SUNDAY UPDATE: YOU DON’T GET SOMETHING FOR NOTHING

 

“Self analysis for a Sunday!”

Before I get into today’s excursion down the rabbit hole, directly below the 20

Day Range MA’s for selected pairs.

click on table to enlarge

I said on Friday, that I would divulge what the Mrs. & my niece are doing with

regards EURUSD, and trading off the Netdania 15s chart … and before I get to

that, I want to state categorically, “you don’t get something for nothing” in trading,

and that every indicator you look at or invent “comes with a price” … question is,

what’s the price in terms of the gains you give up for preventing losses, and does

that potential elimination of some risk make any sense from a trading perspective

… my general take is, in very active volatile markets losses can get out of control

very easily, and it might make perfect sense to give up more in gains than losses,

simply to mitigate losing streaks … in less active markets from an historical

perspective [remember, ANY MARKET can hurt you!], that strategy might not

make any sense cuz it happens so infrequently … crude oil is a good example of

the former, and EURUSD is a good example of the later.

Having said this, YOU ARE ALWAYS GOING TO HAVE A NORMAL PROBABILITY

CURVE AROUND ANY MA OR OTHER INDICATOR, NO MATTER HOW MUCH YOU

ATTEMPT TO ELIMINATE IT! … you can’t eliminate it, not in any market … there

are always going to be those “gray areas” where price diddle farts right at your

indicator, and then goes “back & forth” from buy to sell to buy, etc., driving you

nuts in the process … and in case you’re wondering, this is exactly one of the

main premise points in simply trading from either the long side or the short side

in dollar pairs … IMHO, sticking to one side or the other will ALMOST ALWAYS BE

MORE PROFITABLE THAN SWITCHING FROM LONG TO SHORT AND BACK

AGAIN … it’s not that one side or the other doesn’t get the “gray areas” cuz they

do, but without doing the statistical analysis cuz I don’t have access to the data, I

do think over the long run it works out more profitably.

However, I certainly understand why people want a “directional indicator”, simply

cuz it’s easier to make money when the banks are on your side, rather than when

they aren’t … the trend is your friend BS so to speak … from a scalping

perspective, what’s important to me is “buy fuel” for longs, and “sell fuel” for

shorts … not in the longer term trend, BUT NOW … cuz when the banks sense a

change in order flow, whether it’s from specs or institutions, they react

IMMEDIATELY and spank pairs like USDJPY 3 - 10+ PIPS right up the wall higher,

or over the cliff lower … the problem isn’t that the market won’t give you scalps,

the problem if you’re long, is that if the market is in a short term downtrend, when

it turns from a slight rally and the m1 goes red, it can get very ugly in a heartbeat

… you’re up, and then blink your eyes and price is plunging on some red m1

spike lower … minutes up, seconds to go lower, and if you have to hit the

liquidate button during this, the scumbag bank LP’s are gonna take a good pound

of flesh from you cuz they can, and your fill is gonna be ugly … flip it around and

it’s the same on the upside for shorts … neither side gives you an edge for

scalping per se, it strictly depends on order flow.

On the 15s chart via Netdania, USDJPY over the last 2 weeks has repeatedly

responded well to the HOLT EMA [HEMA] for directional trades … do the math,

and it’s obvious the HEMA tracks trend over a 15.75 minute time frame … short

and sweet … but what if any trader wanted a longer term trend for direction of

trade, not only in USDJPY, but maybe EURUSD as well? … over in the right hand

column in ‘DOWNLOAD LINKS”, I’ve linked to 2 mql4 indicators you might want

to experiment with, that I think are relatively good at spotting trend, and then

trend change in a very timely manner … 1) Heiken Ashi Smoothed, and 2) the

HOLT EMA [HEMA] I use on the 15s at Netdania.

