Weeks ago, after the Mrs. & “Miss Gimpy” had their first run in with “liquidity
providers” in EURUSD, both had lengthy discussions with me, and the upshot
was 1) we don’t like this slippage, and 2) neither of us like the hours most of
FX trades in … that led them to SIMPLE FX to trade the DOW30 … and while
they haven’t gotten beat up badly, neither of ‘em are happy with the extreme
volatility seen second to second, minute to minute, throughout the day … the
very wide and often brutal microsecond changes in the bid/offer, leaves them
cold cuz they realize they are the prey to the LP’s, and it’s just a question of
when they’re next … so, what to do?
And over these last weeks, I’ve gotten tons of emails from people that want to go
into the most excruciating details of 1) what do I do if “this” happens, 2) what do I
do if “that” happens, 3) I ran into this or that and it’s a “gray area” where I don’t
know what to do … and while I appreciate their efforts at writing me, I can’t answer
their questions cuz the answers are “non computable” … in other words, they’re
unsolvable in any kind of algorithm or system of trading … and the reason is,
they’re all wrapped around probability curves where literally anything can happen
… they are, to be blunt, unsolvable probability wave functions with infinite
possible solutions.
But as I told the Mrs. & “Miss Gimpy”, better to concentrate fully and really
understand what we know to be “facts” about trading, then wander off into the
“Twilight Zone” and ponder the “what ifs” … do that, and you’re gone forever
down the rabbit hole, where you will literally go insane … and quite frankly, I’ve
seen it in people and it’s not pretty … just like the pic in the header of today’s
post, what you think you see is shaped by what you want to see, all wrapped up
in the fantasies that you think are “facts” … but it’s an illusion … a figment of
your imagination and not real … and when it comes to trading and money, that
illusion will cost you “bigly & yuge”.
So let me examine the “reality” of trading as it exists today, in the manipulative
era of central bank intervention via scumbag banks … quite frankly, I have been
moving in a specific direction for weeks now, but before I get to that the first
“truth” about trading is that the banks NEVER lose … 1) their respective
computer networks, whether bank or HFT’s [High Frequency Trading firms],
operate in nanoseconds [billionths of a second], where they have spent hundreds
of millions of dollars to be the fastest in the world, whereas your trading network
operates in milliseconds [thousands of a second] … you absolutely cannot beat
any of them to the punch of changing bids / offers … 2) they are not bound by
rules of money like you or me … they are backed by central banks and get all the
money in world if they need it … obviously that isn’t true for any of us … 3) they
do not have to fill your orders fairly or on the market … they can fill your order
anywhere they want to … when you opened your account, you agreed to this in
the “terms & conditions” nobody reads … and 4) they can rob, mug, and rape
your account at will with ZERO TRANSPARENCY OR ACCOUNTABILITY, and
almost never have to answer for stealing money.
When you fire up your trading app, no matter if it’s MT4 or MT5, or some other
proprietary platform, everything you think you see on the screen is nothing but
an illusion … those so called “tight spreads”? … bullshit, meant to deceive cuz
you ain’t gonna get any of ‘em, unless you get lucky now and then and an LP is
stuck on its order book and will give you a decent fill to help themselves … they
sure as Hell aren’t there to help you … and the illusion is strong with people, and
the so called tight spread gets people to trade, but when you eventually analyze
your fills and the slippage you got, you can’t help but notice you “been had”
… “WTF man, what the Hell happened to those “tight spreads”, and why did I
get screwed?”
The inevitable, inescapable conclusion to be drawn is obvious … the LP’s are not
going to allow you to scalp any market successfully over time and allow you to
“pick them off” [that’s their perspective] … only about 10% - 15% of the time will
trading conditions be sufficient to warrant true, profitable scalps, and that
window closes quickly when the LP’s computer network notifies management
that too many specs are winning trades and making money … Bingo!, Bango!,
Boom!, the bid / offer spread widens out of nowhere, sometimes widening
200% - 300%+, and suddenly slippage gets much worse than it was an hour ago
… “Oh OK, you wanna continue to scalp Skippy? … be our guest!” … and in an
instant, profitability at the bank or HFT goes back to “mucho profitability” at
spec expense.
