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Friday, December 30, 2016

THE NEW YEAR AWAITS

“There is ALWAYS a way; you don’t need to go find it, it’s here!”


Last day of the trading year, and I’m a little surprised we’ve seen today 1) a flash crash in EURUSD (150 PIPS in 2 minutes near the Asian open last night), 2) USDJPY flows that in my humble opinion are heavier than normal for this day historically, 3) a decoupling of gold and Yen, and 4) waves of selling in stock indices right out of the open with little recovery in price; something again, you rarely see on the last trading day of the year. Perhaps it portends greater volatility coming in 2017, or maybe it simply is adjustments for year end money flows.


Whatever the case, 2017 looks to be a “banner year” for trading USDJPY, and hopefully gold can break free from the government manipulators in a Trump Presidency, and become more “tradable” [i.e. up & down with more intraday volatility that can see a return of $17 - $20 ranges]. The stock indices? Really, I don’t know, cuz until we start to see expanded daily ranges of greater than 125 index points in the DOW30 every day, there isn’t much point in trading it because there are better places to trade.

With the elevation of USDJPY to its own “asset class”, the world is pretty much fixated 24/5 to anything and everything that happens here; from this pair every other market flows, and you risk losing money if you aren’t aware of the consequences USDJPY has on any other market you’re trading. Which, of course, begs the question of “well, if every other market flows from USDJPY, why not just trade Yen”? SHORT ANSWER: “Duhhh!” Never mind it has the lowest spread & RT commission rate on the MT4 board, has above average volatility with the deepest liquidity [except when it doesn’t], it also trades evenly over the world’s 3 major sessions [Asia, Europe, & the U.S.].

For you Newbie traders out there, and for those looking to vastly expand your income in 2017 [why else would you be here?], right now there is no better market to trade than USDJPY. Come the New Year, you will have everything you need to trade 4 markets in order of preference [and a fifth if ever the ECB stops monkeying around with the DAX30]; 1) USDJPY, 2) spot gold [XAUUSD], 3) DOW30, and 4) if the first 3 fail to provide any action at all, WTI Crude Oil. Between the 4 of them, if these aren’t moving nothing else is moving either.

I have provided [or will be up this weekend] all of the exhaustion charts of gold [Q3 – Q4 2016], USDJPY [Q4 2016], and DOW30 [Q4 2016] with commentary as well as a comprehensive spreadsheet with all of the information at your fingertips for viewing online and/or downloading, to provide you WITH PROOF the volatility algorithms work and work well beyond your expectations. In addition, you got the manuals, tutorials, and email support from me; seriously, anybody with enough ambition to want to financially change their lives [as well as their family] can get everything they need to make 2017 your largest money making year in history. It’s really all up to you; what do you want to do? … and if you’re serious about making money trading…  why for God’s sake have you not opened a demo account at LMFX, downloaded the MT4 trading platform, downloaded all instructions, manuals, and tutorials and buried your ass in Read. Think. Study. Act. Prosper. Hmmm?

I’m not ever asking anybody to take my word for anything. I’m like Tony Montana directly below.


I always tell people to demo things first; seeeeeeeee with your own eyes, make mistakes with play money first, and then when you are ready to go live you have the confidence to know when to do the right thing at the right time; trading is like any other biz you get into, and if you think you can “just let the computer do it” and sit on the beach drinking pina coladas … well, you been looking at too many scam websites after your wallet … time to get real.

This isn’t rocket science or brain surgery; what this “takes” on your part is discipline, patience, and the ability to assimilate new information, become totally comfortable with it, and then apply it. Now, I fully realize there are many people where they have small businesses or professions they are involved in that take up a lot of their time; so, most likely around the end of March 2017, LMFX will have their PAMM ready and you will have the ability for me to manage your funds for 17% of the profits. If that’s the option you need to start moving forward, then let’s do it; otherwise, I give you the ability to do it yourself.

I want 2017 to be a special year for all of my readers/clients; I want to be able to provide you with every single thing you need to be successful trading; there isn’t any reason you can give me … none … that I’m buying, unless you love where you're at now. Other than that, be like the lion and get on your stilts and make the kill!