If your trading signals are off the 15s, I’d use an m5 for direction on the MT4

… currently, the MRS. & my niece are using BOTH Heiken Ashi Smoothed AND

the HEMA … WHEN BOTH ARE IN UPTREND, BUY ONLY OFF 15S NETDANIA

CHART, AND WHEN BOTH ARE IN DOWNTREND, SELL ONLY [SHORT] OFF 15S

NETDANIA CHART … directly below, EURUSD DURING FRIDAY’S TRADING

ACTION ON THE M5.

click on ANY chart to enlarge

As you can see, both indicators give a very good trend picture for scalping … this

is cuz the market is moving and the VIX is decent while the 20 Day Range MA is

also good … if you’re only getting long via the algorithm on the 15s when both

are sky blue on the m5, and only getting short via the algorithm on the 15s when

both are pink on the m5, it’s gonna be hard to lose money on a trade! … this m5 is

from the entire trading day, spanning 12 hours.

Netdania is 7 hours behind Turnkey, so let’s pick out some trades on the 15s from

18:05 - 18:14 [Turnkey], which is 11:05 - 11:14 on the 15s at Netdania … first up,

the m5 with commentary.

As you can see, the trend has changed, and it didn’t take either indicator very long

to change with it … very responsive! … now directly below, the 15s on the

Netdania platform … “X” marks 3 scalp trades from the long side, with the last

one going up rather well.

“Mary is the best!” … so says the girl here who came over to my laptop and put

that in for all to see … in other words, her “15 minutes of fame”! … in other news,

water is wet … I would remind readers, that as long as a market moves

somewhere, the above directional indicators will work extremely well … when

EURUSD, or any other pairs goes “chop city”, that’s when SHTF and you can get

some very “squirrelly” action both up/down … and if that happens consistently,

it’s best to move onto something else that has more VIX.

Tomorrow the Holiday, but Asia & Europe open … we’ll see if they can do

anything … until tomorrow.

… outta here … “The future’s so bright I need 2 pairs of sunglasses 😎😎, and

my own Brinks armored truck” 💓!! … Onward & Upward!!

-vegas

SUNDAY UPDATE: VERSION 2.0 OF THE TRADING ALGORITHM

 

“All alone & markets are closed … try doing “something” else Pablo!”

Before I get into Version 2.0 of the trading algorithm, directly below the 20 Day

Range MA’s for selected pairs … 2 things of note … 1) the Russian Ruble

continues to strengthen against the U.S. Dollar, which figures natch, since

“Taliban Joe” smirked his sanctions would turn the Ruble into rubble, and

2) turmoil among central banks with interest rate policy has the “VIX Genie”

smiling as she wrecks havoc on FX pairs … don’t expect this to end

anytime soon.

click on table to enlarge

Over in the right hand column under “DOWNLOAD LINKS”, is the trading

algorithm, version 2.0 … as I make clear in the updated trading manual, there’s

nothing wrong or incorrect with version 1.0, except the fact that it’s too SLOW

for markets today … and as a scalper [or short term trader if you define it that

way], I’m looking for markets that have volatility [VIX] … not necessarily bat shit

crazy [BSC], cuz that invites “scumbaggery & fuckery” from the bank / HFT LP’s,

who at the slightest provocation will blow spreads out & increase slippage for

their own benefit and profit, AT YOUR EXPENSE! … they simply aren’t gonna

allow you to scalp effectively without paying a heavy price, cuz they don’t like

getting picked off with quick moves … fortunately, the vast majority of the time

this scenario is rather isolated to news events, and once they pass things return

to normal.

You can view the Adobe PDF manual via download to your device or view online

… all files I have are guaranteed virus free, and come from my shared file folder

at “box.com” … this is FREE to everyone … no gimmicks like leaving an email

address or other horseshit, just click the link and choose to view online or

download … that’s it, enjoy!

