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Friday, February 24, 2017

ASYMMETRIC TRADING

“I’m really good at cipherin’ too!”


“Sure, I know how to trade, I spent last night at a Holiday Inn Express … how hard can it be”? Well, if you’re a complete doofus putz like me, and put the wrong order in to start the day, it’s got potential to be rough; long story short, an early USDJPY trade became a EURJPY trade, and promptly went south. A gold trade later at the RM=1 exhaustion line erased most of the mistake trade; if I could read an order box … well, you know the rest … this is the kind of trading day [Friday no less], where a lot of things can go wrong quickly … I don’t really care about the $20 something bucks I dropped for us today collectively … really, for me this is mostly a “scratch” day that doesn’t mean anything other than getting you late to your millionaire party by a day … what is grating on me like sandpaper are 2 things; 1) stupid poo poo that infuriates me to know end [like this morning], and 2) accepting market risk in extremely thin market conditions commensurate with reward [as in, “there ain’t much”].


I’ve said this before, but it bears repeating; “When Asia bids it higher along with Europe, New York is going to go down at some point later in the day; when Asia sells it off overnight, and Europe does not bring it back up, look for New York to put in a good rally at some point; and when Asia & Europe do nothing and HVALUES ARE PUNY … well, anything can happen”. This is very much a market where “waiting” for the downdrafts [to get long] is preferable to about anything you can name; and if you get near the high of the day, being short with a stop will be an adventure you might not ever forget.

In case you’re wondering why I have traded very light this week, in terms of volume size of a trade versus capital, it’s for this very reason; especially in gold, the market can turn on a dime, and go very fast in the other direction. If you get caught with size, the dealers will kill you; and really, USDJPY isn’t much different. It would really help, though, if New York trading ranges were consistently higher than what we are seeing now; even with the “sell grenade” that took us down to the 1253 level earlier today, for the rest of the day you’re looking at a $5 range basically, which isn’t very good, certainly when taken in context with going down $5 in 5 M1 candlesticks and then followed by the Friday cricket parade.

I’d love to “position scale” gold, but the ranges we see make it almost impossible; for example, if I get long at 1253, and another at 1256, and another at 1259, if the market could move up into the 1260’s it would be a huge profit with little risk. However, look at today; during the “blitzkrieg” lower on the USDJPY “rip your face off” rally, I'd be forced to sell into a falling market my entire position; who knows where my fills will be in this mess at 3 times the size. There simply needs to be better intraday volatility in the New York session before I do this [$10 - $15]; something we aren’t seeing right now for sure. [But don’t worry, there will come a day.]

What I mean in today’s title by “asymmetric trading” [besides it goes down a hell of a lot faster than it goes up], is the shape of the M1’s; what we are seeing with increasing frequency is either bat excrement volatile M1’s that spike [up/down makes no difference] $2 - $6 in less than a few seconds, and M1’s that have a range of about 30 – 40 cents; in other words, the “barbell” chart, and what I’ve been saying for a while now, which is “speed of light trading” & crickets with almost nothing in between. I have no idea what “normal” trade flow is anymore with gold, cuz right now it’s everywhere & nowhere with your stop at risk.

And as today’s trading proves with that $8 dive in 37 minutes, nothing is safe in this market; and worse, if you got caught in that, where is the “give & take” in the market for you to get it back? Well, the LP isn’t going to give you the chance; and if you decided to liquidate during one of the downdrafts, your fill is on the bottom waiting for you. Which is why, anytime this stuff gets within a few dollars of the high or low of the day, you have to be extremely careful about being on the wrong side of this hand grenade or the loss has the potential to be a lot bigger than you would want.
 

Over the weekend I’ll have a special blog update on Sunday night; I’ll detail the changes [and why] I’m making with the algorithm to deal with the “barbell” markets we are witnessing on a daily basis. PAMM/MAM spreadsheet will be up and current tomorrow; tonight I’m upgrading the Excel spreadsheet software. “And yes, I’ll have ‘Post It’ notes plastered all over my screen Monday morning reminding me to trade the right market; right along with the ID draped around my neck with string that says ‘return to the Mrs. if he appears lost’. I'd go have a drink, but I'm afraid I might drown myself ... it's not easy being me”. I'm so outta here.

Have a great weekend everybody!
-vegas
OUR ‘TURNKEY FOREX’  PAMM/MAM  IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MANAGED MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!
 

 


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