To say it’s been a “journey of discovery” is an understatement … unlike years &
decades of old, where not much changed on the financial trading landscape, you
certainly can’t say that today … sure, crypto adoption has fostered many changes,
both technological & psychological, but it has also ripped the band aid off the
wound for the world to see … the world doesn’t want to see it, but it’s there
staring you in the face … and that “wound” is one of central bank manipulation
of markets … first led by the Japanese right after the 1987 crash in “Stonks” and
the subsequent obliteration of their stock market … it took the world quite a
while to adopt their manipulative techniques, especially in FX, cuz at the turn of
the century everybody who had an extra nickel was involved in the “carry trade”
… i.e., long whatever, short Yen cuz of the gigantic interest rate differentials
… trillions upon trillions making bucks off of a “sure thing” … and then came
the ‘08 financial crisis and interest rates everywhere went crashing to ZERO or
lower … the result? … everything they were long went down, and the Yen
skyrocketed as Sheeple exited the “carry trade” … and since then, FX has been
a different space than before … much different … and somewhere along the way,
the Yen became a “safe haven” currency, and quite frankly it makes ZERO sense
to me, but the market says otherwise … and for the last 5 - 12 years, as central
banks employ the Ponzi of CNTRL-P and inflate central bank balance sheets,
we now have the “risk on / risk off” scenario that’s played every day and
commented on “ad infinitum nauseum” by hack financial commentators
attempting to look knowledgeable & informed about markets.
As I said earlier in another blog post, it’s tough some days to see “who leads
what”, but one thing is crystal clear … it’s either the SP500 OR USDJPY leading
the charge … everything, and I do mean EVERYTHING in trading finance,
revolves around these 2 markets … “risk on” sees USDJPY & “Spoos” go higher,
and “risk off” sees ‘em both go lower … and where the noticeable & dramatic
changes in sentiment often occur [not coincidentally I will add!] and trap traders
are 1) when New York comes into the day around 7 AM EST [give or take some
minutes], 2) the NYSE opens for cash market “Stonks” [9:30 AM EST], or 3) right
after the “London Fix” and Europe closes for the day [11 AM - NOON EST] … and
unless you’re in a Yen cross or the Yen itself against the dollar, it may or may not
affect your other FX pairs … in other words, the correlation isn’t very good.
For too long, I’ve researched and studied other pairs, including many crosses, as
well as crude oil, world “Stock Bellies”, and of course gold … since I know what
I’m looking for, as you get into real time scenarios, THEY ALL FAIL TO DELIVER
for whatever the reason or multiple reasons … don’t think for a second the
scumbag banks don’t know this, as they set up markets for traders to fail
miserably in, all the while knowing full well it’s a rigged casino for their benefit
… why do you think they let anybody with $1 open an account? … as I have also
stated, VERY HIGH VIX [hello crypto] covers a lot of trading sins, and when you
get it making money is far easier … but when you don’t get it, or only get it when
banks want it to reposition themselves [usually at “the speed of light”], the sins
of trading can’t be covered and washed away … “VOLATILITY IS THE SAVIOR
OF TRADING MARKETS!” … and it’s why central banks manipulate VIX over price
to get the results they want … let me be crystal clear here … there are NO perfect
markets anymore in traditional derivatives trading! … the closest we come is
over in crypto … more than anything, what we need is CONSISTENCY in VIX
… now, that consistency can and does “ebb & flow” over time … you can see
this in the 20 Day Range MA table I produce every Sunday for the upcoming
week in selected main markets … and that overall “ebb & flow” is fine … what is
NOT “fine” are days like a 60 PIP range, then 58 the next day, and 73 the next,
followed by 160 PIPS the next, before going back to the 60’s or 70’s … this
“skewing” of VIX is for the benefit of the banks, drives professional traders
“nutso” cuz there is no pattern to it … one day it’s an economic report that
the prior month did NADA, or it’s an “in the tank” Apparatchik that is trotted out
to the cable channels for some “blah blah, yada yada” and SHTF within
seconds … do you benefit? … most times it’s “Hell NO!”
Let’s cut through the shit here and be honest … the BOJ, run by “Peter Pan”
[I think I can, I think I can!] Kuroda, who’s been there for decades, IS A
MANIPULATION MACHINE … they own more than 50% of ALL shares in the
Nikkei Stock Index and add to it regularly to keep the price from falling … they
utilize “Yield Curve Control” [YCC] to keep interest rates along the curve
stationary … and they “jawbone” the shit out of pretty much everything else,
letting it be known through various ministerial Apparatchiks, what they like and
don’t like … and what this is, is “code” for the importers & exporters of Japan,
which to the BOJ is all that matters … this all gets reflected in USDJPY … and
while many would say this is “bad”, it’s a known quantity cuz it’s
ALWAYS THERE!
My point is, institutional flows in & out of USDJPY by importers and exporters is
“bigly & yuge”, and whether specs are playing or not it doesn’t matter much cuz
the flow of money is ever present … each trading day about $600 BILLION gets
traded each day, with London seeing about 60% of that, and Asia & the U.S.