It’s New Year’s this weekend, and enjoy responsible partying … lot’s of stuff to post this weekend on the website for your viewing and/or download, so check back at your leisure when so motivated … as for me, time for the beach. I’m soooo outta here. Until Monday …

Have a great New Year’s celebration everybody!
-vegas
OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”; REFERENCE ID# 6952 WHEN OPENING YOUR ACCOUNT] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”

 
 


Thursday, December 29, 2016

EXHAUSTION MOVE ANALYSIS

“Nothing you can dream up will ever be as good as the ‘volatility algorithms’ exhaustion lines at predicting short term tops & bottoms!”


With nothing going on, except a little Japan, Inc. repatriation of funds back into the homeland for year end accounting purposes [and a nice sympathy rally in gold [“about time!”] as the US Dollar is thus slightly weaker], and the obligatory fund managers “window dressing” portfolios in the stock indices to show stocks that are up for the year in their funds, it shouldn’t surprise anybody that very little trading is happening anywhere.


Which gives me the chance to bring up the year end archival charts I’ll be adding to the “Download Links” section of the website, most likely on Saturday; I’ve finished USDJPY, spot gold [XAUUSD], and the DOW30 is almost done. I touched on this yesterday, but it is important you understand what is at “your fingertips”; back when I was on the trading floor, information like this would have taken 5 years of human man hours to compile and publish; today, less than 2 weeks.

Essentially, this is a library of RM=1 through RM=4 of M1 exhaustion moves in 3 markets that are equal to or greater than 9 minutes length of time. Gold has been cataloged for June – December 2016 [calendar Q3 & Q4 of 2016]; USDJPY & DOW30 has been cataloged for October – December 2016 [calendar Q4 of 2016]. All the charts contain appropriate ‘Square of Nine’ cycle information of the length of the duration of the move in minutes, and the move in price, and these 2 values are compared against the ‘Square of Nine’ parameters of Gann’s “squaring of time & price” along the key cell numbers on the Cardinal & Diagonal crosses. In addition to the individual charts, each market also has a comprehensive spreadsheet which has all the information over the year; this is a great way to quickly scan which charts you may want to view.

Directly below is a Gann ‘Square of Nine’; notice the first 8 numbers. They are all on the Cardinal or Diagonal crosses, so for analysis purposes, if I am trying to show that exhaustions moves are not random in nature and are in fact based on cycle “tops & bottoms”, what good is it to have anything below 9 minutes for time when every number from 1 to 8 is on a Cardinal or Diagonal cross cell number?
 

 




Starting at cell 9, cell numbers quickly expand outward, thus making moves that are higher in time a function of probability [cell numbers for time on the Cardinal & Diagonal Crosses versus those that aren’t], rather than certainty which we see with cell numbers 1 through 8, and this is the reason I have excluded them for analysis; it doesn’t mean they are any less valid, in terms of making money on them and liquidating positions, it simply means I don’t want to “skew” the data with “slam dunks” that have total certainty of being on the Cardinal or Diagonal cross cell numbers. In essence, I’m taking away data that makes my premise of cycles that are constantly present in the market and only shows data that has a probability of being “off” the algorithm’s predicted model data.

The key parameter regarding price also can be seen in the market spreadsheets for each market; that parameter is the “collective error” over time of price ± from the closest Diagonal or Cardinal cross cell number. Any single trade can be slightly over or under the exact Cardinal or Diagonal cell numbers, but if there is any real bias in the algorithm model, it will show up over time as the collective error grows and grows through the weeks and months of data. Well, as you will see when the data is posted and published, the “collective error” in each market is so low, the median regression line for hundreds of data sets in each market is directly on the Cardinal or Diagonal cross cell numbers; just as Gann predicted they would be for most markets some 100+ years ago.

There are literally hundreds of charts for you to look at, so what is the main point I want you to pick up on? Simply, from either a top or bottom [white arrow on the chart] to an exhaustion move end [orange arrow on the chart], notice how close the plum line slope changes from either the top or bottom; simply put, they are the vast majority of the time very close to each other. So, every time we take a position on a plum line slope change, we are putting ourselves into a situation that has the very real potential of becoming an exhaustion move to the aqua and red lines, and that means making some very nice profits.

