INVESTING IN PRICE

Hidden clues from the “fingers of fate”!

When I wrote yesterday how I thought the current up move in gold would end, I didn’t mean to give the market advice for the day; apparently, somebody was listening. Which brings me full circle to the “bullion wall” of selling by the bullion banks, women’s perfume, and of course volatility; “You didn’t know they are all connected”?

Step back for a second, and place yourself in a world of complete perception; not expectations, needs & wants, or economics, just one of perception by a sample size great enough to statistically be representative of the entire population at large. Individual perceptions are driven by socio-economic status and the absolute need to “project” your rank and/or status to others; the subliminal suggestion always is, “I’m better than you or at worst I’m equal to you”.

Take any perfume for women and put it in a peanut butter jar with a sprayer on top that looks like weed killer from Home Depot; price it at $5 per Oz. and sell it at BigK in a nondescript plain brown box. Good luck with that sales volume. Now take the exact same perfume and sell it in a perfume store, or a high end retail outlet like Saks; gussy it up with fancy packaging, put naked models on TV hawking it cuz they spray it all over themselves every day “don’tchaknow”, price it at $150 per Oz., and voila!! the stores can’t keep it in stock. What happened?

Move this thought over to gold trading; the world’s on fire, chaos in the court’s, chaos in the Middle East, tensions with Iran & Russia, articles everywhere about gold going up … and then everybody meets up close and personal the dealers at the “bullion wall” of selling above 1240 and gives everyone everything they want and more. And when you’re done shopping, they aren’t finished selling, and the price goes a tumbling.

And so, next day, here we are $20 or so lower and the market looks and feels like a bar in an Irish neighborhood in Chicago the morning after St. Paddy’s Day; not so active and pretty moribund and dead.

It’s called volatility, more specifically for us intraday volatility, and without it we might as well be hawking the perfume in the aisle’s of the BigK; no matter what we do [buy or sell], it isn’t gonna work, cuz nobody is interested. The enigma of trading each day is coming to grips on a scale of 1 – 100, where ‘O where is the volatility meter today? Levels of price don’t put money in the bank; intraday volatility puts money in the bank. Specifically, it is these rapid changes in short term sentiment that allows us to buy/sell on the 3 M1’s+ that are contra trend the current sentiment; without volatility, how are we supposed to take advantage of the current dislocation in price?

The good news? Well, it’s this; the 2 volatility algorithms in gold [scalper + regular], when combined properly, track volatility automatically because without it, the 2 price vector fields [plum, yellow, and white lines] will either be “flat” or not in sync with each other thereby nixing any trade you think you might have. In other words, it keeps your donkey out of trouble.

“And who wants his donkey out in a row boat in the middle of the lake”? 

Now, this doesn’t guarantee success [nothing does], but I really like my chances knowing that prices are moving, and the fact that the version 2 signals are significantly better at reducing chop than before, thus increasing my total returns. I know full well that I give up some gains from this, but I’m not interested in batting 50/50 or worse, and I really want to avoid the ebola virus of trading, a succession of losses in a row from false positives that make it seem like I’m bleeding from everywhere. No thanks.

Turning to today’s trade … well, it looks like Mrs. Wantanabe & friends bailed on the very early Asia open, sending gold prices lower by about $10 before you can say, “has my check cleared yet”? … “Do I really have to tell you what this usually means for U.S. prices later in the day?” … It’s Friday, and after yesterday’s bloodbath [6 hours of price taken out in 30 minutes], unless news hits the market in some unexpected way, as we move towards the close of trading for the week, I would expect a firmer tone to prices unless we get under 1220 … and if that happens, it could get rather ugly on the downside … at 1240 everybody and their sister wanted this “gold perfume”; 24 short hours later and there is almost zero interest $15 lower. Amazing how a few candlesticks on an hourly chart can change your perception isn’t it?

Early in the day, 3 trades from the algorithm directly below.

 

A cursory view of the M1 candlestick chart from mid morning may give the impression that I skipped some algorithm signals; not the case. If you zoom in the chart, both buy and sell signals had flat standard deviation lines [plum and yellow] at the appropriate “crunch” moment, thus voiding the trade. What I want to see are clear rising or falling signal lines, and what we got were lines that went flat a minute or two earlier. Granted, sometimes it is a very subtle difference; make no mistake though, it matters greatly to the probability of success in the trade.

Finally, here at mid morning, we got the algo signal that captured a decent scalp and now things are starting to heat up; maybe?

Well, that escalated quickly. Trade #5 directly below.

 

When the market failed to hold 1230.10 on the spike I hit the liquidate button.

Importantly, notice how with increased volatility in price in trades #4 & #5, with the signal lines clearly rising, once the signal was given [green M1] to buy, how quickly the market bounced straight in our profit direction; this is exactly the reason why I tell you volatility, specifically intraday volatility, is the crucial key to making great trades and therefore money.

My last trade of the day; I’m past my goal for the day, but I’m taking this last signal and risking 50 – 70 cents per OZ. … my mental stop here is if it gets below 1230.25 … after I’m in, the signal lines go basically flat, and on the rally back to my entry I take the few pennies per OZ. loss and call it a day. Directly below the action.

 

All of my trades today should point out to you, “that when the ponies are running, you run with ‘em; when the ponies stop running you aren’t anywhere on the track”!

The Turnkey Forex PAMM/MAM is now open; more than likely I’ll start trading the master account either on Monday, February 20, or Wednesday, March 1; this gives time for those of you who have signed up to get all documentation into the brokerage house, some time for wire transfers to be sent and received, or a little time to move money around so you can participate from the beginning. I’ll keep you posted here on the blog, and in the meantime for first time visitors to the website, all of the program’s details are available over in the “Download Links” section in the right hand column [up in the “cloud”], along with the POA form. If you have any questions, please email me at traderzoogold@gmail.com and I’ll respond personally ASAP.

“Hey … U in da chair! … where’s me bacon & when iz da beach”?

I can feel the stare … hunger and sand in his paws, fighting for room in his thoughts … all it’s gonna take is one little push of the chair backwards and …. BOOM! … man, can he take a hint or what? Bacon slices & beach, in exactly that order … We’re sooooo outta here … beach beckons … until Monday.

Have a great weekend everybody!

-vegas

OUR ‘TURNKEY FOREX’  PAMM/MAM  IS NOW OPEN; SEE “PAMM/MAM MANAGED MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD].