000 +], the highest liquidity[meaning no matter how big you think your account is, it’s small compared to bank trading where the average size trade is approximately $35 million], the best volumes in all 3 major world trading sessions [Asia, Europe, & the U.S.], and one of the very best in terms of long term PR. In short, it’s the best market to trade, and I’ll have the manual and tutorial on it shortly, once the stock indices manual is finished and posted.
Turning to gold … well, what can you say after last Wednesday and Friday … talk about washing out the stops … and if you were around your screen when they took out $1200, once again around the century mark stops can get “ugly”; on Friday, one second it’s trading at $1203 and the next second it’s at $1888 … “thank you, please come again!”
On the back of some Yen strength overnight, this morning sees gold higher after the Asian Chuckleheads bid it higher [“of course they did, it’s their job I think.”] … half hour to the New York open and the market is $7 off the high of the day and only $4 from the low … unless the Yen starts to strengthen aggressively today going forward, look for gold to “chop” or weaken … it’s not as if you don’t know the drill by now … Asia up, New York down …just another day in the “Naked City”.

An hour into the New York session, and gold has slipped from above the white daily calculated horizontal line to now below the line threatening the lows made last night near the open in Asia … how many times do I have to say this to the world … “no matter how far they rally it in Asia, it isn’t far enough for the bullion banks to sell it down later in New York.” Ok, market made us wait, but the wait was worth it … lower exhaustion RM=1 move and then the subsequent bounce yielded about $3 from the low … “thank you, see ya.” Days first trade directly below.

“Seriously, how much more perfect does this thing have to be?”
Here, just before the Chicago Noon hour, market is hanging around the while line; hit my profit goal, I don’t see the need to wait for any kind of afternoon action that might give it back. I’m outta here. Until tomorrow.

Have a great day everybody!

Wednesday, November 23, 2016


“When you’re pretty much ready to try anything.”