Gann’s ‘Square of Nine’ is a wonderful tool for spotting cycles in hindsight; it is utterly worthless for predictive power because you can always move either price or time out another level to new cell values. What I have done is simply recognize that every “spike” in price [up or down] is to a degree an exhaustion move, and therefore I wish to eliminate the smaller ones from analysis and concentrate on levels that start with Risk Model [RM] = 1 [normal market mode] and move upwards towards RM=4 [psychotic mode], and at the other end of the volatility spectrum ignore the “one offs” that happen every generation or so [like the ’87 crash, etc.]. By examining market history closely, because it is all we have, I can set up a statistical model showing me what amount of moves take place over time, and have repeated so often it makes your mind go numb, and then plot those values against the ‘Square of Nine’; and presto! Bingo!… when you do that you see tops and bottoms “cluster” around the Cardinal & Diagonal cell values.

Learn the computer code and plug into it the cell numbers for exhaustion, and you basically have the volatility algorithms. And if you spend some time analyzing the data I have collected and present to you, you might just soil yourself when you realize just how accurate this has been over the last decades of trading. I seriously don’t think there is anything even remotely close of “getting you in at the bottom”, and then liquidating “at or near a short term top”; rinse, repeat, and find your “escape to success”.

Yes, I see gold made a nice move today … woulda coulda shoulda … don’t really care though, as I’m looking forward to next week and have already “closed the books” on 2016. The beach beckons … I’m outta here … until tomorrow.

Have a great day everybody!
-vegas
OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”; REFERENCE ID# 6952 WHEN OPENING YOUR ACCOUNT] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”

Wednesday, December 28, 2016

NOTHING BURGER MARKETS

“Kind of sums up the whole day doesn’t it?”


Not anything really to write about today, as it pertains to trading USDJPY and/or gold; both aren’t doing anything and have low daily ranges and low HVALUES. Once again today, USDJPY didn’t go past the 40 PIP threshold [LMFX server] until New York was well underway, telling me that overnight was dull and listless.


We’re in Holiday mode here on “hump day”, and it only gets worse from here to next week, when the world returns from New Years; expect nothing tomorrow and even less on Friday.

On the bright side, I’m getting the archival chart work done on USDJPY & gold, and sometime over the New Year’s weekend, I will have the exhaustion charts up in the “Download Links” section of the website for viewing and/or download; 3rd & 4th calendar quarter of 2016 for gold and 4th calendar quarter of 2016 for USDJPY. These charts [with commentary] are an invaluable source of information for you; not only do they catalogue every exhaustion move in each market for lengths of 9 minutes or more, along with the charts are the spreadsheets that give all the relevant cycle information with details. Once you spend some time looking at these, the only conclusion to be drawn is that the volatility algorithms for both markets are “right on the money” and it is statistically impossible for “random events” to have been responsible for the moves from top to bottom or bottom to top in the short term, with the accuracy of literally pinpointing the exact top or bottom from where the move started to the exhaustion lines, and for the “collective error rate” off of Gann’s ‘Square of Nine’ to be less than hundredths of a percentage point in both time and price!” YOU WANT PROOF THE ALGORITHMS WORK? I GIVE YOU MATHEMATICAL & STATISTICAL PROOF!

As for now, the sun is shining and you know what that means … time for the beach. I’m sooooooo outta here … until tomorrow.

Have a great day everybody!
-vegas
OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”; REFERENCE ID# 6952 WHEN OPENING YOUR ACCOUNT] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”
 

 


Tuesday, December 27, 2016

WHAT SCREWED LOOKS LIKE

“Somewhere in the world there is a fund manager that looks just like this.”


The only reason LP banks don’t screw you on Christmas Day is because the markets are closed; any other day … well … you’re fair game. Which brings me to gold, and more specifically why you shouldn’t be in “Holiday” markets to begin with, unless you have some kind of death wish. 



So, what does getting screwed look like? Well, if a picture is worth a thousand words, the following is a pretty good definition.



And you know, things were going along so slowly, hardly anybody noticed that at the Asian close, somebody most likely noticed a very large buy stop above the market … and who can blame [besides me] the fund manager? After all, gold has been down 7 weeks in a row, the longest losing streak since 2004, and if you’re short maybe you are feeling a little uncomfortable staying short … who knows what he/she is thinking. However, LP banks being LP banks, and bullion dealers being bullion dealers, somebody knew there were buy stops above the market, and at what level. So, what better time to “explode things” than right at the close of a totally non-descript Asian session.

“Here’s your buy stop  fill at the top … Happy Holidays! Please come again!”

