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Friday, November 18, 2016

MAPPING MARKET MISTAKES


“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:


“What?”


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!
-vegas
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!”

 


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