“Yes, and it’s never been the same since.”
Three types of “education” on tap for today; 1) trade education, 2) market algorithm education, and 3) “book learnin’” education. It’s easier than opening a bottle of ketchup, which truth be told, I’ve botched a few times myself, especially after I try for minutes to get the lid off and it won’t loosen one bit; the Mrs. says, “Here, gimme that”, and opens it in like half a second. [“I think I loosened the lid for her … yea, that’s my story and I’m stickin’ to it”.]
I wasn’t expecting the ADP employment report until this afternoon; my econ “go to” page had it at 1:15 P.M. Paradise Island Time, so the 30+ PIPS up in USDJPY in less than a second caught me off guard a little; no matter, I’m glad today it got out of the less than 40 PIP cluster it’s been it for 3 days. The first correction out a move is usually the best, but the signal engulfing pattern was “iffy” at best; I took it, but ended up scalping it cuz it just sat there for 2 full minutes doing nothing. Directly below the trade.
Of course, in hindsight I should have hung on a while [duh], but it just wasn’t moving after I got in; sometimes you’re the pigeon and sometimes you’re the statute. I still made a few pennies, but obviously it wasn’t what I was looking for in the trade.
The second type of education today is a version 3 algorithm markets education; with the ADP report, all we did was go from a stagnate market between 114.05 and 114.30 to a market that sits and stagnates between 114.50 and 114.70 – 75. The action is still not very good, and there are plenty of M1 candlesticks that are 2 to 2 ½ PIPS in length or even less; basing algorithm trades off of a 2 PIP engulfing pattern or reversal is “iffy”. I’m not saying they can’t be good; the ones today have been, but there also have been a couple that weren’t so hot, and the reason they were is twofold; 1) they aren’t coming off of retracements or moves up/down, but rather coming out of congestion, and 2) their size and scope make them less statistically significant than larger ones. Ideally, I’d like to see at least 3 ½ - 4 PIP M1 bars [at a minimum]; what this tells us is that there is “trade flow”. Cuz really, at 2 PIPS or 2 ½ PIPS, it doesn’t take much to make the candlestick go red or green and become a false positive.
One other factor at work today is the day’s HVALUE and daily range; both got to where they did via the ADP report. So, with an HVALUE of approximately 86, and a range of 115, both are at the point where you have to ask yourself the following questions, “given the fact the M1’s are weak and not very large in scope [on average after the report hit], how likely is it both range & HVALUE get expanded further today, especially since starting at 114.95 there is a shipload of resistance on the daily candlestick? Is there enough “oomph” here, now that Europe is closed, to get USDJPY higher, or are we destined to be in “chop” all the way to the close”? Given the way this stuff has been trading, I think the later.
The final factor in “market education” today goes to the heart of why you can’t sit there when things are dead, and try and scalp the “dead cat bounces” on both sides; the argument being, “well, it’s really doing nothing, so I’m just gonna go ahead and sell the ‘tops’ at resistance and then buy the ‘bottoms’ at support and scalp my way through the trading session. Sounds good right”? Well no, it isn’t cuz your employing faulty logic here; 1) you only know what the “tops” & “bottoms” are after the fact, not in real time, 2) at some point you have to know this ends … and it never ends pretty, and 3) one side or the other [long or short] is gonna get blown out of the water when it ends … you will be on the wrong side of it when it happens sure as the sun is shining … even assuming you catch some scalping winners, in the case of today you’re out 30+ PIPS in a second, and now the question is how do you make this back if the market goes sideways from here? [Hint: you don’t]. Just another reason for why the “40 PIP” rule keeps your donkey out of hot water.
The third type of education today is “book learnin’; “get busy learnin’ or get busy dyin’, cuz if you ain’t doin’ the former by default your doin’ the latter”. [And yes, I’m paraphrasing the famous quote from Brooks in ‘Shawshank Redemption’]
I have in my library some books I think many of you will enjoy and learn from reading; in the past, I have made similar offerings to readers/clients and many of you have received the 2 books by Taleb and Gann’s novel. In addition to those however, for those of you who would like copies, simply email me at email@example.com and I will send them to you; simply tell me which ones you want or if you want them all. The first batch are trading related, expensive to buy, hard to find, and all are in Adobe PDF. Here is the list:
1) Candlestick & Pivot Point Trading Triggers – Person – Wiley Books
2) Candlestick Charts – Clive Lambert
3) Japanese Candlestick Charting Techniques – Steve Nison
4) Encyclopedia of Candlestick Charts – Thomas Bulkowski
5) Encyclopedia of Chart Patterns -2nd Edition – Thomas Bulkowski 1034 pages
6) Trading Classic Chart Patterns – Thomas Bulkowski
7) W.D. Gann Master Commodities Course – W.D. Gann
8) Trading Methodologies of W. D. Gann – Pearson
Many times via emails, I get asked by people how I do my math research, what computer languages I know, what’s the best way to “source code” numerical computations, do projects in Microsoft Excel, etc. So, in addition to these trading related books above, below is a list of books I have on “Python”, my computer language of choice for anything numerically intensive. Python is easy to learn, easy to use, comes with instructions on how to download the compiler, and best of all Python is “short & sweet”; you don’t need all the structure of Java or SQl, and that means you can code in “snippets”. If you ever wanted to learn a computer language or do math intensive apps, this is the time, and I got the stuff; no need to spend hundreds of Dollars at the book store. Everything you need is right here below.