I wouldn’t use the analogy unless I thought it fit perfectly … version 2.0 is to

version 1.0, like quantum physics is to Newtonian physics … quite frankly, you

can’t get there from here, cuz it’s a completely different approach and wholly

concentrates on “order flow” within a short term trend … momentum is your

“friend” until it changes, and then it’s your “friend” on the other side … as a

scalper, I appreciate a longer term perspective as well, so the m1 chart isn’t

completely irrelevant, as it still has the HULL 200 EMA, AND THE CCI & MFI

… however, version 2.0 is much, much faster to the draw, being on a 15s

[15 second] candlestick chart at Netdania [if you like spending money, you can

get the same thing at Trading View for $1200 per year], and has its own

TOTALLY AWESOME DIRECTIONAL INDICATOR [Holt EMA (HEMA)] that keeps

you on the “right side” of the market for MOMO based profits … there is no

directional bias to the version 2.0 trading algorithm, so it can be used

interchangeably with long and short positions equally … what the version

2.0 algorithm confronts and addresses is the super fast paced nature of today’s

markets and how to conquer them … you can’t get there from the m1 cuz it’s

too slow … and it does it quickly, thus with the propensity of markets today to

put in double & triple daily reversals, you’re never gonna be far from either the

top or bottom before the HEMA picks up the trend change and puts you on the

right side of the market before others notice it and adjust … quite frankly, with

the cost of going SUB M1, the number of traders worldwide that choose to

“pony up” for the privilege, are very small in the aggregate, and thus ignored

by the scumbag bank LP’s.

I will continue to “bang the table” and insist that you seek markets with the

LOWEST TRADING COST AVAILABLE, at your brokerage house of choice … for

the uninitiated, the manual spells out the concept of the “Trading Ratio” [TR] and

how to use it to identify a market to trade very easily … in general, the higher the

TR, the better the scalping opportunities, with the “sweet spot” of most markets

hitting the value of 3 - 7, with the caveat that anything higher than 7 or 8 will most

likely bring the inevitability of higher spreads & slippage … this past week is

evidence of this, as USDJPY saw it’s bid/offer spread at Turnkey TRIPLE over

normal … the point, though, is it makes ZERO sense to trade a high spread pair

with slippage [most likely an FX cross] just to get more VIX or a bigger daily

range … e.g., on Friday at the London Fix the DAX40 had a TR = 6.5;

GBPAUD = 3.0 - 3.5 TR; EURUSD = 8 TR; GBPUSD = 5.5 TR … DEPENDING ON

WHERE YOU TRADE, which of these 4 markets offers the best conditions for

making money? … well, IMHO, it’s a “slam dunk” for either EURUSD or GBPUSD,

cuz of 1) both are easier to escape the spread, 2) both have far less potential

slippage than the cross or the DAX40, and 3) both have far greater liquidity than

the cross or DAX40 … if your goal is to make money, and if not then why are you

here?, you have to go where conditions are best! … but since I’m not your

MOM, it’s completely up to you!

As I said before, the m1 still provides important perspective, but on the 15s at

least in GBPUSD a trend change will show up within ± 10 - 13 PIPS, which is very

fast, with IMHO the least amount of “false positives” to get speed to be on the

right side of the scalp trade … and while the HULL 200 EMA is very helpful for

longer day trades, it has little to ZERO value for scalp trades, especially in

markets like Cable that move … sure, I want the “bank wind” at my back, and

want them to goose the shit out of the market in my profit direction and squeeze

everyone on the wrong side, and that’s the whole point … get them to work for

you!, not against you!

So, what else can the m1 candlestick give us, in terms of perspective? … while

obviously it doesn’t happen at every top or bottom turn, it happens often

enough to make it significant and worth paying attention to … and that “it”

are “Doji” candlestick patterns … see below.

The two most popular you’ll see on the m1, regardless of market, is the “doji”

and “long legged doji” [often called a “spinning top”] … they come at tops &

bottoms all the time … the key here is CONFIRMATION out the top or bottom on

subsequent m1’s no longer than 1 - 3 or 4 minutes later, and for bottoms they

don’t see the low violated, and for tops the high breached … what usually occurs

on the 15s chart at Netdania, is a collective group of at least 2 - 4 of them

together before the market blows … often times though, doji’s are simply a

CONTINUATION pattern of the move if there is no confirmation out the top or

bottom, and the trend simply continues up or down … but after longer moves,

they show up often enough to keep your eyes on the m1 for them … at Netdania,

you can highlight doji patterns on the 15s candlestick chart … forget the fact

that it’s near the end of the day, my example is for purposes of pointing out the

doji patterns … note the “cluster on the 15s chart.