A three minute “slam job” followed by seven minutes back down, and we’ve been lower ever since … yes, a nice fair and liquid market right? As I have been saying for weeks, the absence of a large retail spec presence is hurting the gold market … and don’t forget, plenty of hedge funds and hedge fund managers are butt hurt as well [“Crispin Odey, please call your office”]; and when bullion banks “smell blood” they go after stops with a vengeance. Just make sure it isn’t your blood.

Another market day, where USDJPY didn’t escape from its 40 PIP trading threshold until well into the New York session; something that tells me to leave it alone in Holiday mode; ditto for gold since last night’s fund manager slaughter. Time for the beach … until tomorrow …

Have a great day everybody!
-vegas
OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”; REFERENCE ID# 6952 WHEN OPENING YOUR ACCOUNT] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”


 

Monday, December 26, 2016

BOXING DAY 2016

“Anybody seen the dog? Yup, best day evahhh!”




It’s “Boxing Day”, affectionately known as the day after Christmas; and, in case you didn’t know it, it’s also “St. Stephens” Day as well. And no, it’s not called “Boxing Day” cuz you get to throw out all of your Christmas boxes.


The origins of Boxing Day can be traced back all the way to the 17th century, when an English bloke named Samuel Pepys [shown directly below in all his splendid glory] used the term in his diary.


The day after Christmas [in the U.K. & its colonial empire], for those who had servants, maids, or workers on their estates, would be given “boxes” filled with presents, money, or even leftover food from the traditional Christmas feast to take home to their families for their Christmas celebrations, since they obviously had to work Christmas day pampering the Lords & their families. It was most likely one of the few days each year they got to spend with loved ones; the other being Easter.

In Ireland, Boxing Day is celebrated as “St. Stephen’s” Day in honor of the Irish Saint who was stoned to death for his belief in Christ. For a very long time, fox hunts were popular on St. Stephen’s Day, but for the most part are banned now and what goes for a “fox hunt” now isn’t anything like it used to be. Today, people all over the U.K. Commonwealth celebrate Boxing Day from sports, to eccentric activities like swimming in the English Channel, or simply enjoying a day off from the hectic pace of Christmas.

Of course, not wanting anything to do with things associated “British”, U.S. customs have not adopted to the concept of Boxing Day … most Americans today will either be returning gifts, eating leftovers with relatives, watching sports on TV, or still trying to get that damn dollhouse put together for little Sally.

Markets today are, for the most part, non existent; and if they are open, spreads are so wide you could drive an 18 wheel semi through them and not come close to either the bid or offer. For example, taking a peak at my screen, shows USDJPY with a current quote of 117.029 bid … offered at 117.079; “hey, who’s up for trading some Yen with a 5.0 PIP spread, when it’s usually 0.3 PIPS?”. As for gold? Mercifully, it’s not open.

For a Monday, it feels like a Sunday … this whole Holiday schedule this year is screwing up my biorythms; the only cure is to treat the whole week like it’s Saturday! Markets reopen up tonight in Asia, but don’t expect anything.

For the most part, enjoy today’s history lesson and sit back, relax, reflect on what Christmas really means, and try and keep that feeling for as long as you can. The dog, although he didn’t get his own “impenetrable bacon box”, is in high spirits as always, with gifts galore to take to the beach and generally gnaw the crap out of to keep him happy. Does he look unhappy?

“These are mine and you can’t have ‘em!”


As for me, I’m in Paradise where it’s 83° at 10:00 A.M., with the sun shining and turquoise waters surrounding me; I’m always happy! Until tomorrow …

Have a great day everybody!
-vegas
OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”
 



 

Friday, December 23, 2016

MERRY CHRISTMAS 2016

“Whaddaya mean I can’t have any?”


Well, here we are, the last trading day before Christmas, and if you have designs about trading today you need serious psychological help; to say nothing is going on is an insult to “nothing going on”. I don’t even know why anything is open today anyway; there isn’t a commercial trading desk in the world that has anybody there besides new MBA grads and interns. Every large trader [and small ones as well] have packed it in, and the only thing anybody wants to see from the trading world is the clock showing its time to leave.


So, not only is it pre-Christmas Eve, it’s Friday as well, and I have a sneaking hunch there aren’t many people that give a rat’s donkey about anything trading related; everybody is gonna be watching the never ending holiday telethon of “The Christmas Story” on TBS/TNT. However, most guys still have Holiday shopping to do, and so I realize you are gonna be busy today finding special gifts for loved ones, and there just isn’t time for trading; as for me … well … I got all my shopping done weeks ago when I caught that special at WalMart on vacuum cleaner bags for the Mrs. … oh, won’t she be thrilled!

