CROSS ASSET RISK STARTS WITH USDJPY

“It’s just one big game of watching dominoes fall down.”


What a relief it must be in Japan; with the BOJ meeting out of the way, and Kuroda and crew safe in a bunker somewhere wondering when the next brick will fall and take the Yen higher, morning sets in on the New York session with little fallout from their inaction last night. “Whew, that was close … stuff could have actually happened had we acted … let’s not make that mistake again”.

And so here we are in day 2 of “correction mode” for the stock indices, and all of a sudden the Trump reflation scenario everybody swore up & down would be happening is … well … not “reflating” or acting like economic activity is just around the corner; and why should it? It took Obama 8 years to practically destroy the economy, and Trump’s supposed to “fix it” within 2 weeks? More noise from the “talking heads”; if they were half as smart as they thought they were, they would know it’s called “volatility”.

Some really good USDJPY algorithm trades today; 2 in particular after gold went ballistic to the upside. Directly below the 2 trades.

With the way the Yen is acting, it’s almost impossible to hang on to this stuff for an extended period before either gold turns around and does something stupid, or a Pol does something stupid and opens his/her pie hole; it’s a toss up, but hang around in this market too long and your “protective” stop is like iron fillings to a magnet.

In other news, in the next few days I will be releasing some information on the –vegas PAMM [our managed accounts program]; right now, just sit tight [meaning, no need to open an account and/or send money if you haven’t done so] and let me get this puppy put together. I’ll have everything you need within about a week.

Chamber of Commerce day in Paradise, and that means I’m sooooo outta here … beach beckons ... until tomorrow.

Have a great day everybody!

-vegas

 
 

WELCOME TO THE MONDAY MARKET MESS

“Is this the line for decent fills?”


I come into the morning not expecting a whole lot market wise RE gold & USDJPY; after all, we got “Peter Pan” Kuroda & crew out tonight at 10 P.M New York time with their latest installment of “we can fly, we really can!”, and of course anything stupid is possible with this bunch, so to get a 140+ PIP move down today is a little surprising. I’m not complaining, just sayin’.

Politics over the weekend have a lot to do with market moods, and you would think Trump’s 90 day ban on Muslims from Obama’s 7 most dangerous countries list, so as to get vetting procedures in place, was the end of the Libtard world as we know it; anything more ridiculous than seeing Chuck U. Schumer crying? Seriously, with these assclowns, everybody is Hitler, all non Libtards are racists, and Islam is the religion of Peace [Yea, right.]

Anyway, some great scalper algorithm trades today in both USDJPY & GBPUSD. Directly below, 2 trades from this morning in GBPUSD.

I could just as easily chosen USDJPY for my examples, and there were many more than the 2 above in Cable. Point is, if you show patience and discipline the trades will come and you can capture the short term trend move.

Today’s post is kind of short by recent standards, but the rest of the week I got plenty to talk and write about. For now, I got some teleconferencing to do on the PAMM … until tomorrow.

Have a great day everybody!

-vegas

OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”; REFERENCE ID# 6952 WHEN OPENING YOUR ACCOUNT] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”

 
 

WITHOUT THE ALGO YOUR BUTT WILL HURT

“Hmmm, from the chart it didn’t seem like a lot of money.”


Today is such a “teachable moment” day in situational awareness I don’t even know where to start … 1) BOJ does extra QE last night, letting the world know it doesn’t want the Yen to go higher [USDJPY lower], 2) gold has been brutally monkey hammered 3 days in a row, and now on day 4 [a Friday no less, meaning plenty of traders will be evening up positions ahead of the weekend], with a relatively tight range of about $8 and we are hovering near the lows, and 3) at 09:30 New York time we get a shipload of worthless ‘before Trump” economic reports which will shake things up. What could possibly go wrong?

Coming into this clusterfark, I check the news and see what “Peter Pan” Kuroda [“I can fly, I really can!”] did, and I’m looking at the hourly on gold directly below.

[Note; click too enlarge all charts]


I got a red trend line on this HR1, along with the Ichimoku cloud [support & resistance levels]; market is about $2 - $3 lower than the trend line prior to 9:30, but from looking at this, I know that if that trend line is broken on the upside, added to the fact that its “position squaring” Friday, we could get a nice burst up in price with buy stops.

Since USDJPY has been inverse correlating pretty well lately with gold, on a move up in gold spells a move down in USDJPY, and with the price destruction in gold lately it’s going to take a Herculean effort to get it above 1190 and keep it there; meaning, buying USDJPY near the bottom for a trade.

