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Friday, January 6, 2017


“Umm, so like, do we buy/sell the NFP report or leave it alone?”

I have no idea why my blog from yesterday got kidnapped; ”I’m blaming the Ruskies! … yea, that’s the ticket … Vlad o’ buddy o’ pal, please stop hacking my system for trades … I understand you need income, but seriously, just ask!”

And so today, we wait for the math wizards at the Bureau of Unicorns & Fairy Tales to release their newest set of [fake, totally made up bullshit] employment numbers so everything financial can go bat excrement crazy for 90 seconds, lose money for a lot of traders so they can spend the rest of the day making it back … maybe.

In yesterday’s Ruskie “hack” blog, I was writing about what brings people to trading; “tell me please, why are you here?” And if you answer me back, “Ummm, to make money”, I’m gonna slap you with a wet spaghetti noodle; making money is a manifestation of why you are here, not the other way around. And so the question remains, “why are you here”? In my mind, it all boils down to one of two choices; either you want “income” from trading to escape the “Pudding Business”, or you’re looking to build a “lump sum” for a purpose. For me personally, it’s always been the “income”; because if you do the “income” right the “lump sums” will follow automatically with time.

Directly below is a table; it assumes a starting account balance of $1K, and also assumes you use constant leverage of 10X; the top numbers represent the number of weeks; the numbers on the left represent the number of PIPS per week [25 = 5 PIPS per day; 35 = 7 PIPS per day; and 45 = 9 PIPS per day] you need to achieve to get the balance in the meat of the chart. “WHERE DO YOU WANT TO BE ON THIS CHART”? 

[Note: click to enlarge]

2 ¼ years into this and your account is at $50K, and your income is about $100K per year; all for 7 PIPS a day. And folks, now you know why I have decided to release the “scalper” volatility algorithm; for those of you who have the “scalper mentality”, and want the shortest time frames from which to make money, go home, and then do it again the next day … well, this is for you.

I want to be clear, that doesn’t mean there is anything wrong with the original volatility algorithm in USDJPY … it works, and works well … this is simply a shorter time frame with more defined goals, and is a very highly probabilistic approach to getting you out of the “Pudding Business” using concepts & techniques many of my former colleagues on the trading floor used year after year.

Once again, taking another look at the table; you don’t have to be a rocket scientist to see and understand 3 things; 1) a profit goal of 7 PIPS a day gets you to the “promised land”, 2) don’t tell me a “few PIPS here and there” doesn’t mean anything … it sure as hell does, and 3) in the context of USDJPY [and to some extent EURUSD; more on this in a minute], a 7 PIP profit goal is tiny and is relatively easy to obtain … question isn’t whether you can attain this … question is can you walk away from a trade with a profit 7+ PIPS after the first few minutes from trading for the day and leave it the hell alone and come back tomorrow and the day after that, all the while maintaining patience & discipline? “From what I have seen from members of the trading public over the years, the answer is no, you won’t be able to leave it alone and you’ll get greedy and run into a day where you get your ass handed to you on a platter.” If you can stay disciplined, the life you want is right here … ain’t no excuses … after you get the scalpers algorithm, all that is left is for you to do it … if you can’t do it, then you aren’t going to get the life you say you want [if you really want it which is another story altogether].

In the context of all of this, I have gone back and forth over these last months debating the “pros & cons” of which markets the scalpers algorithm will be best suited for; there isn’t really any debate, as the obvious answer is a list of 2 markets and 2 markets only; USDJPY & EURUSD. They both have the same very low cost structure; the only real difference is their respective risk profiles, where USDJPY is more volatile on a consistent daily basis. Bottom line is this; either or both can be traded using the scalper’s algorithm, and it is for you to choose which one best fits your style. Either will get you out of the Pudding Business and allow you to “escape to success”.

Looking at today’s action, we got the usual BS “market mayhem” associated with NFP reports … both sides of the order book get taken out back and shot, and what’s left is nothing but carnage. In the stock indices, what I have been saying for weeks is coming true; volatility is shrinking to levels that kill traders … so what do trader’s do? … “they vote with their wallets and they LEAVE!” [Only the smart ones .. the rest refuse to see “the handwriting on the wall”].
Gold? “Oyyy Vey”. This is a market that is “sicker” than the stock indices. Again, as I have written here extensively these last weeks, the gold market has lost a significant number of players the last 6 months … players that aren’t coming back anytime soon … the resultant loss has reduced buy/sell “order flow”, and now more than ever bid/offer changes are more violent from the dealers and slippage is reaching proportions that would make Vito Corleone blush; makes no difference “up” or “down”, the quote you’re seeing on your screen is a make believe best case illusion … you’re gonna get filled 10 – 30 cents away almost every time [if not more]. Bottom line, in my opinion, is that gold is borderline untradeable at this time for 3 big reasons; 1) ranges in New York are pathetic, 2) the above mentioned loss of order flow, and most importantly 3) there is no “give & take” in the market as it trades intraday … meaning, if you make a trade and it’s the wrong one, good luck making that money back later when price “flatlines”. And if you don’t think this is on trader’s minds, I’m here to tell you it is … and if it starts to get worse from here, it’s gonna be a self fulfilling prophecy going forward where shitty trading conditions beget shitty-er-er things after that.

And while 2017 will most definitely have its moments of euphoria & panic, what I see on the trading horizon for most markets is a boring treadmill … one in which practically everything flows from USDJPY and takes its “risk on – risk off” cues from this asset class, and in the process is going to extract a lot of pain on the trading public who either won’t or can’t see the paradigm we find ourselves in AND from which we can’t escape. My goal is simple; make money trading the best available above average volatile market … and right now that market is USDJPY. And as I stated before earlier, if you use the scalper volatility algorithm, it would be either USDJPY and/or EURUSD; more than enough trading action to allow you to achieve your daily trading goals by a factor of at least 100 to 1. As the Nike commercial says, “just DO IT”!

Looking at my screen, here it is 2+ hours after NFP, and pretty much everything except USDJPY & EURUSD is sitting in the middle of their respective tiny ranges. EXIT QUESTION: “if you are in any of these other markets at or near the high/low, how do you plan to get out before the weekend”? “Me neither”.

These last months especially, I have gotten a lot of emails from people who are about 99% scalper oriented, who want a relatively simple BUT HIGHLY EFFECTIVE & PROFITABLE algorithm that does 3 things; 1) works in all 3 major world trading sessions, 2) is relatively simply [KISS], and 3) is achievable each and every day without having to sit hours on end at a computer terminal. OK, I get it … and in these types of markets where it’s either “speed of light” or “watching paint dry”, I get your desire for an income that propels you out of the “Pudding Business” and into a life. The “scalper” algorithm will be ready for you shortly. Until Monday …

Have a great weekend everybody!



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