“The bottom is hiding with Waldo!”
Not all data is created equally … nor is all data important … but one thing all data
is, is that it’s “lagging” … and the dirty little secret is, everybody in the world is
trying to find the magical formula that can project this backwards data forward to
make money … what most miss in this all out frenzy for more bucks, is that while
data is useful, it’s only useful inside a probability paradigm … the data in and of
itself isn’t going to get you rich.
As everybody who regularly reads my blog knows, every blog update Sunday, I
post for the upcoming week, the current 20 Day Range MA for 10 markets … 9
here on this blog, and 1 RE crude oil over on the sister blog … many will look at
any of these and comment, “well that’s nice, all I see though is a moving average
over 20 days … what’s it got to do with anything”? … let me break it down for
you.
There are approximately 20 trading days in each month, so it’s a fair
representation to say the 20 Day Range MA for any market, “is a snapshot of
weekly changes, day by day over a week, of how the market is reacting to news
through a monthly moving average … sure, I or anybody else could do it daily, but
the purpose of doing it weekly is to smooth out the “one off” bumps news creates.
If you go back to yesterday’s blog and pick any of the charts, you’ll see smooth
progressions and sharp turns that last a while … what you most likely won’t see
is sharp up & downs that only last a week or two … in other words, what’s
important here is not the “numerical value” of the data, but the trend of the data.
Remember, I’m plotting “daily” ranges here, not price … what I want to know, is if
ranges are trending higher or are they trending lower … and if I can get a handle
on that, what does it say about the market’s INTRADAY volatility [VIX]? … well, it
says a helluva lot, cuz with one picture I can see where it’s been, if it’s turned, and
where it’s at now … from that, I can immediately determine if I want to trade that
market, everything else being neutral.
In other words, the Sunday blog update charts are “maps of volatility” for each
market, and they impart valuable statistical information when used correctly. For
example, let’s assume the DOW30 has a 20 Day Range MA this week = 250 index
points … after the NYSE open, and taking into account what happened overnight,
an hour into the day the DOW30 has a 100 index point range … well, one of two
things is gonna happen here … 1) either the DOW30 gets its ass in gear and
moves up or down to put the range in, or 2) it sits and dies and at the end of the
day it hasn’t done anything … for trading purposes, I’d take algorithm buy signals
cuz the long positions have “room to run” … they have “room to run” cuz the 20
Day Range MA is telling me there is a high probability some kind of range will
eventually get put in … however, be mindful, it’s only a probability projection, not
a guarantee. What makes FX particularly difficult to trade over these last years, is
that daily ranges and intraday VIX for each of them, is all over the map … one day
an FX pair has a 120 PIP range, and the next day it’s 35 PIPS … central bank
manipulation of FX has killed FX VIX, particularly INTRADAY VIX … I’ve seen
days where either EURUSD or USDJPY has had less than 20 PIP ranges over 10+
hours … what the hell do you do with that?
Using the DOW30 from above, let’s say after one hour of NYSE trading the days
range is 350 index points, and I get an algorithm buy signal on a small correction
off the top of the range … I’m more inclined to pass on the buy algorithm signal
cuz we’re already 100 index points above the 20 Day Range MA for the current
week … the key question here is this … “if I take the buy signal, what are the
probabilities it goes even higher and extends the day’s range even more? … do
trees grow to the sky? … is the DOW30 laying a trap for me up here?
Most assuredly, the answer is YES, and while at the turns of major VIX expansions
or contractions you might miss some trades, my first priority is to not make losing
trades … I’m looking for the “induction” part of mathematical logic, not the
“deduction” part that says, “yea, I’m making the trade cuz it says it will be
profitable” … no, I’m looking for the trade that says to me, “yea, I’m making the
trade cuz it says it won’t lose money” … after you “critically” think about the
premise here, it should dawn on you the latter is far more preferable.
In other words, the 20 Day Range MA is just another tool to study when sizing
up the trading day, and eventually your trades … the $64,000 question will always
be, “is it worth bucking the lower probabilities to establish a position and
expecting expanded ranges, when today’s range is already markedly higher than
the 20 Day Range MA for the week”? … and need I remind you, consistently
taking low probability trades will only get you “whacked” at some point, most
likely when you take on higher leverage for the “big one” that in reality turns out
to be an account killer … “you wanna be the casino, or do you want to be the guy
playing craps”? … for me, I’ll be the casino every time, thank you.
Remember why it is, big banks allow you to open trading accounts online, all the
while promoting the “sizzle” of trading without you ever seeing the steak … the
purpose of trading is simple; “Big money gets small money [you & me], to do shit
they don’t want to do, thereby transferring money balances from spec accounts to
big money”... from their perspective, your money is simply you just borrowing
from them until they take it … how many times in trading have you been “Pavlov’s
Dog”? … they ring the bell, and you go running for a cookie? … they violate every
technical indicator known to man about 50 times a day, and they get you to buy
high and then sell low, or vice versa … they understand collective spec
psychology better than the specs understand themselves, and without you ever
realizing it, if you are a losing trader over time, you are simply being manipulated
into thinking there’s easy money to be picked up off the ground … only, there
isn’t … if you don’t know who the Chump at the poker table is, then it’s you.
