I’m gonna start today’s blog update with the 20 Day Range MA’s of selected
pairs, directly below.
Over in the right hand column, under “Download Links”, there is an Adobe pdf
that is a table of the second half of 2021, with each week’s 20 Day Range MA of
selected pairs … if you take any pair and map it’s changes, you can clearly see
the ebb & flow of changes in its VIX … since the end of 2021, these flows are
calculated and posted each week on the Sunday update.
Over the years and decades I’ve been a professional trader, people always ask
me how I made millions of dollars trading from the floor … what was my
“secret”? … quite frankly, there wasn’t then, nor any time before and after, any
“secret” … the crucial key was / is / always WILL BE VOLATILITY … from the
birth of modern day financial derivatives trading, which was the mid to late
1970’s [major FX dollar pairs, and the SP500 futures started trading in April 1982],
up to the financial crisis of 2008, the dirty little secret was VOLATILITY [VIX] WAS
FAIRLY CONSISTENT! … granted there were days and maybe some weeks where
shit got out of hand [1987 crash], or markets died [around major Holidays], but
on the whole VIX was fairly consistent at “bat shit crazy” [BSC] in the Swiss
Franc, British Pound, & Japanese Yen, and then when it got rolling the SP500
futures … and since it was CONSISTENT, you could count on it about 99%+ of
the time to make you money, cuz no matter the market, during the day when
trading was over, you’re gonna have a “high” and a “low” for the day, and that
difference would match up very closely with the 20 Day Range MA … “count on
it, it’s gonna happen!” … as we all know, a lot can happen between the high & low,
and there are a million stories in the “Naked City” in that daily candlestick on
the chart, so you can never do “stupid shit” and expect to get away with it … but
what you could do in spades was scalp / day trade the shit out of it knowing
what the CONSISTENT VIX was gonna be … so, if you want the “secret”,
THAT WAS IT!
Then everything changed in the financial crisis of 2008 … governments got
involved in trading, interest rates went NIRP [negative interest rate policy]
almost everywhere, and to be truthful, the entire landscape of trading changed
suddenly and violently … 14 years latter, it’s gotten worse, not better, and it is
now a “given”, that the “Plunge Protection Team” [PPT] protects “Stonks” in
the “88/6/6” trading paradigm set up by the FED … the only thing they care
about now, no matter what the PIE HOLES say, is the price level of the SP500,
based entirely on the premise of people thinking, “well Hell, it can’t be that bad,
“Stonks” are rising, so maybe the country isn’t going into a depression”, and
just like very good propaganda, attitudes are changed for no discernible reason
other than Apparatchik bullshit! … and those “glory days” of FX? … where the
Hell are they now? … into the dustbin of history is where, as central banks
learned from “Peter Pan” Kuroda of the BOJ, how to effectively manipulate
EVERYTHING FINANCIAL BY PRINTING MONEY.
I’m gonna highlight the problems traders face, by using an example that every
trader should be familiar with, from rank Newbie to “you’ve been around a while
and gotten burned” … there are plenty of others to be sure, but let’s simply look
at MOVING AVERAGES [MA’s] … pick your poison as to the MA method [Simple,
Exponential, etc.], it doesn’t make any difference … pick any market, but I’m
gonna pick FX, for example EURUSD … directly below in succession, are 2
monthly charts of EURUSD, the first from 2000 - 2012, and the second from
2013 - 2021 … the plum lines are 2 simple 12 period MA’s for calculating the
yearly average range of PIPS “rate of change” per month over the year.
Notice the difference in the “grid” of the charts … quite a comedown from
2000 - 2012, before governments got actively involved in MANIPULATING VIX
… directly below that shows the table results of the plum lines from 2001 - 2021.
Quite a change over different periods isn’t it? … my point here, though, is to
highlight the fallibility & limitations of MA’s … quite frankly, any MA crossover
you use is gonna get slaughtered when VIX slows down [it’s called “chop”]
… and when VIX goes up significantly, you miss quite a few tops & bottoms cuz
your signal crossover is to “Hoover Dam” SLOW! … now, I can do the above
analysis for any market, and what you’re gonna find is the same no matter where
you go or what you trade … even now, crypto is going through its own “nuclear
winter” … if you look at the 20 Day Range MA of your favorite market(s) from
H2 2021 to now, you can see the very big differences some markets have had
… so if you use “conventional methods” [those found in the library of the MT4]
to model your trading decisions, my question to you is simple.
“When and under what level of circumstance was the “VIX structure” of your
market when you created your model [algorithm]”? … cuz unless the
“VIX structure” stays relatively stable [good luck with that], you’re gonna get
toasted by either rising or slowing VIX and not know WTF happened! … and
quite frankly mi amigos, this is the central issue of our time now in markets
… so what to do?
For many months, I have traversed many blind alleys to find the answer … cuz
what is needed is AN AUTOMATIC ANALYSIS IN REAL TIME OF CHANGES IN VIX
THAT SHOW UP ON THE M1 FOR ANY MARKET … I have written at length of the
limitations of the trading algorithm I use … briefly, they are 1) completely dead
markets, 2) wildly inconsistent VIX on the M1, where one day an FX pair [or other
market] has a 150 PIP range, and the next day it’s 55 PIPS, and 3) “V” bottoms
out of nowhere that scream higher, cuz of increased VIX [e.g., “Spoos”], and the
buy signal is simply too “Hoover Dam” slow!