1) Core Python Applications Programming – Wesley Chun
2) Numerical Python – Langtangen
3) Python: A Visual Quick Start Guide – Pearson
4) Python Programming for the Absolute Beginner – Michael Dawson
5) Python For Dummies – S. & A. Maruch
There’s enough material here to keep you busy until about 2020; all are in Adobe PDF and if you had to buy them in some book store all 13 would be over $1,000 retail. For you Newbies and first time visitors, you don’t have to worry this is some kind of scam to get your email address, or I’m going to sell your email to somebody, or now all of a sudden you’ll be inundated with offers to buy vitamins, etc. I don’t do any of that crap; all I do is send you the books for your education and enjoyment.
Here just after Noon in New York, USDJPY is trading at the lower end of its “post ADP” band of 20 PIPS. In essence, we went from an HVALUE in the 30’s to an HVALUE in the 70’s in about 1 second, and like before the ADP report, are stuck in a very narrow range only higher. Not really a very good trading day at all considering how the day broke down and what transpired. Remember, ADP reports are notoriously non correlated with the “fairy tale” numbers from Friday’s upcoming NFP report, so this may be the reason for the caution today in extending the range higher. Add to this Ichimoku cloud resistance and a full slate of event risk ahead within the next 5 trading days, and it doesn’t surprise me at all “big money” is hesitant.
Given the way the day traded, today was an “event anomaly”, and there isn’t much difference from today from days where the HVALUE < 40 PIPS; outside of 1 or 2 seconds and 30-40 PIPS to the upside, M1 candles were for the most part small in scope and lacking conviction and/or direction. It will be interesting to see if Friday’s NFP report backs up today’s ADP report and what happens if it does or doesn’t, and the impact on USDJPY.
Even considering the day’s action was “crap”, M1 candlesticks outside the “ADP blitz” small, the market stuck in a 20 PIP range the last 5 hours going into the close, THE GOOD NEWS is that the version 3 volatility algorithm SIGNAL PARAMETERS worked, and worked well given today’s limitations from the market. If you take today’s market action and use the version 2 algorithm, there are losses everywhere due to the fact that action is slow, constricted, and went “speed of light to … crickets” quickly and the signal parameters collapsed under the restricted intraday volatility [I know I looked]. Directly below, the market action in USDJPY earlier in the day near the top, and the 3 “Shooting Star” patterns near the top made the successful correct call.
In hindsight, I should have held onto my long trade at the engulfing pattern turn on the first correction; we would have made more money obviously, but not a whole lot more given the restricted range … and as I have explained before, this is the part that eats most people alive … regret … and the awesomeness of failure. As a trader, you have to be mentally tougher than most people and move on to the next trade; some you get right and some you don’t being cautious.
I haven’t mentioned gold today … and with good reason. You have to have an account “death wish” to be in this market right now; risk/reward “skewed” way out of line, and the slippage on size I don’t even want to count that high.
Ok, here we are at 2 P.M. New York time; this is my unofficial close time if nothing is happening … and nothing is happening except a light selloff; about an hour ago a tiny stop hunt on the downside below 114.50 went nowhere, and prices have slipped below that area again. Right now, USDJPY is in “no mans land” for the day; still about 28 PIPS above the 50% retracement level, but I don’t think there’s any way we go higher from here into the close and hit a new high. I just don’t see the power or momentum in the market given the last few hours; if anything, the longs on the ADP report may be the ones in slight trouble, as all of them are underwater on price from the report.
PAMM/MAM spreadsheet directly below.
Again, if you want any of the books, email me … beach beckons … tomorrow is another day filled with opportunity … I’m outta here mi amigos … until tomorrow.
Have a great day everybody!
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”!