A few things to note from this 15s chart … 1) on the breakout of the group of

Doji’s”, the HEMA reacts quickly, within a few PIPS!, and even though still RED,

it’s SLOPE HIGHER is a warning flag to NOT take further short positions until the

slope is negative again … and 2) on the way up, we see doji patterns act as

CONTINUATION patterns, as they have no downside price action on the chart

… if you happened to be short Cable into this collective group of doji patterns,

cuz HEMA RED is sloping lower, you’d have to be cognizant of the 1) breakout,

and 2) the slope change of the RED HEMA … this should prompt a very quick

liquidation of your short position … there isn’t enough here to get long, so there

is no “buy signal” from this chart, but note also the HEMA changes color to LIME

GREEN within about 10 PIPS from the bottom or breakout … I very much like the

candlestick recognition patterns that Netdania supports … too bad the vast

majority of brokerage houses don’t have it in their MT4 and/or MT5 standard

packages … why not, too expensive? … give me a break … try the banks don’t

want it offered, and you’ll be closer to the truth then you’ll ever know!

From today’s blog update, plus the updated Version 2 algorithm manual, I hope

you can see and understand the vast superiority of trading using 15s charts, and

why I updated to it when I realized it was available to us … FREE IS EVEN

BETTER! … we are much closer to turns than ever before, and in active to very

active [NOT BSC] markets that we see today, the vast number of signals is

amazing … sometime during the upcoming week, I’ll give a more thorough

review of why I prefer to trade FX dollar pairs from one side or the other

[long / short] almost exclusively. 

This doesn’t apply to FX crosses cuz the dollar is taken out of the equation

… and while I would prefer to trade crosses [especially YEN], right now sees

every YEN cross with heightened bid/offer spreads & higher than normal slippage,

even on Turnkey’s fastest platform … as I stated earlier, the TR for GBPUSD at the

London Fix on Friday was 5.5 … for EURJPY the TR = approximately 6; for

GBPJPY the TR = approximately 4.5 … for both of these crosses, the TR values

assume NO SLIPPAGE [well, good luck with that!] … so where right now is the

“advantage “ in trading either of these 2 crosses? … right, there is NONE … and

there are more than a couple of big disadvantages, including slippage and too

fast movements that can take your position out of your comfort zone, getting

you to puke, only to see it rebound / drop quickly and make you feel foolish

… right now, you’ll get better conditions in either EURUSD or GBPUSD than

either of the YEN crosses, without the disadvantages, and it’s the reason I’m not

trading them … simple!

Tomorrow is a “Holiday” in the U.S. … “Juneteenth” …  another pandering

Holiday for federal workers, who don’t do shit anyway, so why not another PAID

day off? … what difference does it make? … and while commendable to

remember the 1865 freeing of slaves in Texas, thus in effect ending slavery, 1865

ain’t exactly yesterday … why wasn’t it recognized for its importance in the 20th

century? … if it was so important, why didn’t Obama do it? … is Obama as

“racy-ist” as 20th century POLS? … I’m not holding my breath for anybody in

the MSM to ask some questions? … when do we get the “Holiday” to remember

the Japanese American citizens who were FREED from internment camps [that

would be “prison” for you Biden voters] by order of that Democrat Icon FDR

during WWII? … “crickets” … see my shocked face.   

Despite “Juneteenth”, the world turns & trades … onto the week … outta here

… “The future’s so bright I need 2 pairs of sunglasses 😎😎, and my own

Brinks armored truck” 💓!! … Onward & Upward!!

-vegas