Trading is an act of love … it requires & demands courage … the courage to face
reality, and when reality changes, so does your trading! … countless things to
absorb & learn, but none more important than understanding how your market
works … and for the vast majority of people, they really don’t know what drives
markets to do what they do … yesterday, I released “The Period 5 Algorithm” for
scalpers, which is simply a more defined approach based on “The Modified
Tunnel Trading [TT] Algorithm”, and it digs deeper into the scalping process
… looking at today’s markets [excluding crypto], given all of the scumbaggery
& manipulation of central banks across the spectrum of MT4 markets, 2
phenomenal criteria emerge that cannot be ignored … 1) VIX is down across the
board … that means lower average daily ranges AND more instances of the
infamous “Flying Wedge of Death” [FWD], and 2) markets that trend nicely for
days & weeks are a thing of the past … over decades of trading, there’s only
one trading regime that makes money under all conditions … Bull, Bear, Neutral
… and that’s scalping successfully.
What matters of course are 1) getting the LOWEST total cost to trade, 2) very
tight bid / offer spreads, 3) super low RT [round turn] commissions, 4) latency
of execution time on fills must be excellent, 5) high volumes & liquidity for even
the biggest traders, AND 6) slippage MUST BE minimal to non existent
… assuming all markets move and have VIX, the more of these 6 that hit the
target, the better that market is for scalpers … and if you’re a true scalper, every
market outside FX will disappoint and cost you money “bigly & yuge” … to whit,
“Stock Bellies” CFD’s are a joke when it comes to slippage, and other markets
have spreads that are to “Hoover Dam” high.
Under certain circumstances, crypto alt-coins can be excellent scalping markets,
but as we’ve seen lately, when VIX dries up these markets dry up as well as the
specs leave in droves for supposed “greener pastures” … spreads widen, right
along with lower liquidity on the “open order book” platforms, and the excellent
scalping seen before is a distant memory … now it’s “chop city”. Again I will say,
over the years and decades so far [and we’re only 50 years into the “modern era”
of trading], looking at all of the available markets to trade from Ag markets,
interest rates, stock indices, energy, & metals, ONLY FX has kept all 6 criteria
above while the rest have “waxed & waned”, getting hot / cooling off and
basically being a nightmare to scalp effectively constantly & consistently over
time to allow you to not only make a living and live the trader lifestyle, but
accumulate wealth in the process … cuz when they grow cold and stay that way
[hello interest rate futures & Ag markets], how you gonna make money honey?
Most days, it’s easy to overlook the FX pairs when crypto is exploding [up or
down], the metals are on fire, or “Stonks” are getting the “Plunge Protection
Team” [PPT] lift, and they grab the headlines … meanwhile, FX is hosting the
largest volumes & liquidity by far known to markets … meaning you can trade
in million dollar notional sizes if you want and nobody notices … try that in
Turnkey’s [or anywhere else for that matter] “Stock Belies” CFD’s and I’ll wait
for the slippage screams from hell … twice, cuz you gotta liquidate as well! … it
remains to be seen what gold will look like come tomorrow, but it wouldn’t
surprise me if trading conditions worsened … we’ll see … quite frankly, over in
the FX space, most of the dollar majors have a total cost to trade well below
1 PIP, right along with some of their respective crosses [e.g., EURJPY, AUDJPY],
and the premise behind “The Period 5 Algorithm” is present in all FX pairs
… pick your favorite pair and GO!
Today marks the start of my model portfolios for SPY [the ETF for the SP500],
BTC, & ETH … they join the ETF’s for gold [GLD] and silver [SLV] that were
created 2 weeks ago and have positions on … as of today, no changes yet to
those portfolios, and we’ll see what the Basel 3 changes do to price in the
coming week … for SPY [and options], the “skew” in SP500 pricing between
puts & calls has never been greater … put prices are off the meter needle, as
everybody and their brother bids SP500 OTM puts into the stratosphere, while
calls are melting as VIX goes lower into the July 4 weekend … nothing to do
here as of yet.
Over in BTC & ETH, some of the option IV’s [implied volatility] are so insanely
priced, that come next weekend I’ll have some recommendations on how to
capitalize on these 2 crypto pairs … another week of dull activity into the
July 4 weekend [maybe, maybe not] won’t do much to melt any option with a
longer maturity out into the Fall or end of the year.
Over this upcoming week, I’ll be adding these pdf’s in “Download Links”, so
look for them.
Onto the week … outta here … “the future’s so “GOLD”-en bright I need
sunglasses”! 😎 … Onward & Upward!!
-vegas
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