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Thursday, May 10, 2018

WHAT’S YOUR FAVORITE FLAVOR OF PANIC?

“Where do you start with this Clusterfark?”

It’s tough to know, where to even begin to start with today’s mega “clusterfark” 
in GBPUSD … not that it wasn’t unexpected, cuz days like these always have 
the potential to come at you with more than a little zeal and hot price action 
that can melt steel. So, why should today’s Cable data dump, BOE interest rate 
decision, quarterly inflation report, BOE Governor Carney speech & presser, 
& finally U.S. consumer inflation numbers give more than a little volatility 
… what could possibly go wrong?

It all starts innocently enough, with some “back & forth” at our 06:00 server 
time open, but quickly turns bearish, and leads to an interim low around 
1.35230, about 15 minutes before the first batch of news is going to hit on 
British Industrial production & manufacturing … and again, as I have 
pointed out in some previous blogs, since the start of the year Cable has 
increasingly started to “ramp”, either up or down makes no difference, right 
before numbers are released; and while some of this is normal, it’s getting to 
the point now, where every scheduled news release sets off panic, minutes 
before the reported event … “hey, why should today be any different”? 

The first set of numbers were not good, but they were better than consensus, 
and that led to a minor rally … but after that, it’s about 2 hours and 30 
minutes to the “big enchilada”, the BOE interest rate decision, inflation report, 
& Carney presser, and here’s where the first batch of “fun & games” starts 
… a furious rally ensues, where the last hour sees new daily highs above 
1.36000, buy stops set off, and then starting about 20 minutes to the BOE 
decision, the market starts to break hard … and “viola”, at exactly 11:00:00, 
on release of the BOE news, hop in the back seat cuz “Thelma & Louise” have 
reserved a seat for you with your name on it … “bottom of the quarry, here we 
come”!

It’s pretty damn clear to me, somebody had the data before release, and they 
were long …  the only way to avoid being slaughtered, was to “goose” the 
market higher buying everything in sight, and then selling every buy stop & 
bid above 1.36000 they could get their hands on … and then in the last 20 
minutes, sell it hard to get short … BOOM! … 100 lower, thanks for coming 
& playing! “Oh, but the fun is just starting, cuz we got U.S. inflation numbers 
which came in slightly “soft” … BOOM! … to the upside we go 50 PIPS, and 
while people catch their breath for approximately an hour, now comes the other 
shoe to drop, and down goes Frazier to new lows”! Surely, the fun is over now, 
right?

At 15:05, Bloomberg runs a headline stating that Carney sees a rate hike later 
this year if there are no “economic shocks”“well, say hello to 50 PIPS higher 
in seconds, right off the lows of the day”, and again just like in April, Carney 
throws a bone to the banks who are long down here and saves their bacon 
“it’s what central bankers do for their pals, and it also punishes retail shorts 
who hang around for too damned long, so in essence his comments kill two birds 
with one stone, and it’s … mission accomplished”! And with that, Europe closes, 
volumes shrink to zero, liquidity is “buh bye”, and if you’re short now, good 
luck, cuz we’re about 40 - 50 PIPS off the low, and who knows who bails you 
out now … not that being long is any great shakes either, cuz the reality is 
anybody in either side of a position is in the same “Titanic” lifeboat waiting to 
get rescued. “If 20 people were in positions right now, 10 short and 10 long, 
could all of them lose money in the next couple of hours? … Hell yes”!

Through all of this, I managed 2 short trades … PAMM up just a few bucks 
shy of 0.1%.

And while I was up in both immediately, both caught me in 3 - 4 PIP upticks in 
liquidating … the first I saw and then immediately liquidated, the second came 
right as I clicked to get out … and while frustrating, you can’t sit there and 
ignore them simply cuz you don’t like what they just did, you have to cover and 
liquidate … as I have stated before in the blogs, and it works both ways but the 
short side especially in Cable, when you start hitting new lows for the day, and 
the very next “tick”, or bid/offer, that you see in the order box is 3 - 5 PIPS 
higher, what that is telling you is, “hey man, it’s either over or damn close to the 
downside, and while they may take it down again, when this happens 2,3,5, or 
more times when you’re short, the market is trying to tell you to get the hell out 
and liquidate, and if you don’t, there’s gonna come an M1 candlestick that you 
are most definitely not gonna like seeing … and today, from 1.34800 down to the 
low at 1.34600, in the span of approximately 40 minutes, these “mystery” upticks 
of 3 - 5 PIPS occured at least a couple of dozen times”.

And then 13 minutes off the low, at 15:05, the Bloomberg headline hits, and 
everybody who is still short is simply “roadkill” … you were warned, and if it 
happened to you, learn from the experience and consider it cheap tuition.