Now, you may be happy with your brokerage house for trading, but I sure as Hell
am not … you may trade a myriad of instruments and pairs and get great fills all
the time … I don’t know this world!, but that’s not to say it isn’t out there
… SIMPLE FX has excellent stock indices spreads that are very consistent in
volatile conditions, but that doesn’t do much good when the bid / offer in the
DOW30 goes 50 - 100+ index points in microseconds, or when the m1 charts
have ranges in excess of 40 - 50+ index points as a matter of regularity … “great,
the spread didn’t change! … not so great, I hit the buy button when the offer was
68 and got filled at 93, only to see less than a second later the offer is now 73
and I got filled at the very tippy top!” … spread didn’t change, but it’s “mission
accomplished” from the banks perspective via slippage … again, they aren’t
gonna allow you to “pick them off”.
Even using the 10s or 15s Netdania charts, it still doesn’t matter … just look at
my very last USDJPY trade where I got ripped & raped for 7 full PIPS of slippage
on a buy fill, that already had a widened spread! … again, the message is clear
from the scumbag bank LP to me … “our scalps are not for debate or
consideration cuz that’s what we do … sure, you can scalp trade, but you might
want to look in the mirror and see if you have a scalp!”
So even if you get the absolute right conditions to scalp, the LP’s are gonna close
that window “el mucho quicko” … that’s the first problem … the second problem is
almost just as sickening … you get a decent scalp, and then the market runs for
3 hours straight [or more] up / down leaving you in the dust … we see this
constantly in “Stock Bellies”, and to some extent in FX … so, you change course
a little and decide to let some positions run a while … now comes the third
problem … the market dies and all of your trades mean very little to nothing in
terms of making money, before the next C-4 explosion rips them higher or lower
in microseconds, with of course you not in it cuz it was dead!
Unless you want to live in a delusional trading world, the undeniable conclusion
is you can’t “scalp” markets like most people think when they hear the word
“scalp” … and you for sure can’t do it at Turnkey … maybe other places you can,
I dunno … back to my original point of talking with the Mrs. & “Miss Gimpy”, and
to their inevitable question of, “OK, so what do we trade and how do we trade it?”
Without connecting the “dots”, here’s the bottom line … the PAMM is going to
primarily trade gold … directly below, first the daily chart of the period under
analysis [July 1 - August 12], to show there isn’t anything special about the last
6 weeks … some down, some up, but the trading action isn’t anything over and
above what’s been seen in the immediate past … if anything, it’s a little slower,
not faster.
Directly below, a table of spot gold range from 6 AM EST - 2 PM EST [8 hours]
… about a $17 range in New York on average. Taking out the big days, and the
median is close to that $17 figure … that equates to 170 PIPS, where $0.10 is
considered 1 PIP … is there any FX pair that gives 170 PIPS on average during
the New York session? … nope, not even close … does gold trade like the DOW30
or the “Spoos”? … nope, not even close, cuz there’s more “trading” up/down
with more CONSISTENT VIX than “Stock Bellies”.
Granted, there are “warts & pimples” associated with gold, but other pairs are
worse. Over the next week or so, I’ll create a PDF for download or online viewing
in “Download Links” for how to trade gold … this is specific to gold, and I haven’t
done any analysis for other pairs, but having said that I don’t see why it wouldn’t
work just as well in other pairs … the entire premise is a combo of “day trading”
with scalping when appropriate … directly below, the very short version of
parameters, rules for getting long, liquidations, followed by a screenshot from
Friday, August 12, 2022 right around the NYSE open [16:30 server time
at Turnkey].
PARAMETERS
1.HULL MA COLOR, 120 PERIOD EMA, LIGHT GREEN SLOPE UP, PINK SLOPE
DOWN … BOTH DASHED LINES.
2. VIDYA CMO 1.1 … 27 PERIOD, 7 SMOOTHING, MEDIAN PRICE … LIME UP &
FLAT, RED DOWN FOR SLOPE.
