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Tuesday, January 17, 2017


“Hey, I’m thinkin’ I like gold a lot more now!”

Yup, gold has made a roaring comeback … well maybe … the jury is still out. While over the last few days to maybe a week, trading conditions have improved, a couple of things to note; 1) spreads during the off New York session hours are higher [sometimes as much as 100% higher], and 2) New York trading still looks disjointed, with bids/offers jumping erratically up/down so that the LP can fill your order wherever the hell they want. Ok you say, use limit orders; “fine, that works great when you get filled, but what do you say when your limit sell liquidation order misses a fill by 4 cents on the bid side and now the market is falling”? Well, I’ll tell you what happens; you get filled a couple of bucks lower over 4 cents.

But what concerns me most about gold is the New York session; traditionally, since gold is a U.S. based market, it should … should … have the majority of the price discovery in U.S. hours. So, what do I see again, for the umpteenth millionth time today? Why an almost $18 range from overnight; what’s left but the shouting for New York? Any bets New York today will be deader than a Clinton Global Initiative pep rally?

Not that USDJPY has been a “liquidity paradise” either; gaps here are everywhere, and the early morning liftoff from the lows at around 13:50 LMFX server time left some butthurt with those who overstayed their short positions just a tad too long. Still, with the lowest cost of doing business of anything you can find outside of other FX U.S. Dollar pairs, since gold & USDJPY are pretty much correlated at the moment, why pay 150% more to trade gold when any move is going to be mirrored in USDJPY? Of course this can change, and most likely will at some point, but for the moment you can get your gold move in USDJPY.

We are only a couple of days removed from Trump assuming the Presidency, and if people think the transition from Nov. 8th to the inauguration was going to be some smooth process, with the obligatory “happy talk” from 1) Chalky, and 2) the Trumpster himself, and business as usual as you’ve known it since you’ve been alive … well … fugetaboutit!

What this means for us as traders is more volatility, and the necessity of remaining disciplined and showing patience in our trades. It’s a long trading day in a market like USDJPY, which can start early and end late if you wish, and a lot happens over the course of the day in this $3 trillion notional a day market. Directly below, the trade of the day in USDJPY via the scalper’s algorithm.

Now, regardless of prior trades today from the short side, and there were plenty; here is the aftermath of the explosion off the low taking USDJPY higher. All 3 lines with a positive slope [one more down minute and it wouldn’t have been], the 3 M1 down candlesticks, and the next minute we get “green” and the buy signal; result is a 20+ PIP profit in about 3 minutes; slightly more if you hung on with the “free trade” philosophy I wrote about in earlier blog posts. If you didn’t, no worries; and if you made slightly less than 20 PIPS, again no worries … the key here is “entry” … you can be the world’s biggest screw up [and believe me, I’ve known a few] on liquidation and still end up with more money than you dreamed before you started. Remember, trading requires no memory.

Oh, it’s that time of day … beach beckons … my toes need sand between them and my eyes need to see turquoise water. I’m outta here … Until tomorrow.

Have a great day everybody!


UPDATE 14:00 NEW YORK SESSION: Well, just like I said earlier; here we are 7 hours into the NY session and gold has an approximate $4 range; big whoop. We go from bat excrement crazy in the “wee hours” to mind numbing nothingness. THIS is the problem with gold trading at the moment; USDJPY not much better, although more movement than gold. Beach looks better every second.


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