“Ho hum … time to go meet my trading pair for the day!”
Before I get to crude oil today, some critical reminders … 1) IVIX INDEX levels are
a proprietary index of mine, created for the sole purpose of establishing M1
volatility from any M1 to the next M1 … 2) they are “snapshots” of the past
week’s action broken down into specific 4 hour intervals that match the 3 major
trading sessions of the world as they relate to trading and not necessarily the
hours of the day … 3) I created an index for 2 specific purposes, A) to measure
volatility from one M1 to the next to get an idea how volatile the market actually is
for scalping and/or short term trading and to compare that to different times of
the day, and B) to be able to make an “apples to apples” comparison between
markets and/or compare different market groups to each other … 4) IVIX INDEX
levels have no predictive value, other than when a market gets put into motion it
tends to stay in that motion until something stops it … and what stops it usually
is the end of the day or the start of a different 8 hour world session.
Directly below, this past week’s IVIX INDEX levels for first FX, and then below that
other key markets.
click on any table to enlarge
Bottom line is this … if your trading objective is to scalp and/or short term trade,
you have to be in a market or group of markets that consistently have 1) IVIX
INDEX values = to or > 60, 2) LOW “total cost of trading” via bid/offer spreads,
3) ZERO or very little slippage on fills, and 4) market(s) that actually trade and
don’t go in straight lines.
This last point is specific to your trading algorithm [or trading model], but I would
remind people that no matter how smart you are, how many math Ph. D’s you got
working for you, or how many millions of lines of computer code you’ve
developed, you DON’T GET ANYTHING FOR NOTHING IN TRADING
… EVERYTHING COMES WITH A PRICE TAG! … meaning of course, in order to
get something, you have to give something up, and you’re never going to have
your cake and eat it too! … “welcome to the trading basement mi amigo”!
Looking at the tables from last week, several things jump out at me … 1) the lack
of FX movement as the stock indices “go off the VIX rails”!, 2) when did the
DAX30 start taking meth?, and 3) outside of Cable [GBPUSD], the complete lack
of acceptable trading conditions in FX for the first half of the European session
… quite frankly it’s pathetic … looking at the other dollar pairs, you can’t help but
wonder WTF is going on here?
Some general observations about each group of markets in the IVIX INDEX tables.
FX
As I said, only Cable [GBPJPY & GBPCHF at times] did anything, and it didn’t help
us at all during the week cuz it went in straight lines, with Friday being particularly
galling … what makes it more amazing, is that the Yen crosses of EURJPY &
GBPJPY did almost ZERO as the stock indices tanked for two days in a row … so
much for the “risk on / risk off” bullshit we are submitted to almost daily by the
talking heads.
Over these last weeks, something really interesting is happening in FX in the major
dollar trading pairs, including specifically EURJPY & GBPJPY, at COINEXX &
TURNKEY … 1) bid/offer spreads have collapsed [good for us], 2) fill times on
market orders are faster [latency], AND 3) any significant slippage, outside of
maybe 1 or 2 tenths of a PIP has been eliminated [doubly good for us!] … the
PAMM / MAM is hosted at Turnkey, but COINEXX has a few pennies LOWER RT
commission rate … quite frankly this is amazing to me, and I’ll get to why I think
it’s happening in a minute … overall, if I was sitting out there and wanted 1) best
overall LOWEST spreads & LOWEST RT COMMISSIONS, and 2) range of markets
including crypto, I’d choose COINEXX, cuz TURNKEY at present doesn’t offer
crypto trading … both have very light KYC requirements, which is simply sending
them an ID … big whoop … TURNKEY HAS DOLLAR AND EURUSD accounts,
whereas COINEXX HAS crypto accounts as well, so you can hold account
balances in Bitcoin or 4 other crypto pairs … PRIMEXBT IS NO KYC, and if you
prefer NO KYC this is the place, but if you’re trading FX over about 25,000
notional, the bid/offer spreads climb quickly … their oil trading is OK, but
compared to either TURNKEY OR COINEXX it’s “subpar” … you end up paying
about $0.007 more per trade than you would at COINEXX OR TURNKEY … OK, so
do the math here … 250 trading days per year, 3 trades per day average, 100
barrels per trade [a buck a penny] … your small account of less than $1,000 just
sent the brokerage house & LP’s $525 for absolutely NO REASON … unless
you’re Pablo Escobar, why would you pay this?
As I said, spreads have collapsed, and not just for a millisecond or two, but over
the entire European & U.S. sessions … spreads for EURUSD & USDJPY from
0 - 0.1 quite often, with a sprinkling of 0.2 - 0.3 thrown into the mix … GBPUSD
SPREADS OF 0.1 - 0.3, with a sprinkling of 0.4 - 0.5 … now here’s what amazes
me to no end … spreads in EURJPY & GBPJPY of 0 - 0.3 pretty much most of the
day! … some smattering of 0.4 - 0.5 if stops get run in Cable or EUR … in other
words, interbank spreads in both crosses where you’re getting the YEN for free
… cuz remember, on institutional platforms these spreads are almost always
0 - 0.1 PIPS … so what’s going on here?