Here’s how I played it; 1) let the numbers come out at 9:30, 2) if we get no reaction from the numbers, I’ll look for algo signals to sell USDJPY on gold rallying at some point on short covering, 3) if USDJPY market goes bananas on the upside, it will mean gold busts 1180 decisively, and takes price into exhaustion line territory where I will buy, 4) if gold pops higher, meaning USDJPY goes lower, I’ll buy USDJPY if gold hits the upper exhaustion line at RM=1. In any event, option #4 is what happened. Directly below, first the gold chart and then the USDJPY chart.

As you can see from both charts, we got a double confirmation of a short term top in gold with an RM=1 upper exhaustion hit, and a short term bottom in USDJPY with an RM=1 lower exhaustion hit. When I bought USDJPY, I got the worst fill imaginable; a full 3 PIPS off the offer on my screen, which despite what any/all brokerage houses tell you when they swear to you nobody is trading off of you [which I know is bullshit cuz they all do it despite ECN, STP, and every other alphabet soup networking BS … they might not know “who you are”, but they see the order and want protection … a rotten fill is exactly what you want to see because it means a rally is imminent!]; don’t be naïve enough to believe they are handing out great fills in a fast moving market.

Don’t get me wrong, I’m not blaming LMFX here, I’m just stating FX trading “facts” as I know them from being in this biz for so many years; every brokerage house on earth “talks” a good game. They ALL got the best LP’s [oxymoronic statement if I ever heard one], deepest liquidity [except when it ain’t], and lowest spreads [except if you look]. Fact is, every LP allowing you to have an account is looking to rip you off; every trade, every day.

Now, I have a good long USDJPY trade going here from an exhaustion line hit, so what do I do now? Easy Peezee; I’m looking for a spike up to liquidate [sell]. Well, within seconds on a spike up I liquidated and actually got a much better fill than I had anticipated; do you think that would have happened if I had waited until price had stalled or started to roll over and go down? [Hint: “Hell No!”] And do you think I CARE it rallied further a few minutes later where I could have made even more money? [Hint: “Hell No! (part deux)]

In essence, the day’s trading was a “backdoor” algorithm signal; I didn’t want to sell gold at the upper exhaustion line, but felt given the circumstances of the day’s news events [especially “Peter Pan”], buying USDJPY on a break was the play especially if the correlation with gold held up [and it did]. It’s called “situational awareness” and I had the scenarios pegged in my trader brain [“please be careful when entering”] for how I wanted to play this Friday before it occurred.


I also want to add something to what I wrote yesterday; namely the “1%” theme. Three things of importance here; 1) your weekly total of 50 PIPS [10 PIPS a day] is more important than each single day. In other words, don’t sweat the small stuff if you finish a day with 8 or 9 PIPS or even lower, cuz there’s gonna be days where you will be above 10, 2) don’t dwell on the PIPS, concentrate on the trade; some trades are quick scalps because they don’t look or feel right, others you can “free trade” it for more given the right circumstances in the market, and 3) nothing in life is absolutely perfect; if you fall short a week or two it simply means you get to add a week or two to get what you want at the end. It’s no big deal; don’t put so much pressure on yourself that you end up doing “stupid shit” [and you know what that is without me even having to tell you].

Every single trading day there is opportunity within these above average volatile markets; right now USDJPY is pure “gold”. Right behind Yen is GBPUSD, which has been trading with good ranges and HVALUES. EURUSD has been very good for those of you that want “pure scalping”. Gold, for its part, is “iffy” due to 2 criteria; 1) the spread is high versus Cable or Yen, and 2) ranges and HVALUES have not been consistently high enough. The stock indices are a disaster, and I recommend for the moment you stay away from them. Crude oil is always a viable “last resort” if things die down; from where I’m sitting, I don’t think either Cable or USDJPY are going to “die down”, so crude [at the moment] isn’t an option for me.

One other subject I want to brooch before I head out for the weekend; the “life” of a trader. I’m not any different than any of you reading this; nobody shoved a “silver spoon” into my mouth nor ponied up “free money” for me when I started. I wasn’t born knowing any of this; I struggled, got knocked down, got back up and took more shots than a bowling pin. However, I scratched, clawed, and took “no” for an answer when those in the Pudding Business told me I was crazy. In other words, I learned the biz. And the one thing, and I know I speak for all those who have traded professionally, that is always in my mind is I never want to have to be in the Pudding Business.

Having said that, I know because it is how I “did it” when I started in my trading career; all you have to do is follow the volatility algorithm [scalper, regular, or combine them like I do] and make some PIPS for your dreams to come true. Too often, I here people who want to take $1,000 today and have $25,000 within 2 weeks, not knowing that you might as well go to Las Vegas and play Keno cuz your chances are better there. Trading is a “process”; and when you finally “get it right” [which I show you how to do], you can name your income.