I checked under the tree this morning, and all I see are wrapped presents for the dog … you’d think he owns the place or something. How many assorted toys, nurf balls, and bags of treats does he need? Meanwhile, the only gifts I get are through the mail and say “amount due”; ahhh, the joys of being an adult male.

Still, it’s one of my favorite times of year; mostly because I get to look at the Weather Channel and see most of you in the U.S. freezing to death while I “catch a chill” here in Paradise when the thermometer drops below 78°; “now, now … it’s Christmas … no Paradise envy”. Of course, if you’re sick of the weather, the traffic, the “Pudding Business”, and in general the lovely state your living in, the real Christmas present you should be giving yourself and family would be making more money than they could ever spend down here somewhere in the Caribbean soaking up warm temps with nary a worry. For the vast majority of you, still plenty of time to make it happen, and “escape to success”!

Until next Monday mi amigos, I am wishing all of my readers/clients the most very MERRY CHRISTMAS!

Have a great Christmas everybody!
-vegas
OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”
 

 


Thursday, December 22, 2016

LOOKING AHEAD TO 2017

“It’s shaping up to be one hell of a seesaw battle!”


We’ve maybe got a couple of days next week that perhaps could show some kind of intraday volatility for trading purposes, but sitting here today looks & feels very much like a pre Holiday nothing burger. The USDJPY volatility algorithm’s threshold HVALUE has yet to be seen, and gold is so dead I’ve seen better EKG’s from cadavers at the county morgue; so, not much to report on today, which means it’s a perfect learning day.


What can we learn from 2016 markets, and how do we project that into 2017? The first lesson to be learned from 2016 is that there are no such things as “fundamentals” in any market; you can break down the MT4 markets into stock indices, FX, precious metals, energy, and USDJPY.
 

Stock indices, at the moment, are a complete trading joke; intraday volatilities have collapsed to the point where you could be stuck inside the spread on a CFD for hours, and not see the other side. World wide manipulation by central banks to eradicate volatility and create the illusion of stability through stock prices is doomed to failure; you’d think they would know this, but anybody who dreamed up negative interest rates to cure deflation is stuck in an alternative universe anyway, and in their collectivist delusional mindset this makes perfect sense. It remains to be seen how long this charade can continue, but I do know one thing, “never underestimate the power of government to either change the rules of the game or continue the Ponzi scheme unabated, right up until the time you have no more money left.” At some point in 2017, world stock indices have a “reckoning” with reality, most likely caused by some perceived disappointment with the Trumpster , and volatility returns with a vengeance.

However, one of my major disappointments with brokerage houses and LP [liquidity provider] banks is that their CFD’s [in pretty much all of the stock indices] are grossly mispriced in favor of “the house” and grossly overpriced for retail specs [you & me]; and when you add in round turn commissions [RT], if applicable, and it’s even worse.

For example, take the best spread available, which is in the DOW30 at ASSETS FX of 1.8 index points, add the RT of another 1 point, and your “net” trading cost is 2.8 index points. Assume you have $1,000 in your trading account and use leverage of about 10X; that translates into 0.5 lots [1 lot = $1 per index point; DOW30 at approximately 20,000, so ½ lot = approximately 10,000 notional value]. Let’s also assume you trade, based on algorithm signals, about 4 times each day; your cost for the day’s trading = $0.50 * 2.8 * 4 = $5.60; for the year, assuming approximately 240 trading days [20*12] = a cost to your account of $1,344. 

 
Now compare this to USDJPY; at current rates you would be trading 0.12 lots 4 times per day, with total “net” costs of 0.7 PIPS. The math looks like this: $1 * 0.7 * 4 = $2.80. For the year, $2.80 * 240 = $672.

So, comparing the two, by trading the lowest “net” cost stock index, you’re paying the LP & the brokerage house almost 70% the value of your account EVERY YEAR for the privilege, OVER AND ABOVE WHAT YOUR COSTS ARE IN USDJPY WHICH HAS MUCH DEEPER AND BETTER LIQUDITY AND MUCH MORE CONSISTENT VOLATILE RANGES.