“Well, I got news for you; it ain’t the Chicago river next to the CME in Chicago either.”
Ok, trading pretty much finished for the week, as traders all over the world [except those who have a complete “death wish” for their trading account] take the U.S. cue from the Thanksgiving Holiday, and basically call it a 5 day drinkfest weekend. Coming into today and turning my laptop on, my only thoughts are that any cadaver at the morgue has a higher EKG than gold [or any other market for that matter. So, if for any reason you are thinking about trading Holiday markets, simply send me the money you anticipate losing, and I’ll send you back an autographed pic of me on the beach along with a quick note on how the Mrs. plans on spending [your] her money; this way we can make it all warm & fuzzy personal, and you don’t have to dream up an evil LP who took your money. The way I see it, everybody wins!
I wrote the other day about how gold died about 6 months into Reagan’s landslide election victory over Carter back in 1980; and I also told you how I left the gold pit for good after a day where the entire daily range for the day was like $1.80 [maybe it was $1.90, but after all these years since, I’m getting a little fuzzy thinking about it; all I really remember is it was below $2. “And now that I’m in my late 20’s … well … I ain’t what I used to be!]. Well, there were plenty of “locals” [professional floor traders] that refused to believe gold had changed, and were looking eagerly forward to $20+ ranges returning “any day now”; some of them stood there for years waiting, while other markets took over like Swiss Franc and then the SP500 futures, and for practical trading purposes made trading gold look like “corn spreads”. “Talk about denial, these guys were it!”
Honestly folks, I’ve been pushed these last months, really on a daily and weekly basis, by traders [new, experienced, big, small, and everything in between] to “consider” [which of course means “get up off your ass and do it!”] adding back into the mix of markets I follow and offer volatility algorithms, to tackling “Yen” again and make it available. It’s something I’ve thought about since Spring, because unlike any other FX pair on the planet, USDJPY affects and influences gold & the stock indices, and I don’t want to be like the guys on the floor that were in denial and simply say, “well, it doesn’t matter!”, when in fact it very much matters.
Over the Summer and into Fall here, I’ve taken a “radical” approach with the volatility algorithm in applying it to the Yen; more so because FX has become almost untradeable with previous algorithms I have used. I want the core logic, mathematical philosophy, and intraday volatility to be above average and that remains the same, but I’ve had to “re-think” how to optimally initiate trades [long/short, there is no bias in USDJPY like there is in gold] for the lowest risk / highest profit potential, all the while keeping probabilities of success in the 90th percentile. Since the Spring, when I haven’t been working on other stuff, I turned my attention to USDJPY, taking a “top down” approach with the broadest problems tackled first. It’s been a great intellectual challenge with some bumpy moments, but having all kinds of probability and statistical tools as well as all the market data I could ever want, I do have an M1 volatility trading algorithm in USDJPY that I am going to release after I finish the stock indices; more than likely you’re looking at end of year for this as I have to write the manual and gather the data for all of you.
Now, I know what you’re thinkin’; “hey, you said you weren’t doing FX, so what gives?” Well, “what gives” is that I got tons of clients [small, large, and small institutional traders] pleading with me for answers RE USDJPY, that won’t leave me alone until I do it. Plus, from a “one trick pony” standpoint, it makes sense to have the deepest, most liquid FX pair as an option to trade any time day or night.
My motivation here is to give you “options”; whether you’re a small or very large trader doesn’t matter in USDJPY; this market can handle anything you got, or any size you want to do and dwarfs stock indices and gold combined. It wasn’t something I really wanted to do, but I don’t live in “denialville” either, and I can logically understand and appreciate the need of many of you of having a viable volatility algorithm in USDJPY. So, it’s coming after the stock indices manual. [Note: don't look for any other FX market anytime soon.]
Turning to gold today … I’m glad I’m taking the week off, and I know that when you get into Holiday week’s, experience tells me to back away because liquidity and volumes are about half of what they are normally … and if there’s ever a time for “stupid shit” to happen, it’s a week like this! … today is a perfect example of this, and seeing gold drop $15 in about 3 seconds from 1203 to 1188 should remind all of you what the break from 1300 down to 1274 back on October 4th was like; even century marks in gold always have serious stops associated with them; it’s called ‘situational awareness’!”
Sure, I could have wandered in and taken some of the first exhaustion moves and made a buck or two today, but I don’t have ESP, and would rather enjoy my Holiday; I hope you did the same!
No trading tomorrow or Friday, and so I’ll be back on the blog on Monday; until then I’ll be working on all these manuals and data charts to put things together for all of you. To those of you in the U.S., have a great Thanksgiving Holiday and enjoy family and friends; markets will be here on Monday when all of us come back. Until then …
Have a great Holiday weekend everybody!