making up the other 40% … unless there is some specific driver in the news cycle
that directly affects “risk on / risk off”, USDJPY will have the highest consistency
in terms of VIX than the other major pairs … in other words, it’s rare to see
extremely big VIX days relative to its 20 Day Range MA, like you see in EUR, GBP,
CAD, etc. … and quite frankly, THIS IS EXACTLY WHAT I WANT TO SEE, AND
WHAT THE TRADING ALGORITHM DEMANDS FOR OPTIMAL PROFITS! … and
inside practically every day’s range is “trading” … up/down … and here is where
it gets really interesting cuz USDJPY has the LOWEST cost to trade of anything
on the board … ANYTHING! … AND while I’m very quick to lambast Turnkey when
their LP’s act like the thieves they are in most markets, USDJPY is decidedly
DIFFERENT … acceptable latency [usually quick fills, meaning the LP isn’t
holding the order to screw you], rare to see slippage from the bid [selling] or
offer [buying], and a CONSISTENT BID/OFFER SPREAD of 0.00 - 0.02 PIPS … and
right now, we’re in month 1 out of 3 months of NO commissions! … so while
Turnkey is the “shits” in CFD’s [crude oil, gold, “Stock Bellies (any of ‘em)], I give
them an A+ in USDJPY … quite frankly, there isn’t any place you can go and get
BETTER conditions in USDJPY than Turnkey [I know, it’s hard to swallow that,
but it is what it is, and tells you most likely that USDJPY is their highest traded
contract by volume] … and just for comparison and to be fair, Turnkey isn’t the
only house that is “the shits” for CFD’s … the whole industry is a gigantic rip
off, with spreads and slippage the main issues affecting whatever it is you want
to look at … granted, Turnkey is a better quality of “shit CFD’s” than many other
houses, but shit is still shit!
I posted last week, and I’m reprinting the graph again below, what the ideal
market looks like to the trading algorithm … to sum up, somewhat calm to active
on the surface of the VIX & price surface, and much more active “UNDER” THE
SURFACE WHERE THE CURRENTS FLOW! … directly below that visual graph.
And to the untrained trader, and those who don’t study markets carefully, this is
where the action is … for those wanting to be long, you’re searching for
“buy fuel” at the bottom turns, and for those looking to be short, you’re
searching for “sell fuel” at the top turns.
Flip this around and move over to crypto, and it simply doesn’t matter what ‘s
going on “UNDER” the surface cuz VIX is extremely high, and therefore the action
is on the surface as if a hurricane is moving through! … that pic is directly below.
Well, when you have these conditions, all that matters to profitability is to be first
in line at the surface turns [buying], and then waiting for the rats who are short to
panic and jump ship, which inevitably starts in 3 .. 2 .. 1 … and away we go! ,,, and
their predictable panic means they will buy your limit order to sell and PAY YOU
THE VIG! … and as we all know by now, this is one of the major advantages of an
“open order book” platform over MT4 / MT5 … so, you have to know which graph
your market belongs to, and therefore how to trade it! … simple as that … and in
today’s trading paradigm, crypto [crude oil & “Spoos” if you’re trading futures
ONLY] is the only place where you’re going to be allowed to be in the right place
with the second graph … FX is definitely in the first graph, no matter the pair.
From there it breaks down into 1) CONSISTENCY of VIX, 2) cost to trade, wanting
the absolute LOWEST, 3) ZERO to minimal slippage on fills, and 4) volume &
liquidity as high as possible … well, there’s ONLY one market that fits this bill,
and that’s USDJPY … why is it, the market you’re looking for is always the last
place you look!?
Cuz of the high volumes & liquidity, and primarily cuz of the money flows from
importers & exporters, USDJPY is the only pair I feel comfortable being either
long or short when appropriate … and that very definitely is due to the nature of
the “risk on / risk off” role Yen plays, as well as the level of interest rates
between known manipulated Yen rates which barely move if at all, and the
10 YR. U.S. Treasury rate which is heavily traded … and then there are all of the
crosses the Yen is in, where it’s always the denominator of the cross … that flow
of money influences Yen as well, particularly when either “on or off” is in play
cuz of news events or economic surprises.
Looking at the world today, and the events that have transpired over the last year,
IMHO I don’t think the “FX VIX Genie” is going back into the manipulated bottle
central banks want her in … that doesn’t mean she goes bat shit crazy [BSC], it
simply means she isn’t dying either … we’ve seen about a 50% increase in VIX
for USDJPY over the last 6 months to a year … it’s been a slow and steady rise,
and while there is a new government in Japan, the same Assclowns [namely
Kuroda & crew] are still running the BOJ … fact is, the money flows in and out of
Japan are too large for the BOJ to effectively manipulate and throttle, so they
decide to let VIX increase, albeit slowly … that’s fine, cuz it’s consistent … the
BOJ doesn’t intervene any longer directly in FX … that failed experiment went
out in the 80’s & 90’s … they “jawbone” now and control interest rates along the
curve to get what they want, and the big players know it so they pay attention.
Quite frankly, unless something big happens to shake up the financial world,
USDJPY is going to stay in that first graph I showed above … I simply can’t see
what makes it trade like crypto with very high volatility … doesn’t mean it can’t
happen, and if it does I’ll switch gears, but until then it’s a moot point.
As you can tell if you’ve been paying attention and given any thought to this, the
2 paradigms of trading, namely 1) high VIX, and 2) everything else, are part of the
same overall trading ecosystem … thinking of the oceans gives a good visual,
instead of probability theory, and when markets are in the middle of a hurricane
[crypto], nothing much matters below the surface cuz whatever is going on is
gonna be “trumped” by the action above … but when trading conditions are
normal to slow, the action is below the surface, and in this environment it doesn’t
matter much what happens above the surface cuz nothing is really happening
there, all the action is in the currents below the surface … in the final analysis,
it’s about defining EXACTLY your trading algorithm [model] and what you expect
from it, and matching it perfectly with the proper market … get it wrong and
you’re toast … get it right, and the market becomes an ATM! … and it’s the
reason why “The Syndicate” is so successful trading crypto, with ETHUSD being
the current “winner winner, chicken dinner” crypto pair of choice, cuz it’s nailing
all of the conditions necessary for profit … we’re about ready to embark on that
for the PAMM in USDJPY.
Directly below, the 20 Day Range MA’s for selected markets.
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