3. TEMA 15 PERIOD, YELLOW LINE.
4. MONEY FLOW INDEX [MFI], PERIOD 8, LEVELS 80, 50, 20 IN AQUA.
5. NETDANIA 15S OR 30S CHART FOR TIMING ENTRY OR LIQUIDATION. YOU
CAN CHOOSE TO USE ALLIGATOR OR NOT, IT’S UP TO YOU.
LONG ENTRY
1.WHEN HULL MA IS LIGHT GREEN [UP SLOPE] … ONLY LONG WHEN TEMA
IS ABOVE VIDYA, AND THE CROSSOVER CAN BE USED AS A BUY SIGNAL
… LIQUIDATIONS ON SPIKES UP OR CHANGE IN THE TEMA SLOPE FROM UP
TO DOWN … RINSE AND REPEAT.
2. WHEN HULL MA IS PINK [DOWN SLOPE] … EITHER DON’T MAKE ANY LONG
TRADES AT ALL [MOST OCNSERVATIVE] WHILE HULL IS PINK, OR WHEN TEMA
LONG CROSSES OVER VIDYA [AGGRESSIVE] A BUY SIGNAL IS GENERATED
FOR A SCALP … DON’T GET GREEDY! … LIQUIDATE ON A SPIKE UP, WITH A
STOP BELOW THE MOST RECENT LOW.
3.ONLY GET LONG TEMA OVER VIDYA WHEN TEMA HAS BEEN UNDER VIDYA
FOR AT A MINIMUM OF 10 M1’S WHEN THE HULL IS PINK … ANYTHING LESS
THAN THAT IGNORE THE SIGNAL CUZ MOST LIKELY IT’S A “FALSE POSITIVE”.
4. USE THE MFI [“DUMB MONEY INDEX’] AS A GUIDE ONLY FOR TRADES
… IGNORE BUY SIGNALS WHEN THE MFI IS ABOVE 80, AND IF LONG BE
COGNIZANT OF WHERE MONEY IS FLOWING … IF EVERYBODY IS BUYING,
CHANCES ARE WE’RE NEAR A TOP … DO NOT USE THE MFI AS A SIGNAL TO
BUY … IT IS FOR PERSPECTIVE ONLY TO GIVE YOU A SENSE OF WHAT THE
PUBLIC IS DOING.
Directly below, the screenshot.
If the scalp is there on a spike higher that’s worth the effort, then scalp it … most
of the time it won’t be, cuz gold needs time to “play out” the “buy fuel” for the
public to see and get a sense of … that usually takes some time, from anywhere
1 - maybe 6 or 7 minutes before kicking in … it is extremely important to not take
long trades when HULL is “pink” and TEMA is UNDER VIDYA for LESS THAN 10
MINUTES … gold explodes higher best when at bottoms you see 1) failed double
bottoms, especially when it goes through just a little then comes back roaring
higher, and 2) large “bullish engulfing patterns off the failed double bottom
… gold loves to test, and the scumbag bullion dealers are always looking for
stops to secure MAX best positioning for themselves.
I’ll have much more, including examples when the manual is finished … until
then, test it out with very light volumes or on a demo, or on other pairs to see if
applicable … if you happen to be at a house that gives good scalps in pairs like
EURUSD, and slippage is rare, then by all means stay with version 3 of the
trading algorithm … as for me and the PAMM, we don’t live in that world or
universe at Turnkey, cuz it’s a complete illusion of bullshit … I might as well be
arguing my case to the “Queen of Hearts” down inside the rabbit hole! … which,
this slightly newer scenario is fine with me, cuz this is more in line with how I
traded gold from the trading floor back when there were pits … it’s just been
“quant sized” into a trading model algorithm … and with about a $17 range in
8 hours during the New York day, I don’t have to move to frickin’ Thailand to
trade it, nor get up super early.