Tuesday, November 22, 2016


“Hey look, I found some Asian gold traders!”
How many times have I said this; “There isn’t a price high enough you can take gold in Asia, that can’t be undone by the bullion banks in New York”. And so, here again today our hapless Chuckleheads in Asia bid it up first hour last night, and like the sun rising in the east, bullion banks have sold it down; in so many metaphorical ways our friends are like the clueless young skulls full of mush who still think, despite the overwhelming clear evidence of the facts which show the ”thug” robbing the convenience store and then attacking the police officer, and now have a “narrative” for the SJW’s to paint every cop in the U.S. cold blooded killers.
So, let’s take a look at the Chuckleheads and their motivations; what I find is something far more interesting than buying high and selling low. On the surface it makes no sense for these people to do what they do almost every night, which of course is “bid it up” and buy gold. Why would anybody that isn’t insane continue to do this and lose money almost every single night? Does the mystical Mrs. Watanabe have an unlimited checkbook and never check her P/L?
I think what is at play here is not short term trading, but a long term strategy of the Chinese & Ruskies to buy spot gold in Asia, take delivery, and build their stockpile of gold reserves, and if they get clipped a few bucks on the price so be it. In other words, they want the physical and don’t give a rats donkey what they have to pay for it.
Since 2012, what you are seeing is the largest transfer of wealth in the history of the world, as gold flows “West to East”!
And in my humble opinion, the reason behind this move is simple; both the Chinese & the Ruskies want to end U.S. financial hegemony in the world by having currencies [i.e. the Yuan & the Ruble, respectively] that are backed by gold. And on that day when they announce to the world the transformation back to “gold backed” currency, the gig is up for the U.S.; you are now looking right down the barrel of a gun and for all practical purposes, the U.S. is Venezuela. And all without a shot being fired!
There is no doubt in my mind, the reasons behind U.S. Dollar dominance in the world is, 1) crude oil is priced and trade in Dollars [petro Dollars], and 2) The Federal Reserve has co-opted world wire transfers and undermined the “SWIFT” system Europe uses and thus ends up “clubbing” those countries that don’t “toe the line” politically and are thus forced to hug the U.S. Why do you think both the Chinese & the Ruskies have set up a new bank clearing system to bypass the Fed & SWIFT and have also set up futures contracts in gold and oil based in Yuan & Rubles? It isn’t because they’d like a futures contract.
So, while we take advantage of their actions because we are traders, and almost with 90% certainty Asia & New York are inversely correlated in terms of price, never forget that what they are doing [I think], in terms of their ultimate objectives has nothing to do with short term trading. And for us, that spells great news, and it’s why [I think] this correlation stands is valid almost all the time.
Ok, we’re in Thanksgiving week, and while I know there will be signals today to make a buck or two, this is basically a Holiday week, so I won’t be posting the hypothetical trades I could have made today or tomorrow. Over the Thanksgiving Holiday I’ll be working on all the stock indices plus Amazon & Google; trust me, the work involved in this is massive, and I don’t want to release things until I’m happy with the data and the manual. And while I would love to have it done today, it will be here very shortly; in other words, quality over quantity!
It’s a beautiful day in Paradise, time for the beach. Until tomorrow …
Have a great day everybody!

