Long time readers know that I’m all about volatility and trading markets that have above average intraday movements that the algorithms can take advantage of and make money; now, I’m not talking about the VIX or other measurements often times referred to as the “fear indices”, or intrinsic or historical volatilities. Knowing what has happened and what to expect from the last 30 years of trading isn’t going to help me tomorrow.
In order of importance, what matters most to me is 1) intraday volatility with enough “action” that decent buy/sell signals can be activated, and profits made from those moves; not just one, but several, 2) the lowest cost of doing business I can negotiate or otherwise obtain, because I know this is “money in my pocket” [which is not insignificant over time], and 3) good volumes and liquidity so that slippage on fills is kept to a minimum. If I can get these conditions, I’d trade dirt futures if it was listed.
Several months ago, before the scalper volatility algorithm was introduced and then the regular volatility algorithm was updated to version 2, some of the FX pairs dotting the landscape on the MT4 were simply moving too fast to be accurately modeled by the algorithm; 2 things to note here, 1) sometimes you would need 30 – 40 PIPS to see algorithm changes, and 2) whipsaw action really bloodied the results.
However, with the scalper’s algorithm, and the changes that have been made to the M1 signal parameters, it’s time to “re-think” one FX pair that meets all the requirements listed above and can be added to EURUSD and USDJPY for scalping; and that FX pair is GBPUSD.
Since Brexit, this pair has not slowed down, often putting in days with much better HVALUES than either USDJPY and/or gold; so we have the necessary volatility, and now that LMFX has a spread of 0 to ½ PIP, the “net” trading cost is roughly 0.8 – 1.3 PIPS; this is just slightly higher than exchange membership trading [which cost roughly $200,000 by the way]. In essence, you’re paying about 1 – 2 tenths of a PIP for the privilege of NOT PAYING $200,000, and so that’s a lot of trading over the years isn’t it? [Hint: about `100,000 1 lot trades]
Directly below 2 charts from some algo trades this morning in GBPUSD.
USDJPY had its moments as well, and directly below that chart. While 4 out of 4 would have been nice, 3 out of 4 winners is still good, and the gains more than made up for the single loss [which was very small].
Gold, for its part got taken out and shot, with another infamous, mild screw job with sell stops that saw prices go South in a hurry when prices busted 1197. And so it goes with another “bullion wall” getting erected between 1210 -1215 [like I wrote about before in previous blog posts], and the bullion dealers just “wait you out” and sell more; when you can borrow all the money in the world to sell, it’s hard not to make money.
Even though it’s still morning, I think the day is basically over, what with the DOW30 finally … finally … getting over 20,000 [Gartman is now long via Zero Hedge; Uh Oh!], USDJPY dancing the “round tripper from high to low, back to the high, and now in the middle, and gold getting monkey hammered once again.
Beach beckons … I’m soooooo outta here … until tomorrow.
Have a great day everybody!
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