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Wednesday, February 28, 2018

LEARNING CURVE 101 BASICS

“If only somebody had given me advice a little earlier!”

The “learning curve” in trading is steep, and I’ve compiled some of what you 
need in the “non-computable” attributes area; trust me, you won’t find these 
in any book on trading … “I’m talkin’ “inside baseball” here”, and a firm 
grasp of these will increase your profitability greatly. In no particular order 
of importance, they are as follows: 1) know the volatility of your market 
[“Summary Volatility Table” in the “Download Links” section in the right-hand 
column], and what to expect from it when you trade, 2) know and understand 
the proper “fingerprint” for retracements in the market you trade for best 
execution, 3) understand that for any FX pair, the bull and bear moves are not 
“symmetrical”, and have very different characteristics in how they trade, 4) do 
NOT place your stops where the entire universe of retail spec accounts have 
theirs as a collective group … if you do, you will get hurt, 5) try and liquidate 
positions on spikes in your profit direction, 6) do NOT buy rallies or sell breaks, 
and 7) you must develop “situational awareness” regarding the 6 items listed 
above.

When I talk with traders who are consistent losers over time, the problem 
usually boils down to one of the 7 criteria listed above, and while the solution is 
easy to define and identify, getting a trader out of his/her losing ways and into 
 “profit mode” is another story entirely … “cuz at crunch time, they want to 
revert to what’s “comfortable & knowable”, not necessarily what’s profitable 
… in other words, the brain says one thing and the guts say another, and the urge 
to do “stupid shit” is extremely high … this is why I tell new traders that your 
biggest advantage in trading in the modern era is your “newness” … you don’t 
have any bad habits to break … meanwhile, you think it’s your biggest liability, 
when it isn’t … the hardest thing is to get veteran traders who can’t shake losing, 
cuz it’s as if it’s almost ingrained in them”.

And what most people don’t realize, is that today is much easier to learn the 
biz than “back-in-the-day”; no commuting, you got a demo and can practice 
first, and you can do a limited amount of back testing of your trading model 
… all that didn’t exist when I learned the biz from my mentor Bert … “it was 
very much head first into the deep end of the pool”.

For newer traders and veterans alike, I’ve got 4 different algorithms over in 
the “Download Links” section to keep you busy for months … 7 different 
markets, with 7 distinctly different personalities, and a multitude of time 
frames from which you can attack the markets from your own reward/risk 
profile. As most all of my regular readers know, I’m trading EURUSD and 
using 2 of the algorithms simultaneously; “The Scalper’s Algorithm: The Final 
Solution” and “The Teacup Handle Turn”. In essence, they compliment each 
other brilliantly. However, if your style is different than mine, the other 2, 
along with different time frames, work as well … I’m trying to give you the 
benefit of my trading knowledge and experience, so you can match what’s best 
for you and the market you trade.

Turning to today’s market … if you like “vicious choppy slop”, then you will 
love today … good grief, could the M1 spikes [up & down] on “vapors” get any 
worse? Throw in a range that’s truly pathetic in a classic “Flying Wedge of 
Death” [FWD] pattern from the European open, and you got a recipe for 
disaster right in front of you … buying any kind of rally today, or selling the 
mini-waterfalls, got you killed within minutes, if not seconds … your classic  
“yo-yo” FWD, all wrapped up with a Christmas bow in a “doji” daily 
candlestick. “Six months from now, somebody looks back at today on the daily 
candlesticks, and sees the tiny “doji” formation and thinks the day was a dull 
waste … quite the contrary … as I’ve stated before, these kind of days can be the 
most vicious account killers traders will ever witness, and over the course of my 
career I’ve seen plenty of people get buried in the “Trader’s Graveyard” cuz of 
FWD small “dojis”, of some shape, manner, or form”.

Only one trade today … PAMM up slightly, a couple of bucks.

The ‘setup” was good, and for 90 seconds I looked like a genius in liquidating 
only a few tenths of a PIP off the high for the M1, when price stopped going up 
and stalled … that “hesitancy”, when it should have been moving higher, is all it 
took to get me to liquidate … from a 5+ PIP drop, price turned around and 
marched straight up about 20 PIPS … it is what it is, and it doesn’t really 
bother me, cuz it comes with the territory [“Stop complaining about the 
screaming Fido, and get out from underneath the wicker sofa … geesh, Mr. 
Sensitive over there”!]. And after that little run on short covering, EURUSD 
price is back within a few PIPS of where I made the trade … another very 
tough day to trade from the long side, in a market that has suddenly become 
totally paranoid of higher U.S. interest rates. 