Monday, November 21, 2016


“Hey Dutch, you got a bid/offer on spot gold?”
I remember the time period very well; it was the Fall of 1980, and I’m standing smack dab in the middle of the world’s largest gold futures pit. It’s September, and the first event up is the assassination of Egypt’s President Anwar Sadat; gold skyrockets up into the mid 700’s. By October, it’s very clear to the “talking heads” and of course the expert political pundits that Carter was a “slam dunk” in the upcoming presidential election over the cowboy, renegade, clownish, lead us into WWIII with the Ruskies, B-grade actor who made a movie with a frickin’ chimp, “how could anybody vote for this fucking clown” Ronald Reagan. The last public poll taken 2 weeks before the election showed Carter with a 9 point lead, and “talking heads” were whispering landslide.
“Oh, you’re gonna get your landslide alright! Hahahaha!”
I will never ever forget watching NBC the night of the election; John Chancellor and David Brinkley, two of the biggest mainstream TV journalists [aka “Democrats with by-lines”] who absolutely couldn’t believe what they were seeing, slowly accepting the inevitable that Reagan was going to win and win “bigly”. “Holy cow David, we just got an update on returns from Florida, and Reagan has taken a very big lead; Ummm, could somebody check those returns with election central and make sure they are right? I don’t want our audience to think maybe something is ‘happening’ when in fact it isn’t.”
“Ok David, I don’t mean to interrupt you here, but we have an update from Florida; yes, the last results were in error … wait … what? … Reagan’s lead is actually bigger than first reported?”
Absolute “comedy gold” that night as every single MSM asshat [just like now] first goes through anger, then denial, then reluctant acceptance.
At first, gold rallied on Reagan’s win, figuring this guy will kill the world, or at the very least turn it “upside down” and be very good for gold prices. What turned out of course, is starting in 1981 gold worked lower and crashed in late 1982, and never recovered much for the next approximately 20 years. We went from $20+ ranges on the trading floor, to a day in 1981 where after a $1.80 range for the day, I walked out of that pit and never returned. And until the start of the 21rst century, I don’t think during that 20 years it ever had a day with a range over $10; it probably did, but it would be a rare event and I have no memory of it.
Fast forward to today, and the parallels to Trump’s win on 11/8 is scary similar; 1) we have a MSM press that is “150%” totally in the tank as Libtard Nation for Democrats, 2) the anger, denial, acceptance is working its way through the process as before, 3) the conventional wisdom [what an oxymoron here] says Trump is going to “kill the world”, and most importantly for us 4) gold is proceeding much faster down than I thought possible.
All of which brings me to ask the $64,000 question; “Is history repeating itself, and does this forebode much lower gold prices, and more importantly, are we staring at a multi-year bear market that sees not only lower prices but very small ranges for trading?” There are “wild cards” on the proverbial table we didn’t have back then; 1) world debt almost infinitely higher at negative interest rates, 2) the rise of China and the continuing collapse of the Yuan, and 3) world economies on the brink of total collapse. All of which, by the way, is supportive of gold.
As you all know, I’m a trader NOT an analyst; hell, I’d trade “black dirt futures” if there was a market in it that had good intraday volatility and liquidity. But I’m also a “realist”, and I don’t just sit around and become unaware of the trading environment and trading paradigms that are unfolding or developing around the world either. As the Mrs. so aptly states, “trade whatever the hell you want; just remember, I got needs!”
And so it goes, nothing ever really changes as the decades flow by and “shit happens”; and in this flowing of time, gold “ebbs & flows” with it. My thoughts are I have to be prepared to give you markets to trade with the appropriate volatility algorithms so we don’t have to sit here and watch history repeat with our pants down.
Turning to gold today … “see my shocked face the Chuckleheads bid gold higher in Asia right out of the gate last night.”right now, near the open in gold, the Yen is finally showing some strength after getting clobbered the last few weeks, and this should provide support for gold today if it can hold the gains.
Well, that didn’t take long; first trade of the day [and most likely the last trade of the day as this is Thanksgiving week in the U.S.] directly below.
Even though market is above the white line, when gold runs out of steam, I’m not hanging around in a long position to find out what happens later; “hope & change” is great for Libtards listening to professional asshats like Chalky Soetero, but it most definitely isn’t a viable trading strategy. Little over a buck in this puppy for the effort, and it does you no good to try and “wish it” higher. Until we see the SP500 break, you aren’t going to see gold op up more than a couple of bucks because the rallies can’t be sustained. And until they can be sustained, you have to have “situational awareness” and realize, that until it happens, it’s not happening now so don’t hang on to long positions and expect the overall market trend to bail you out if you fuck up.
Here at the New York Noon hour, gold is in one of its “glacier moves” lower; i.e. constant commercial selling eating away at buy orders, and until either/both USDJPY or SP500 breaks, the chances of a good day rally in gold is “Slim to None” and Slim is on vacation. Not interested in trading gold the rest of the day cuz I don’t see good probabilities of anything happening.
Over the weekend, I spent a lot of time on the stock indices manual, and I’m making good progress, but I’m not finished; there’s a lot to do there with 6 markets [DOW30. SP500, NASDAQ100, RUSSELL2000, GOOGLE, & AMAZON], and it’s a big project, especially when you consider all of the exhaustion charts I have to go through. So, have patience and it will be here soon.
The dog looks antsy, so I know it’s time to hit the beach for some Vitamin C therapy … we’re soooooooo outta here. Until tomorrow …
Have a great day everybody!


Friday, November 18, 2016


“Yes, especially when I’m trading!”