It’s very easy to fall into the “the Dukes know something, let’s get in on it!”, and 
trade ahead of important news … “are we here to trade, or play financial 
roulette”? … but, I’m here to tell you, that the butthurt from days like this 
aren’t worth it, if you end up doing “stupid shit”, and believe me, the amount 
of “stupid shit” handed out today could probably fill up Rhode Island about 3 
feet high, border to border.

Directly below, the M5 Cable algorithm for the day.


What’s important to understand and realize from the algorithm, is not the  
“blue box”, which I have already said is an “artificial construct” created by me 
years ago, that analysis shows has no significant bearing on profitability, but 
the 2 EMA 46 lines … in essence, our statistical analysis shows these two lines 
to be the most “OPTIMAL” for mapping profitable trades with either the M5 
or the M1 … and when Cousin It showed me this, and I looked at the 
probability matrix he calculated, I chuckled and said, “I got something to show 
you”. And directly below is what I showed him.

“And in that instant, I saw all the hair on him stand up straight”!

In essence, the two 46 EMA’s are dynamic “snapshots”, every 5 minutes, of 
where the average HR4 “extreme” value [plum the low, yellow the high] is, 
meaning it’s movement over the course of the day tells you where big money is 
placing their bets … price below the 2 lines and market is going lower … price 
above the 2 lines, and market is going higher … and simply looking at today’s 
action from above, you can clearly see how the 2 lines act as “support & 
resistance” … the fact the “blue box” worked for me all those years ago, is cuz 
at the start of the day, the 2 lines are going to be moving relative to the  
“blue box”, and more than likely going to “change slope” at or near the 
boundaries of the “blue box”, or stay the same and go in one direction. These 
HR4 values are tough to change, and they prevent you from getting long or 
short too early … when the slopes change, now you’re either seconds or a 
couple minutes away from price moving, sometimes dramatically.

Of course, back then I had “zero” computing power, so there’s no way I could 
have known this without spending 100 years doing manual calculations … but 
today, I now know “I was right for the wrong reason”!

Today was the first really good market moving day we’ve had, since the 
algorithm information became known to us late Monday … I’ve had 3 days of 
useless “chop” to look at and analyze, now today we get some action, and you 
can clearly see the values of the EMA lines did their job, and did it 
extraordinarily well. More on all of this in the days ahead, as well as the 
“supplement” to the GBPUSD algorithm manual due out this weekend.

A few words on crude oil … again today, any time this stuff moves, the LP’s
raise the spread … most of the night from the European open, saw WTI with a 
2 - 3 cent spread, and a range of about 50 cents per barrel … then, as New York 
begins to show up in the early hours, crude weakens some, and by the time we 
are minutes away from the 9:30 A.M. NYSE open, crude is lower. Directly 
below, the screenshot of “market watch” inside the MT4, where you can see the 
spread in USOUSD IS 6 CENTS.


Meanwhile, over in the futures market, WTI is trading with volume, at a 1 cent 
spread, with hundreds and sometimes thousands of contracts bid and offered at 
every penny … and the scumbag LP’s expect you to pay 6 cents? Here’s a 
futures market, that yesterday, traded almost 2 million contracts in WTI, and 
their mini WTI [½ half the size] traded approximately 20,000 contracts.

Seriously, I’d love to trade this market via a CFD, but the bankers seem to me 
to be retarded … I’ve told them this, and they never listen, and just expect 
everybody to go along with their mispriced horrible 10 barrel CFD, which 
makes no sense whatsoever … sooner or later, like FX had to experience once, 
somebody “breaks the mold” and trading conditions improve to the point 
where they are comparable or even better than futures, and no doubt it will 
take place in crude oil in the near future.

All told, I’m pleased with the Cable algorithm and how it performed today, 
and while I would have liked the short positions to have produced more profit, 
the market is what it is and we just move forward. Take away the gap spikes 
due to the news releases, and there’s only one decent market decline today, and 
both of our short positions occurred during that time … the rest of the time 
today saw “blitzkrieg” short covering, that at times was downright violent in 
scope, causing many a trader, I’m sure, to do nothing but puke positions 
constantly for losses. 

And as the daily candlestick chart below so clearly shows, the last 4 out of 6 
trading days has been some kind of “doji” spindle … “can we please end this 
spindle shit and go somewhere? … is that too much to ask”?


Cuz right here, this is the biggest threat to making money …”DOJI’S!” … and 
while a couple “now & then” are tolerable, and if the daily range is high enough 
they can still produce nice profit, getting them consistently is not what we want 
to see, especially with relatively small daily ranges … and as we hopefully break 
away from these patterns, not only will profits be at a level where I want them, 
the algorithm will shine greatly as well … and with that, 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
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