Now, having said this, there isn’t any point in any of you believing there is some
“Holy Grail” out there that can solve 100% of these problems … that’s not what I
research for … what I want is for limitations in an algorithm [a/k/a losing trades]
to be sharply REDUCED, understanding they can never be totally solved … dead
markets there isn’t anything anybody can do about it … move onto another
market … if you persist in trading a dead market, what’s gonna happen is a day
shows up and the VIX Genie is “let out of the bottle”, and you get carried out toes
up … not an “IF” scenario, but a “WHEN”! … that leads to simply VIX, and
understanding how it affects the market you’re trading … and over the last
several weeks, from months of research & development, I’ve put the puzzle
together mathematically and coded it into the current trading algorithm for even
better responsiveness on signals IN ANY KIND OF MARKET THE SCUMBAG
LP’S WANT TO THROW AT ME.
I want to be clear here … this algo is NOT IN ANY WAY a model for what goes on
over in crypto … crypto is its own separate deal, and quite frankly, if crypto
trading only gets you what traditional markets return, what’s the point of trading
it? … cuz “Stock Belies”, especially the major U.S. indices, operate under the
“88/6/6” trading paradigm, there is an inherent edge here not found in other
markets by simply concentrating on LONG POSITIONED TRADES … YOU GOT A
15 - 1 EDGE, WHAT THE HELL DO YOU WANT? … to a lesser extent, the DAX40
and the FTSE100 fall under this umbrella as well … in other words, as long as
the spread holds in “Spoos” at Turnkey, look for the PAMM to be trading it … as
I said, it doesn’t matter the market, as I’ve designed and implemented it into the
trading algorithm for anything / everything from a VIX perspective, EXCEPT THE
DEADEST OF MARKETS … so if you’re a EURUSD and/or USDJPY trader, and
the range for the day is 28 PIPS, there isn’t anything I can do via the algo to help
you … simply move on Skippy!
Moving specifically over to the “Spoos”, lately the biggest problem has been the
sharp “V” bottoms, and the algo being too “Hoover Dam” slow to get to the buy
signal before a signal is given … what good does it do us if the “Spoos” go up 12
index points in 1 - 3 minutes, burning buy fuel, and then give us a signal?
… right, it doesn’t … and if VIX slows down in the “Spoos”? … no problem cuz
the algo adjusts AUTOMATICALLY TO CHANGES IN VIX IN REAL TIME, WITH
ALMOST ZERO LAG! … what that means for us, is that we get closer to bottoms
than ever before under all VIX scenarios except the truy dead … IMHO, we’d need
to see the 20 Day Range MA in the “Spoos” go under about 35 index points, and
currently we’re right around 100 … we ain’t gonna get all of the bottoms of
course, but we’ll get our healthy share, way above and beyond what we’re getting
now which ain’t much.
Tomorrow, which is Monday, is the last day of February … I’ve already
incorporated the new metrics & parameters into the trading algorithm … my list
of markets for PAMM trading are prioritized as follows … 1) “Spoos” currently at
the top of the list … 2) DAX40 if the spread at Turnkey is acceptable … here lately
it hasn’t been, and quite frankly it’s been a total shitshow circus with a very
inconsistent spread … 3) EURUSD, GBPUSD, & USDJPY, whichever looks the
most interesting from day to day if the “Stock Bellies” go “sleepytime” … 4) gold,
where I’d be shocked if this market picks up and moves significantly over the
next 3 - 6 months … maybe but I doubt it.
So why am I laying out all of this for my readers? … I’ll have the results of trading
for March + the last day of February, and I’ll post the results weekly on the blog
update starting next Sunday … at the end of March, in some way, shape, and/or
form, I’ll be making this “traditional market MT4” algorithm PUBLIC here on the
website … with all of the available markets on the MT4 [could be used for futures
as well], in all of the groups, that means there are many dozens of potential
markets, including the FX non dollar crosses, plenty of indices, energy, precious
metals, you name it for people to trade their favorite market(s) … the algorithm is
flexible enough for both scalping & day trading on the M1 … I’ll leave it up to
readers to play with different time periods for position trading … right now, I’d
recommend Turnkey only for FX, and “Simple FX” for CFD’s [not much difference
in “Spoos” trading between the two, but other indices there is a big difference
with Simple FX better [lower spread + no commissions]]
From my perspective, these changes to the trading algorithm are a “game
changer” … you’ll see the difference at the end of March … I’m not at all worried
about other traders front running or crowding out trades with heavy participation,
simply cuz of the depth of markets and the flexibility the algorithm offers to
either scalpers / day traders / or anywhere in between the two … add to that the
depth of volume & liquidity in futures that dwarfs CFD’s, and it ain’t gonna happen
… the very best scenario is to utilize the micro emini futures at a brokerage house
outside of the U.S. … but as “Simple FX” proves, and there are plenty of others
out there as well, paying a fraction of a futures tick above a futures spread, in
order to have a NO KYC account via crypto, gives better privacy, security, and
anonymity for a very small, and in most cases, meaningless cost to trade … again,
I want to point out before I go, what has now changed is having the ability to NOT
WORRY HOW VIX AFFECTS BUY SIGNALS IN THE “SPOOS” … cuz whatever it is
[other than completely dead], it’s dealt with in REAL TIME AND GIVES ME THE
VERY BEST OPPORTUNITY TO GET BUY SIGNALS AS CLOSE TO THE BOTTOM
OF A MOVE, WITHOUT A SIGNIFICANT INCREASE IN “FALSE POSITIVES” … and
this has been bugging the shit out of me for months & months … finally I got a
handle on it and the math “works” … nobody need worry how it works cuz
it's visual in scope … a retarded kitten could trade this … do you know the
quantum mechanics of how your smart phone works? … I rest my case.
Onto another what looks to be “blistering week” in terms of movement … outta
here … “The future’s so bright I need sunglasses”!! 😎😎… Onward & Upward!!
-vegas
No comments:
Post a Comment