Ok, February is in the books, and we got a fresh new month kicking off with 
NFP on Friday, and Italian elections on Sunday … plenty of volatility to be 
sure dead ahead. Problem with “doji” days, is that you don’t get the “setups”, 
and when you do they are too close to the day’s low in a very tight range to 
make the trade, simply cuz you can’t assume a 5% [or less] probability event is 
gonna hold … if you consistently make the trade off the ‘special situations” in 
the manual, you end up with early losing trades before the eventual low of the 
day is put in, and that will hurt profitability … better to leave them alone and 
wait for a bigger range, cuz 95%+ of the time, you’re gonna get it.

Nonetheless, a profitable day … many would trade places with us I’m sure 
… again, disappointed in lack of range, and in the number of “setups” the 
market gave us … so, we take the crumbs and come back tomorrow, while 
remembering the goal is to “add to equity” … it’s early afternoon in New York, 
Europe has closed, and market action has slowed noticeably; no way I’m 
getting caught in this slop heading towards the close … I’m outta here … until 
tomorrow mi amigos … Onward & Upward!!

PAMM spreadsheet directly below. [Note: sometime over this upcoming 
weekend, I’ll be uploading a new PDF over in the “Download Links” section in 
the right-hand column. I’ll now be archiving PAMM results at the end of each 
month going forward … therefore, there will be a New file, “PAMM RESULTS: 
2018 JANUARY - FEBRUARY”. When March is completed, I’ll update the file 
and add it, and on we go throughout the year, each month adding to 2018 
results. This way, everybody has a very quick and handy reference guide, 
without having to wade through all the past blog posts.]


Have a great day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND
OPERATIONAL; SEE “PAMM/MAM 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”!

  













 

Tuesday, February 27, 2018

THE NEW WIZARD OF SMART IS GONNA SPEAK

“New FED chief to speak … markets on suicide watch!”

The U.S. has a new FED chief … although, Spicoli could do just as good a job 
as any of the clueless Twits they march up to Capitol Hill to lie through their 
teeth … somebody explain to me why 2% inflation is “good”? It robs people 
of savings and devalues the currency, and makes passing an inheritance to 
future generations a joke … you realize since the FED was formed in 1913, 
the value of the U.S. Dollar has been debased over 98%? … “who says we 
aren’t Venezuela”?

“Oh wait, I forgot … the middle class are supposed to be “worker bees” 
… you’re not supposed to accumulate wealth over time, cuz your job is to be in 
the “Pudding Business” ‘till you drop from exhaustion … your family and kids 
don’t get free health care, government benefits, free college tuition, etc. like 
illegal aliens & immigrants do … nope … your job is to STFU and take it, while 
assclowns that run large U.S. corporations into the ground and thus kill your 
job, get “golden parachutes” worth hundreds of millions of dollars for the 
worthless effort … meanwhile in D.C., the POLS run the country into the 
ground while opening the borders to every dirt bag who wants in … sure, what’s 
not to like while they destroy traditional institutions, destabilize the country with 
asinine policies, and then to rub salt in your face, they then devalue the worth of 
your money and wealth”! It’s been this way since I graduated from college 
many years ago … why do you think I became a trader?

And since the website gets a lot of new readers, and it’s been a while since I 
put the image up, directly below is your application for the “Pudding Business 
… if the shoe fits, wear it”!

“I’m sure this was your dream job when you were in 8th grade … right?”

We’ve all been in this position … question is, what do you do about it? I’ll put 
up with all the bullshit trading puts on my plate, cuz it’s my plate and I call the 
shots … I never was, nor will ever be, the kind of guy who can diligently work 
for some assclown company and take marching orders from a clueless manager 
who is more like an SS Commandant, simply for a measly paycheck.

So, the world is in “hurry up & wait” mode ‘till Powell makes his first 
statements as the new FED chief, taking over from Grandma Yellen, where the 
countdown to a seven figure “gig” at JPM or Vampire Squid as a “consultant” 
has commenced … his prepared statements to Congress will be released at 8:30 
A.M. EST. My only question is, “has he learned the proper way to speak 
“bullshit”, or is he a little rough around the edges … soon enough we’ll find out”.

Turning to today’s market … the first 13 hours plus a complete waste of time; 
first, the Chuckleheads in Asia did “their thing” [“buy Mortimer, buy”!!], and 
coming into the European open, EURUSD is on the high of the day … “you 
know what this means, right”? … and then it’s “4 steps down 3 steps up” to 
below even [1.23000]  5 hours later. A ton of news hitting the wires affecting 
EURUSD, but the main event for today is Spicoli giving his virgin FED 
Chairman “snowjob” to Congress … and sure enough, he puts his foot in his 
mouth and rattles markets … apparently, he hasn’t learned the fine art of 
talking for an hour and saying absolutely nothing anybody can understand, 
while everybody within earshot reaches for the aspirin bottle. So, a non-event 
until 13:30 server time. Basically, today trades like it’s an NFP Friday, which 
by the way, we get in 3 days [oh joy].