Now, this obviously begs the question of “then why trade it if I’m giving substantial sums of money away for free and getting very little if anything in return?” Cuz here’s the secret folks; with 10X leverage, as your account grows so do your volumes and that approximate 70% you’re giving away, over & above USDJPY, to the lovely scumbag LP every year as a percentage of your account stays exactly the same! EXIT QUESTION: “Is the DOW30 consistently 70% more volatile than USDJPY? SHORT ANSWER: “Bwaaaahahahahaha!”

Let’s turn to FX; outside of USDJPY, a complete disaster with flash crashes du jour, substantially lower volumes [about 30% in 2016] as retail specs & hedge funds abandon the markets in record numbers, and last but not least stop hunts & slippage on the rise. Unless the Euro collapses, and broken into its component country parts, what’s going to propel volumes here in 2017? “Me neither.”

Gold … crickets … Any idea how many people got totally crushed trying to pick a bottom in gold, and/or stayed long from “Brexit”? Well, I’m here to tell you it is significant, and those traders won’t be back in 2017; they bought into the “gold is the best performing asset class of 2016” financial press BS, and if continues like this I’ll be rich! Outside of intermittent rallies from short covering, unless there is a complete global economic meltdown, it’s hard for me to get excited about gold; it very much looks like a dead market on life support. Until $15+ ranges start appearing again with regularity, you can expect intraday volatility to be lower than average, and slippage to be greater than normal from LP games; all in all, there are better sandbox’s to “play”.

And if you’ve been paying attention to the gold versus USDJPY correlation matrix, literally the second USDJPY stops going down is when gold gets crushed by the dealer & bullion bank community in their never ending zest to sell, sell, and sell some more. The way it goes down isn’t smooth and it isn’t pretty, and liquidating into this leads to some “eye watering” fills that are guaranteed to be off the market.

The problem I see with crude oil right now is simple: seems like every day is an “NFP Friday”; what with rig counts, IEA inventory reports, the DOE inventory reports from Cushing, OK. every Wednesday morning, and last but certainly not least the constant “blah blah” from OPEC & Russia about either production or production cuts, any position you take is akin to being in a dynamite factory when somebody walks in the door with a lighted cigar. “What could possibly go wrong here?”

Another problem is the fact that one day you’ll see a $3 range and the next it’ll be $0.75; the wide discrepancy in ranges makes it difficult to stay with a position with any degree of probabilistic certainty. The spread, and contract specs at LMFX are the best you are likely to get anywhere in crude oil; “net” trading costs are $0.03 per 1 lot [1 lot = 100 bbls.], so it’s not the cost of trading that prevents, in my opinion, from making WTI crude oil a “primary” trading market, it’s the total uncertain “news flow” that creates “bat excrement” volatility over a few minutes time frame. Now, “that’s great if you’re on the side of the bat; not so much if you’re the statute in the park.” Cuz, remember, if you’re on the wrong side, you have a stop somewhere in there, and that stop is going to be nailed up on a cross; God help you with the fill. So, it very much becomes a very delicate exercise in risk management.
 

Which brings me full circle to USDJPY; unless Kuroda & the BOJ suddenly wake up and smell the coffee, which is highly unlikely, I can’t see anything on the horizon which would make me see this “asset class” of “risk on … risk off” going to sleep and intraday volatility taking a significant hit. And even if it did somehow, that would mean everything else, with the possible exception of crude oil, would be in the doldrums as well; stock indices & gold would be dead.
 

From a macro perspective, I think the surprises will come from 3 areas; 1) people will be surprised at how fast Trump implements his priorities and programs, and thus the impact on interest rates have the potential to be significant [up and down], 2) a more rapid deterioration and disintegration of the Eurozone; I can’t see Merkel hanging onto power in Germany, and Wilders is poised to take power in the Netherlands; add to that the disaster that is Italy & Spain, and it will be a miracle if the E.U. can make it to 2018, and 3) never, ever underestimate Kuroda & the BOJ to do utterly “stupid shit” at anytime and turn “risk on … risk off” into a roller coaster.  

Given this, 2017 looks to be full of trading opportunity galore. Until tomorrow …

Have a great day everybody!

-vegas

OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW! USE LMFX BROKER ID# 6952 AS YOUR REFERENCE. THANKS!
 
 


Wednesday, December 21, 2016

A USDJPY “FINGERPRINT”

“Sluething for clues in USDJPY.”