My guess here, and it’s only an educated guess, is that the world’s largest HFT’s,
namely outfits like BlackRock, Virtu, & Citadel, to name just the largest three,
have decided to undercut the scumbag LP banks and steal some business in
this $9 TRILLION PER DAY DOLLAR BUSINESS … and especially offshore
brokerage houses that accept deposits / withdrawals via crypto, it cuts ties with
anything having to do with the U.S. via either the FED or their BFF scumbag
American bank LP’s … in other words, not only can they give clients better
pricing, neither the U.S. Treasury, the FED, or any of the scumbag Wall Street
bank LP’s can exert any pressure on these brokerage houses to 1) do KYC,
2) don’t accept crypto, or 3) face the loss of liquidity providers cuz you won’t do
#1 or #2, or both … “does anybody else see a middle finger in the air besides
me”?
And this has started to bleed over into other markets as well, and I wouldn’t be
surprised if metals were next, cuz it appears it has happened in crude oil … and
quite frankly, the HFT’s have all of the advantages over the scumbag banks cuz
they’re private business and aren’t subject to FED banking rules & Treasury
directives. Now, all we need are FX markets that actually trade instead of only
screaming in one direction or the other.
PRECIOUS METALS
XAUUSD & XAGUSD
The problem with both gold & silver isn’t the IVIX INDEX level, although you
wonder why their lack of higher levels given stocks cratering, it’s the fact that
bid/offer spreads are beyond laughable & ludicrous, they are criminal thieving of
the highest order, AND slippage is out of control with any market fill turning into
a guaranteed roller coaster ride … there isn’t any way you can scalp and/or short
term trade these 2 without the scumbag bullion banks cleaning your clock!
… this isn’t complicated, just thieving bandits looking for easy money from
dopes willing to give it to them.
STOCK INDICES
And as you can clearly see, IVIX INDEX levels rising to insane levels on Thursday
& Friday, and best left alone … and while bid/offer spreads + RT commissions are
what traders look for, SLIPPAGE IN ALL OF THE INDICES on fills, most notably
the DAX30 & NDX100, are atrocious … eye watering terrible! … remember, the
scumbag LP’s have no rules prohibiting them from filling you anywhere the hell
they want … you buy into a market ripping higher, or sell into a cratering M1 red
spike down, and I guarantee you ain’t gonna like what you see next in that fill box
… and of course, just like the metals, your stops get run with abandon and raped
multiple times per day by these thieves, so somebody tell me how that helps your
account? … “right, me neither” … and for the uninitiated Newbie to trading, on
ALL electronic trading platforms [MT4, MT5, or any other], “limit orders” are
nothing more than “MIT” [market if touched] orders, and of course the scumbag
LP’s are NOT held to either your buy or sell limit order … “I no longer use limit
orders in my trading, cuz THREE TIMES over the last 5 years, I’ve had “sell limits”
to take a profit from a long position, see the market go through my “sell limit” on
the bid side of the order box to the upside, only to see price immediately plummet
and I got filled substantially lower than my sell order, cuz it got treated like a MIT
order … yea, a bunch of bullshit, but there’s nothing you can do about it if you
want to trade”.
Which brings me around to crude oil … the “revolution” that is happening in
pricing is, IMHO, due entirely to HFT’s entering the space and leaving either the
oil brokers or scumbag banks in the dust … for years, the CME has frowned upon
banks and/or oil brokers making arbitrage markets in crude oil to offshore
brokerage houses and their CFD’s, unless of course they were total ripoffs with
spreads of 5 - 7 cents per barrel, cuz the CME didn’t want any competition against
their e-mini crude oil futures contract [500 barrels], which quite frankly is a loser
… enter the HFT’s and the CME has no leverage over these companies … they
have TRILLIONS IN ASSETS, and their operations are private … all I can say is,
about frickin’ time!
Oil as a market is completely different than anything else … it’s a “physical”
commodity … you can’t use the CNTRL-P machine at the FED [or other central
banks] to manipulate the price … and as we saw in May 2020 when the May
contract went off the board at -$40 per contract, somebody was PAYING YOU
$40,000 to take delivery of 1,000 barrels of oil, cuz there was literally no place to
store it … “how many HFT’s and other entities, in late February & March when the
pandemic started to hit, went out and locked up every single oil storage unit in
the country for the next 6 months or so, as demand for oil plummeted with
lock downs, and left ZERO storage for any of the futures expiration's going
forward into the Summer”? … I’ll bet more than a few.
Breaking the IVIX INDEX tables above down, directly below GBPUSD & GBPJPY
[the most volatile FX pairs last week] versus oil [WTI and/or Brent] for
comparison.
As I said in an earlier blog, if oil was an FX pair you’d be trading it cuz it
compares very well and has more distinct active trading hours than FX … Labor
Day Holiday tomorrow so the U.S. will be closed, but Europe pays no attention,
so we’ll see what happens … of course, like anything else cuz nothing is perfect,
oil has its moments of “deadness” & “lunacy”, particularly every Wednesday
morning at 10:30 AM EST [this upcoming week it will be on Thursday at
11 AM EST cuz of the Holiday], as the crude oil inventories report comes out and
moves oil, sometimes dramatically.
Not expecting anything overnight or tomorrow, but you never know in this stuff
… until tomorrow … Onward & Upward!!
-vegas
No comments:
Post a Comment