“Well, that escalated quickly, didn’t it”? And here is where “situational 
awareness” means everything; you simply got to know that EURUSD price 
under 1.2280 spells big trouble for being long … that doesn’t mean it has to go 
lower, but you have to know that the last 5 days has seen this level hold, and if 
price gets underneath it and your long with a cozy stop, you run the risk of 
getting filled nowhere near your stop price … reward/risk ratio is definitely not 
in your favor here, cuz any long position gain is dwarfed by potential stop loss 
selling … “you simply must pass on the temptation to get long; all you’re doing by 
getting long is hoping to make some money that will someday go towards a large 
loss in the same situation … that’s it … and more than likely, the money ain’t 
gonna be there to eat the loss … therefore, you lose and lose big”. And, that’s 
exactly what I did … I left it alone.

Seeing price go lower, I know trading from the long side I have to be almost 
perfect in both entry and liquidation … short selling is still premature for 
EURUSD at this point, simply cuz all we are seeing is the long awaited 
correction I wrote about weeks ago. And after support level after support level 
from the last 1 - 2 weeks gets taken out on stops, you can see from the M1 
candlestick just how ugly it can be … “why the hell would anybody want to get 
caught in this kind of selling by trying to pick a bottom; you need to see some 
support, and more importantly a failure to go down and then looking for “The 
Teacup Handle Turn” for entry, and then a pop to get out … it’s the only chance 
I know I have of turning a profit without getting butchered like a hog in the 
slaughterhouse”.

Only one trade today … PAMM up slightly, about half way to 0.1% … 
understatement of the day: “being long today is not the place to be”. 

I want to go into some detail on the trade I made, cuz it will give you insight 
into my thought process as to why then, and why at the price I made it. 
Directly below the M1, with commentary.


Think for a second about what it is that got me “profit” out of this trade; it 
wasn’t my good looks [“wait … what; no”?], gut feeling, instincts as an analyst, 
or I got lucky … “it was 100%, solely the setup; nothing more nothing less, and 
the extremely high probability that “The Teacup Handle Turn” will be profitable 
over 95% of the time … and when it fails just over the neckline, you got to take 
the small profit and then come back later, whenever that is … especially on a day 
longs are getting whacked by the truckload”. You simply can’t “blink”, or stop to 
 “think” about it … “you snooze, you lose”! … you have to know beforehand 
what it is you must do, and that’s called “situational awareness”. As newer 
traders tend to stumble, simply cuz they don’t know any better, well now you 
know how it has to be … and if I’m wrong, and it goes higher 2 milliseconds 
after I get out, so what? … Remember, “opportunity is infinite, capital is finite”!

One thing I should also mention, is over the course of the history of EURUSD, 
quite often the big bull runs it has made since its inception in 1999, price has 
seen 400 - 600 PIP corrections over multiple weeks before the bull run 
resumes. What that means, is that we could easily see EURUSD price go down 
to the 1.21 - 1.19 area and still be in a bull market; it most definitely isn’t out 
of the realm of possibility. I’m not saying it will, but just keep some perspective 
about market action before you flip from bull to bear and pay the consequences 
for being way too early … “we’re traders, not analysts”.

We are now in the early New York afternoon, and EURUSD has seen some 
short covering back up to the 1.22400 - 500 area, from the low on panic selling 
while the SP500 was getting “monkey hammered” … it’s hard for me too tell 
which market is watching which market … all of them scared literally shitless 
over U.S. higher interest rates, which Spicoli gave his blessing for earlier to 
Congress. If the market stays here at this level, it’s gonna make for an 
interesting next couple of days … a literal data dump capped off with NFP on 
Friday … question is, does the 1.22000 level get taken out via sell stops in 
EURUSD, and how big are they? … will strong data and a strong NFP report 
do the trick, or is this simply a “suckers dump” by weak longs, and EURUSD 
rallies quickly and strongly from here? I dunno, but what matters most is that 
volatility will stay high and provide plenty of opportunity.

A tough day to be long … only after price goes down 120+ PIPS do we get a 
bounce on short covering … maybe a few fresh longs coming in, but I doubt it; 
the trading action suggests short covering. I really don’t like these shortened 
days due to news; as I’ve said before, it skews action and creates panic in the 
market, and by the time price action hits “DEFCON 1”, it becomes a 
crapshoot with reward/risk totally skewed towards losing money. And “oh joy”
NFP in 3 days, so we get another one.

Newer traders, especially, must understand that financial markets will never 
allow you to “have your cake and eat it to”; for every advantage you think you 
have, you had to “give up” something to get it. Down days in bull markets, and 
up days in bear markets can be dealt with effectively by the algorithms if done 
right, and today proves that, cuz what I said earlier isn’t any different than 
what I have been writing about for a very long time … which is, it’s all about 
the “setup”. We’ll see what tomorrow brings … I’m outta here … until 
tomorrow mi amigos … Onward & Upward!!

PAMM spreadsheet directly below.


Have a great day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND
OPERATIONAL; SEE “PAMM/MAM 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”!