Ok, it’s Friday, and another week of seeing gold get crushed like a bug on a windshield; and a quick look at the daily candlestick sees as ugly a market in terms of price as I’ve seen in a while. And yet … the algorithm continues to make money on the long side of this market.
And it being Friday, I also know you most likely got the market attention span of this guy:


But before we break today for your most, best-est weekend evahhhh!, I want to summarize some of the areas I’ve gone over these last blog posts and highlight the biggest mistakes Newbie and/or losing traders make; 1) not paying attention to what the algorithm says to do , or worse fading the algorithm, 2) not having your “thinkin’ cap on and lack “situational awareness”, 3) having no idea what the limitations or weaknesses of your algorithm actually are and where they can hurt you, and 4) setting your daily profit goals in a realistic manner and looking at the market not in terms of money but in terms of the trade to achieve these goals. Forget or pay no attention to any of these, at any moment you’re in a trade, and it’s only a question of “when”, not “if”, Mr. Market wants to talk to you about that upcoming loss.
Trading is pretty much unlike any other “job”, “profession” , or entrepreneurial activity you will ever see; while everything else moves, most of the time, at a pace that can sometimes be hectic, trading moves at the “speed of light” compared to these other activities. When you trade, you have to know ahead of time what you’re going to do under ALL circumstances, and when faced with a decision, you have to act “Now!”, not 30 seconds or 2 minutes form now while you think about it. Trading is not about being “smart”; trading is not about being “lucky” ; while experience helps, markets have no memory of who or what you are, and you do “stupid shit” it will punish you like a deer in headlights.

All 4 of the criteria I listed above are important as “stand alone” elements you have to conquer; put any combination of them together and make mistakes simultaneously, and you are looking at a disaster. From day-to-day, the need to have “situational awareness” is the most important, and you should be checking the daily charts to see where the retail [lemmings] spec position traders have their collective buy/sell stops [easy to spot from the dailies], and then check to see if there are any economic reports or events on the U.S. calendar that could affect gold as we move into the New York day.
Turning to gold today … the Asians finally read the proverbial “handwriting on the wall” and sell gold down last night about $10 into the lows in Europe … “You know what that means, right?” … coming into the New York session, 1) it being a Friday and gold has been killed all week, 2) the Chuckleheads sold it last night, 3) early on we’re above the daily calculated white horizontal line, and finally if those first three items aren’t enough for you 4) shorts always panic first in the gold market, so we should have early strength … new high? … who knows, but early on any buy signals from the algorithm should be very good. Trades #1 & #2 directly below.
The first trade had two “spindles” from which the second one, when it turned red I liquidated. The second trade almost hit the exhaustion lines, and when it didn’t make it and started to back off the high I liquidated; notice, even though the market is above the white line, I know what has happened in this market this week with price getting slaughtered, and I am under no illusions that it can sustain any upward movement for very long at this point. First of all, stock indices are basically flat, and this buying is purely short covering going into the weekend; to get gold moving past the overnight high would take the SP500 moving lower, which it isn’t doing. So, you have to have “situational awareness” and understand that rallies absolutely must be sold on the spikes up; you’re only gonna get one chance, before the bullion banks step in and end it. And if you get stuck in this stuff at present you are looking at losses; I simply don’t care what it does after I liquidate. Total captured profit here of about $4.50; another down day in gold, another day of profits from the long side. Any guess as to what this looks like when the SP500 and the other indices start going lower and take out the sell stops from the “Trump Rally”? “Yuuuuge!”
So, no need for further trades today given the profit is above my profit goal for the day; and more importantly, as we move forward into the Noon hour and to the close, unless the stock indices get killed lower on stops, I think the probability of gold rallying is very low. More likely an assault on 1200 or the more probable “chop city” scenario. Either way, I’m not interested.
A lot of work to do this weekend putting this last stock indices and CFD Shares manual together and posted; the dog and I are headed to the beach for some “R &R”, and then it’s back to hitting the keyboard. Until Monday …
Have a great weekend everybody!