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Monday, November 27, 2017

WALKING BLINDFOLDED IN A MINEFIELD

“What could possibly go wrong?”

Do I laugh or do I cry? I mean, you can’t make this bat guano up! If you understand how FX crosses work [viz., the numerator & denominator math], when you see such small ranges over hours, it gives a pretty good picture of just how pathetic the Dollar pairs are doing relative to each other; and right now, we are in “hurry up & wait” mode again in just about every market but spot gold, where once again prices rise so they can fall and wipe out some more retail specs in about 2 seconds via the “fat finger” of sell side manipulation.

I realize it’s early, and the day is only about 4 hours old, but the 121 & 183 EMA’s in GBPCAD so far, look like I-80 in Nebraska; flat and straight. Meanwhile, the 5 & 9 oscillate back & forth and yield nothing … 4 ½ hours into the day, and we are less than a handful of PIPS from where we started … a little up and then a little down … “a little song, a little dance, a little seltzer down your pants” … yea, so far, it’s been that kind of welcome for us in my chosen pair GBPCAD, which is doing its best to make me look like an idiot … “Well, I got news for you; I don’t need your help to look like an idiot … I can do that all by myself … so there”! [Two thumbs up from the Mrs.!]

At least the King with one eye in the “Land of the Blind” has one eye; I feel like markets are flying a jetliner with no instruments, during a thunderstorm in the mountains, and everybody on board is arguing over who gets an aisle seat for more leg room. It’s all so predictable … at some point some Apparatchik Pie Hole [government or central banker], whose mistress needs a shiny new red Mercedes for Christmas, will stroll out and say something that moves all of this in seconds … up, down, who knows? Meanwhile, as the FX world awaits blond mistresses getting their Christmas presents, we can all sit here and drool over ourselves watching “up one tick, down one tick” ad infinitum nauseum, until my eyes glaze over and I think, once again, of sending my resume to the circus. And wouldn’t you know it, just as I write, a 20 PIP spike up in Cable on “vapors” … well, it is getting late in the day in Central Europe [after 4 P.M.], and the Benz specials won’t last all week … just sayin’.

In all seriousness, I thought today would be the least productive trading day of the week; the data barrage starts in earnest tomorrow with inflation numbers of out Canada, and on Friday we get Canada’s version of the NFP report; in between, a lot of data out of Europe and the U.S. that will move things. Sure enough, we started off slow enough, and the first 5 hours saw almost nothing. “Well, that escalated quickly didn’t it”? I’m not that surprised Cable leaped like it did; I’m surprised at the reversal of USDCAD to the upside, after hitting new lows around 1.26800 … with all the data this week, it sure looked and felt like a “position squaring” day in USDCAD … that in turn had me cautious about GBPCAD running away to the upside; 10 of the last 11 days has seen Cable go higher. How long is this stupidity going to last?

True to form, GBPCAD went into action; problem today is once the 121 & 183 EMA’s got going to the upside, all three buy signals came on spikes higher. The first one I took with lower volume, the last two I ignored. That higher buy fill meant on the spike up to a new high I had to liquidate … there’s the spike up I need to liquidate a long position on; there isn’t time to think about “what ifs” in the crosses … I hesitate, and it’s a coin flip as to whether it’s 10 against me within a second. Like I’ve said before, in the crosses, “you snooze you lose, and then you just move on”.

Overall, I’m happy with the fills on both buy and sell liquidation … both right on the market. A couple of things to note in GBPCAD; 1) you must absolutely liquidate long positions on large spikes higher since your position started, and consequently you must also liquidate short positions on large spikes down, 2) if you don’t get any large spikes, but simply a “soft trending” move, that’s what the “Parabolic SAR” [white dots] is for, and it works beautifully getting you out at the extremes when allowed to work, 3) you have to treat each day in this market like its very own “bull” and/or “bear” market … yesterday doesn’t matter … just because it’s up 200 IPS today, doesn’t mean it can’t be down 400 PIPS tomorrow … use the daily & weekly candlestick to gauge where buy/sell stops are and use to your benefit if possible … stops, when hit, can run this puppy farther and faster than you can dream … use limit sells above the market when long, and limit buys below the market when short … when it moves 30, 40, 50+ PIPS in seconds, you won’t have time to click the liquidation button and get a good fill … it will be over and you were to late … it simply doesn’t matter if it goes past your liquidation point, cuz you aren’t going to get the sell at the top, or the buy at the bottom anyway, 4) be very, very careful of using the “special situations” chapter in the Scalper’s Algorithm manual to fade tops and bottoms; GBPCAD is volatile enough as it is, and the only way I would do it is if 2 conditions are met; A) there is no news flow to explain the big move for the day, and B) the day’s range from the European open is at least 150 PIPS … if I don’t get these 2 conditions, I’m not fading the move, no matter the candlestick formation at the top/bottom,  and most importantly 5) do NOT anticipate signal changes to get long/short; if you do, you will get burned … sometimes you will be right, but that isn’t going to be enough to cover the losses when you’re wrong.

As I’m watching GBPCAD today, it is eerily familiar to the “old” Swiss Franc futures traded in the pit; how many times today did I ask myself, “hey, where have I seen this before”? Fact is, the “action” is a carbon copy of the way the Swissy used to trade before it got ruined by the SNB, and turned into a EURO “clone”. Here just shortly after Noon New York, about an 86 PIP range for the 8HR period … market avoided the “tail risk” parameter which is the 75 PIP “line in the sand” … this is the approximate demarcation line, where if the market fails to achieve at least a 75 PIPS [in the 8HR period] range, the probability of the infamous “Flying Wedge of Death” [FWD] or a daily “Doji” becomes a very real probability; above that mark, not so much … and today’s action, where it looked early like “bat guano on a stick “, has turned into a mediocre day, given the data dumps later [starting tomorrow] and the fact that the market at least made a couple of small runs to the upside.

Overall, not nearly as much profit as I would have liked from today’s trade … that’s the bad news; the good news is that the fills were excellent, the market performed admirably given the nature of the week at hand, and the fact [notwithstanding the spikes up] the algorithm performed very well. One final thought to leave you with; if you understand the algorithm, you quickly realize over time that starting the day at 08:00 [server time], your first algorithm signals are the very best performers … once you get past the third or fourth ones, unless there is market moving news, the statistical probability of very nice profits starts to shrink … this ties in with 1) loss of time left in the day, and 2) the inherent nature of markets to correct and make life miserable for those who hang around looking for more. I don’t talk about it much, cuz it lacks relevance in today’s marketplace, but the fact remains, that back in the day in the pits, I wanted to make money on the first moves and then leave the rest of the day for the “jackals” to fight over the up/down scraps … come in the next day, and start all over again like the day before never existed. It’s as good a trading philosophy then as it is now, and GBPCAD is every bit the “old” Swissy reincarnated on the MT4.

As I stated earlier, I’m surprised USDCAD has taken off to the upside, given the data due tomorrow and the rest of the week … didn’t see this coming. Going forward in this pair, I’ll be taking nothing for granted; there’s simply too much here in terms of price movement to ignore … the rest of the week should be a hoot. The future is so bright in this pair, I need sunglasses!


Time for the beach … dog and I are outta here … until tomorrow mi amigos. PAMM spreadsheet directly below. Onward & Upward!!


Have a great day everybody!

-vegas

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