When you get right down to brass tacks, the only thing that matters to scalpers
and day traders is INTRADAY VOLATILITY [VIX] … with it you make money,
without it you get chopped to pieces … and in today’s POLS & Apparatchiks
trading paradigm, the only 2 market areas where there’s decent, CONSISTENT
VIX is crude oil and stock indices … the rest are pretenders. And from Sunday’s
charts, you can see that both crude oil and stock indices are headed South in
terms of VIX … how does the FED kill traders? … EASY PEEZEE, they take away
VIX!! … and when they do that, they take away the ability of traders to make back
any loss on further trades during the day, cuz there isn’t anything there in terms
of market moves to make anything back … and what ‘stupid shit” traders do to
combat this, is to take on higher & higher leverage on future trades, and that
almost 100% of the time leads to disaster.
This all ties into the “Traders Course” [TC] and the M1 Scalpers Algorithms
… technically, the 20 Day Range MA for each market is not a part of the
algorithms … it’s simply secondary data for consideration inside a probability
paradigm all traders find themselves … and it doesn’t make any difference if you
believe it or not, cuz YOU’RE THERE WHETHER YOU LIKE IT OR NOT! … in other
words, we’re ALL on a gigantic chessboard, and we can’t see what the “big boys”
are doing … but their actions most assuredly have consequences for us as they
move any market … the 20 Day Range MA simply gives us the ability to “SEE”
some of the pieces that are being moved, to give us a better idea what the
chessboard looks like at any given moment in time … and just like in chess,
what you think might be a good move, is only a trap for checkmate in 3 moves if
you don’t see it … not taking the “bait” by initiating trades [buys or sells] at low
probability moments, gives you an edge in trading, cuz you’ve decided not to be
“Pavlov’s Dog” anymore!
Today is “Veteran’s Day” … for you Obama voters just getting up who think
history started the day President Empty Suite took office, November 11th, marks
the anniversary of the end of World War I [WWI], where the armistice occurred on
the 11th month, of the 11th day, at the 11th hour, in 1918 … the armistice was
actually signed at around 5 A.M., and fighting continued right up to the official 11
A.M. treaty, signalling the end of hostilities … in the last hour, from
10 A.M. - 11 A.M., approximately 2,500 men were killed along the Western front
… shameful, stupid, and a complete loss of humanity is my only reaction.
So today, bond markets and bankers get the day off, and stocks are open. I’m not
looking for anything today, that’s for sure, as big trouble in Hong Kong is gonna
keep a lid on things … we’ll see.
We start the day with ZERO news and reports cuz it’s a quasi Holiday, and so we
got the usual suspects involved with manipulation right out of the gate … and
that means the QE∞ crowd, who will buy with abandon every dip they can find
… however, remember they’re not there to trade but invest, and their payoff
comes down the road when the FED goes full retard NIRP, and every asset that
can return anything is worth its weight in gold. Other than that, it’s a manipulated
bag of shit where spikes from hell come and go like squirrel farts in the forest,
thus tripping stops both buy and sell, and nothing is really going anywhere
… and on a day that’s basically a Holiday, it’s the players with the most money
who will gain cuz they can ramp price with abandon … and who’s that? … it’s the
corporate buyback crowd and the “Plunge Protection Team” [PPT] and they aren’t
gonna let go … quite frankly, there isn’t one redeeming thing about today’s
DOW30 trading that should get anybody involved in it, cuz it’s a total coin flip
given the action … and nobody should trade under those conditions … hell, if
that’s what you want, go to Las Vegas, they’ll at least give you a free buffet meal.
And for those wondering, I’m not in the camp that think the stock market offers
great value … quite the contrary, I think it’s a manipulated Ponzi scheme via FED
manipulation & QE bullshit, and exponentially overvalued … however, I don’t care
cuz I’m a trader … the value of the DOW30 is as a “trading vehicle”, not an
investment vehicle … use the DOW30 to trade no matter the level, and who cares
if it’s between 5,000 and 50,000? … and strictly from that perspective, and the fact
it’s part of the “88/6/6” trading paradigm, and we use leverage in our trading, via
the “Traders Course” [TC] algorithm we can achieve remarkable returns on our
money … with crude oil basically dead right now, stuck in a range in what seems
like forever, there isn’t anything else to compare with the opportunities in the
DOW30 … this just happens to be a quasi Holiday trading day, where the
manipulators have greater control than usual cuz volumes and liquidity is light.
Up until I started writing today’s blog, I haven’t even looked at price today … it’s a
non event as far as I’m concerned, and you might as well trade Christmas Eve as
well … will they manipulate it lower, then higher, then do something else? … sure,
why not? … who’s going to stop them when they got CNTRL-P in their back
pocket? … of course it’s manipulated shenanigans, and we’ll see more of it as we
head for the 2020 elections in less than a year from now … after that, who knows?
Outta here early today … until tomorrow mi amigos … Onward & Upward!!
Have a great day everybody!
-vegas
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