The Mrs. & “Miss Gimpy” have been trading gold over at SIMPLE FX [the spread
is a hair better than Turnkey (a few pennies), plus no commissions] all this last
week, although they skipped out early on Friday to go eat lunch with the Mrs.
friends at their favorite seafood restaurant … so they missed that late Friday
afternoon rally, but overall they were quite happy with results for the week and
avoided shiploads of “false positives” … realize, no market is “perfect” any more,
but gold’s redeeming value as a trading instrument is the simple fact that it trades
and goes up/down better than about anything traded, far better than anything in
FX or “Stock Bellies” on that specific point, so if you do run into a wrong way
trade, it shouldn’t be a problem given the way it trades and utilizing the rules
I’ve laid down … granted, you do have to be wary of stops around 1HR, 4HR,
daily, and weekly support and resistance areas, cuz they can and will be quite
messy … as well, anytime gold trades around a century mark for the first time,
stops [both buy and sell] will be an issue and get run by the bullion dealers … you
have to avoid “stupid shit” trades around century marks
[e.g. 1800, 1900, 2000, etc.].
Having said all of this, of course there are “gray areas” … just like there are gray
areas in ANY TRADING MODEL OR ALGORITHM … you will still get out of a long
trade and make $2 per Oz. and feel quite happy, until you wait another 3 minutes
and it’s up another $6 … or it stalled in price and you didn’t liquidate, and a
winner turned into a scratch trade or a slight loser, thus pissing you off to no
end … NEWS FLASH: “there’s no getting around that, deal with it! … trading is
simple, I’ve never said it was easy … you simply can’t “cover all the bases” so to
speak … you can’t catch every squiggle and then capture the big moves also … if
this is your goal, you’re barking up the wrong tree and headed for a lifetime of
frustration and heartache cuz it is impossible … we cannot code all of the infinite
probability functions that can happen … we can however, look at scenarios that
in the past are “favorable” for producing profits on long positions and thus ride
higher probabilities of success, much like casinos do when establishing rules for
blackjack, roulette, craps, and baccarat … those rules are to give them an “edge”
… casinos have cold hard math, traders have proven history.
This is what I’ve created & developed for the Mrs. & “Miss Gimpy” [along with
myself and the PAMM], given the STONE COLD realities facing us from banks
and/or HFT’s … like I said, maybe there are places where the version 3 algo can
, but it ain’t happening at Turnkey, and to ignore that reality will only produce
less than stellar results … we still got a volatile market that moves during New
York hours most days [a very big positive], and given the proclivity of
governments the world over to print money via QE INFINITY, gold in my book has
better probabilities of price volatility going forward than about anything going
at this point … the keys are discipline & patience and waiting for the optimal
points when price is poised to move higher … and this gold trading algorithm
does that IMHO … it could work well in DOW30 or USDJPY, I dunno cuz I
developed it specifically for gold, or it could BOMB spectacularly … I’ll leave it
to you to play around in any market of your choosing.
Quite frankly, I thought [erroneously as it turned out] the DOW30 would be an
excellent candidate for scalping … it ain’t! … just an illusion … and in the final
analysis, I’m looking at knees, and not looking at what I think I’m looking at … we
have to deal in realities, not illusions nor the physics of “down the rabbit hole”
… and if it looks like a game of “Whack-A-Mole”, I can understand that, but that’s
not what’s at play here … it’s finding the right market that can optimally give us
what we want .. cuz if it ain’t deliverin’ the goods, why the Hell stick around?
… and what we want is shiploads of cash, not the robbing, mugging, and rape by
LP’s as they fill their pockets through slight of hand, expecting us not to notice
WTF is going on … over the last couple of years, we are fortunate that central
banks have gone “full retard basket of kittens on meth” for QE and the bubbles
they have created, from which there is no escape without a real depression
… that has elevated gold higher, and by default its trading range has expanded
significantly … gold is a different animal than it was from a few years ago, and
the “VIX Genie” in gold ain’t goin’ back in the bottle!” … this is much in our favor
versus the days when we had $7 or $8 ranges for the entire day, and now we
have $17 ranges on average just in New York.
To wrap things up, directly below the 20 Day Range MA’s for selected pairs for
the upcoming week.
… outta here … “The future’s so bright I need 2 pairs of ‘golden” sunglasses 😎😎,
and my own Brinks armored truck” 💓!! … Onward & Upward!!
-vegas
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