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Monday, July 31, 2017


“I desire the proof of the negative that can’t happen!”

The Version 4 Algorithm “Quick Guide” is out and available, and while very brief and concise, there are 2 important criteria I want to bring up; 1) the reason it works and is powerful, is that it pinpoints the end of the corrective phase inside a contra short term trend, and 2) it first waits for the “trend followers” and moving average folks to “puke” and liquidate, and then on the turn makes the call for a position; it simply uses the M1 against all those using it for trend and “fades it” at the turn. So, in essence, the algorithm waits for and wants the Moving Average [MA] folks using the M1 for signals to liquidate on a trend change that is 1) the least effective of all time frames and highly unreliable, and 2) takes the appropriate opposite position.

As I have written before, there are “non-computable” problems in trading that computers can’t solve; so, if for example, I tried to “code” this Version 4 algorithm into an EA [Expert Advisor], how do you define “at the turn”? Exactly what is it? An engulfing pattern, a reversal, simply a color change, what? And here is where the problems mount exponentially, cuz if you don’t “act” in a literal second, the trade more than likely will be gone … there is “zero” time for you to analyze the setup and make a decision … which of course can lead to paralysis and that’s not good either.

Now, we all know that there is absolutely nothing in the trading financial realm that is 100% guaranteed; always have and always will be dealing in “probability waves”. Over time, everything will happen, you just have to wait long enough to see it. Having said that, in the “Quick Guide” I mentioned the algorithm’s limitations, one of which is that when the M5 changes trend, and goes from one side of the “Kumo Cloud” to the other, the position has a much higher probability of loss than at other times. But, inside the short-term trend, it gives some great turning points … some give the signals from the Version 3.2 algorithm, but whether they are present or not, if the M5 doesn’t change trend, the M1 signal trade will be a good one from a profit perspective.

What I’ve done, essentially, is turn the market on its donkey and ask it to prove me wrong; I’m not asking for a continuation of a “breakout” trend on the M1 “Kumo Cloud”, or try and follow any breakout of the traditional MA’s (2) that come with the indicator on the MT4, that says to the market, “can you please continue a little further so I can profit”? With probabilities greater than a casino in Las Vegas enjoys, I know what the answer is … to ask the question is to answer it!

It all starts with, “tell me what you can’t do with ease? … what’s hard for you Mr. Market? … what and where is the highest probability event inside a short-term trend to make a trade and profit? … and what is it approximately”? And the answer is,  all of the “fake out” breakouts on the Ichimoku MA’s, the “Kumo Cloud”, and by default the other indicators that follow right along and get people to make the wrong trade [e.g., MACD, RSI, etc.], cuz what’s happening in real time is that the “big money” has the time, money, and computer capability to know with certainty what the top 500 trading systems are doing in real time, and the software “know how” to exploit traders without the trader ever knowing he/she is being exploited by a large hedge fund or bank. [“What, you expected them to tell you first”?]

And as we find ourselves [without anybody’s permission of course] in the “Central Bank Paradigm” of trading now, the first question every trader should be asking themselves is, “why has trading changed and what can I do about it”? … but instead ask, “things have changed but I don’t know why … should I be worried about it, or just trust the market? So, the Version 4 algorithm started out in its genesis, not with “help me with better trend following signals Mr. Market”, but with “show me … Mr. Market … what’s the most difficult thing for you to do to NOT screw people, the least amount of the time”. Cuz when I know that, or have a good idea of what it is, I can do the “OPPOSITE” and achieve consistent success and profit.

And really, that’s what lies at the philosophical heart of the Version 4 Algorithm and how it is different than previous versions. Once I realized I didn’t have to “reinvent the wheel”, and that the math was available inside the “Ichimoku Kinko Hyo” indicator on the MT4, and that I could pick apart what I wanted and discard the rest, things fell into place rather quickly.

Turning to today’s market … “vapors” anyone? … seriously, I’m getting more than a little annoyed with the Dow30 showing every single damn day that basically, about 99% of every rally happens away from New York, when the market is easily manipulated when everybody is asleep. Then, New York is a simple “protect & defend” the manipulations higher, but no more … the action is disgusting, the volumes pitiful, and the ranges along with volatility [VIX] the worst in 50+ years.

The DAX30, on the other hand, exhibiting what a semi-free stock index market looks like when allowed to go up and down. Not the best of days, as the market has put in a solid reversal to the downside, inside a somewhat small range… going in and out of the M5 “Kumo Cloud” twice with a short term trend change. A little unusual, as reversals of this magnitude are somewhat rare in stock indices [approximately 3% - 5% probability on any given day], but certainly not a “one off” like a “double reversal” which are extremely rare and happen once every 5 – 10 years.

In total, I made 3 DAX30 trades today for the PAMM [yes, the Excel spreadsheet is working now], 2 from the long side and 1 from the short side; on the second long trade, the market trapped us with a “twofer”; 1) price on the M5 went into the “Kumo cloud” thus going from bullish to neutral, and 2) price slowly drifting away from my entry point on the M1 … in sum, took a small loss and moved on. The other long trade and the short sale played out very well, so it’s a profitable day … not as much as I’d like, but the fact is the cash market in the DAX30 opened today and went straight up … after its high, its straight down to new lows … even the M1 spent an enormous amount of time over, and then under, its “Kumo Cloud”, and therefore there were only a few signals generated before the cash close at 11:30; smaller than most days to be sure.

The Dow30? … I’ve run out of adjectives to describe the trading action … it’s simply “nonexistent”, and it’s pointless to mention what’s going on, cuz nothing is going on that is worth repeating in front of children … leaving it alone until something / anything happens that can get an M1 > than 3 – 5 points! … I’m not sure there aren’t 15 minute intervals where you can’t even get outside the 2 point spread … and the SP500? … worse than the Dow30, and to be totally honest, I don’t know how anybody can be expected to trade this puppy it’s so sickly. Two great markets placed into utter obscurity by central bank manipulators hellbent on using the stock market as a social policy tool … the utter hubris and pomp they place on themselves, that history may show them soon what total fools they really are in retrospect.

Well, here we are about 30 minutes from the close in New York, and it has been truly one of those days in the Dow30 & SP500 you can forget and file under “waste of time”. I don’t know how much worse the price action can get … it’s simply unbelievable how pitiful conditions have become, especially when you realize that outside of less than a handful of days, since April which is 4 months, practically every day the Dow30 is higher comes from overnight “vapors” … New York is a disaster, pretty much a nothing burger with more movement in the DAX30 when it is closed, than the Dow30 when it’s open. But, here we are, and this historically low VIX [50 + year lows, and an all-time record low the other day at 8.63; something the market has never seen … ever.] has people lulled to sleep with complacency and risk, so over loaded on the hype the FED “has their back” … “hi, I’m from the government and I’m here to help”! Onward & Upward!

PAMM spreadsheet directly below.

 “Hey, who put my ice cream dish in here? … I wasn’t done yet!”

Time for the beach! … “the ice cream King” and I are outta here … until tomorrow.

Have a great day everybody!



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