Today, I want to go over the subject of “fingerprints” in MT4 markets; specifically USDJPY. What I mean by a “fingerprint” are identifying characteristics that can often be found in helping you identify the short term direction of the market; the 2 most popular in USDJPY are 1) retracements, and 2) double tops and/or double bottoms.


The first I don’t pay much attention to because the M1 volatility algorithm will most often totally nail the turn after a retracement in price, so there is no need to guess [no matter how educated] what that particular level may be. The majority of the time retracements in price in USDJPY are in the 20-25 PIP range before the move continues on its merry way; however, “willy nilly” taking a position just because it retraced 22 PIPS can be very dangerous, as it might be on its way to a 40 PIP or even 60 PIP retracement before resumption of the trend. In any event, the M1 algorithm will pinpoint the turn anyway, so what’s the point of guessing?

There is however a scenario, on both tops and bottoms of a short term move, which we can take advantage of and make money. To set this scenario up, let’s assume 1) I am using the HR1 with SAR [0.032 & 0.32 respectively for input values], and 2) if the general intermediate uptrend in USDJPY is up, then I have yellow support lines [2] in place for a change in trend [tutorial]. Assuming these 2 criteria are in place, also assume that the “white dot” SAR is above the market [sell] at the moment and USDJPY is moving lower and I want to “buy” at the change in slope of the Plum Line from negative to positive when the Plum Line is under the Yellow Line. [Note: this is the market scenario which is currently present.]

In this scenario, I am clearly faced with a market “correction” in an otherwise intermediate up trending market; there are “cross currents” here that have the potential to make trades either “choppy” or losers with a higher probability than if the “white dots” SAR was below the market [buy]; what those probabilities are I can’t tell you, but they are lower than the 95%+ we would have with the SAR below the market.

USDJPY, especially when the down move is strong, very often will attempt a test of the low before putting in any kind of rally I’d like to capture. If the attempt to take out the most immediate low is successful, you can expect some gap action on the downside; however, when the attempt for a new low fails [a double bottom], the M1 with the algorithm is very quick in picking up the trend change, and it is this rally I want to capture. In other words, 2 things to pick up from this: 1) you don’t have to “take” every single algorithm buy [sell] signal in a down market because even if you were wrong and it would have made you money, by missing it you only have lost opportunity, and there are infinite opportunities available to you in the future, and 2) the second signal many times will be the one with power.

Today’s action in USDJPY bears this out; all the conditions above were met, and once we got into the New York session, there were 2 trades that show what I have been writing about above. Directly below the 2 trades.
 



You can clearly see the 2 double bottoms, and the subsequent rallies that followed them, with the second one going to the RM=1 exhaustion line. This type of trading action happens frequently given the assumptions I made earlier; however, don’t look for this [cuz you aren’t going to get it very often] scenario when the SAR is below the price. Most often, in that case, you have one opportunity before the “train leaves the station”, and if you miss it, you aren’t going to get another chance at that price level.

Take everything I said above and “flip it over” for price action from the sell side, and now I’m talking about “double tops”; the scenario here is exactly the same except reversed for price and the position of the SAR. Nothing in trading is 100% “fool proof” or guaranteed, but what I described today happens so frequently, I think it’s worth paying attention to on an ongoing basis. Having said that though, if you totally ignore today’s post and simply follow algorithm rules [on either the M30 or the HR1 from the tutorial], you will still be very profitable; this “tweak”, if you will, simply has the potential for you to be more profitable in your trading without violating algorithm rules and/or procedures.

Experienced professional traders, like me, don’t just sit like “bumps on a log” and drift through life year-after-year when trading, happily collecting money along the way nary a thought in our heads; I READ, THINK. STUDY. ACT. PROSPER. I pay attention to anything and everything that might possibly give me and/or the algorithm a problem and then I find a solution, or a course of action that mitigates the risk I might be facing; I learn the “personalities” of markets, how this differs from other asset classes, what the particular “fingerprints” of any market are and how best to trade it, and always have “my ears to the ground” listening for possible paradigm shifts in financial trading.

I wasn’t really planning on trading today, but after that first exhaustion move up off of the lows, another algorithm buy signal popped up that I thought should be a good trade … actually became a great trade. Directly below today’s first and only trade.



I’ll take it, and now I’m sooooooo outta here. Until tomorrow …

Have a great day everybody!
-vegas
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