What you need to understand is that it isn’t “guesswork” or “analysis” that gets you your goal; what gets you to your goals is “intraday volatility”. If you have it, there’s almost no way at the end of the trading day [6 – 12 hours] you can be down money if you trade the market via the rules & procedures in the scalper’s algorithm; you’ll get a shipload of signals. Give me any very low cost, tight spread, liquid market and if that market has consistently high HVALUES, it’s like walking up to an ATM and walking away with money. 

Remember Butch [above, best photo we got of him, but really he’s a marshmallow], head security honcho for the –vegas team? Hell, he’s in 7^th grade now … startin’ to think about the ladies … you think a paper route is gonna pay those bills? … Butch loved crude oil, but I got him trading USDJPY now, and some of his 6 girlfriends even got him eatin’ sushi… “Even Winthorp here [err, sorry Butch, don’t hit me] KNOWS VOLATILITY IS THE ANSWER! … between Netflix, pizza, Mickey D’s, texting, surfing, & more pizza, ya think butch pours over charts and brokerage house research reports? … Bwahahahaha … AND IF BUTCH CAN DO IT, WHY CAN’T YOU?

Uh oh … I’m picking up very intense telepathic signals now … “go to the impenetrable bacon box in the kitchen and get me some sliced roast beef … and … LET’S GO TO THE BEACH!” I’m sooooooo outta here … beach beckons … until Monday.

Have a great weekend everybody!

-vegas

OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”; REFERENCE ID# 6952 WHEN OPENING YOUR ACCOUNT] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”

 
 



 

FRIDAY THE 13TH MARKET DYSFUNCTION

“In order; Buzzardfeed, MSNBC, & CNN. Boo Frickin’ Hoo!”


The political realm has spilled over into the market realm; paralysis has set in ahead of the U.S. 3 day MLK Holiday. Amazingly, the entirety of the trading world is stunned … yes stunned … that stocks can’t go up 10% per month throughout Trump’s presidency, although since Chalky is leaving to once again pursue “community organizing”, or maybe a gig at the useless U.N., you would think most markets would cheer.

I wake up this morning to see, after 13 hours of mind numbing nothingness, the SP500 had a 3 index point range and the DOW30 has a 25 point range, gold is … well … gold and doing zero, and USDJPY is sitting trying to figure out which side of the ledger to screw with RE stops; some choice, huh?

So, here we are in USDJPY & gold, attempting to handle the utter obliteration in gold of about $250 per Oz. since Brexit, and a “rip your face off” rally in USDJPY from about 100 to the 118 area [in half the time] that I have a hard time remembering in recent history it has gone so fast, and everywhere I look analysts [God help us] are now acting like it’s the end of the trading world as we know it. For sure, markets needed to “correct”, so this is hardly unusual.

This time, though, may be different as President Trump takes office in one week, kicks a black guy out of a white house [“why yes, pun intended”!] and starts to pursue a new course for this country. And with that, we are apt to see an increase in volatility which should … should … make for better gold trading & USDJPY trading conditions. Although, never underestimate Kuroda & crew in the land of “The Rising Sun” to mess things up with their own “Peter Pan” version of reality.
 
Today we got crickets the whole first 13 hours or so, and then all hell breaks loose on the retail sales & PPI numbers in USDJPY … market is “crowded” on the short side of Yen, and thus the meteoric rise when selling dries up. “Nothing like big, fat, juicy losses right before a weekend to make things right .. heh”? And so, in 4 minutes USDJPY makes a new low, screams to the old high, sells off, and here we sit where we were about 5 hours ago around the 114.50 – 60 area.

From the mailbag, I’ve gotten a ton of emails RE the scalper’s algorithm; one thing I would like to add. If you are so wanting, you can make the plum & yellow lines in the regular USDJPY volatility algo ”black” [thus invisible; go to colors and change] and take the indicators from the scalper’s algorithm [2] and place them over the volatility algorithm; what you will get is the scalper’s algorithm with exhaustion lines.

Next week, I’ll be posting a ton of charts from each day with trades from the scalper’s algorithm with the exhaustion lines. As for today, as if you needed any convincing the scalper’s algorithm is pure gold, after the retail sales report and PPI were out of the way, directly below the white arrow buy signals from the scalper’s algorithm manual.

Please understand both algorithms for USDJPY can easily stand the test of performance on their own; they are very similar but also have very subtle differences. Bottom line is that they both will be close [in terms of time] for buy/sell initiation, the scalper’s algorithm more attuned to both sides of the market in the very short term.

When you combine the “free trade” element to a trade in the scalper’s algorithm, now you’ve subtly shifted your approach; now, it’s nice to have the exhaustion lines up on the same chart without the need to change to another.

For example, suppose you get a signal to buy and you get long at 114.100 … by the time you get the close window order box up, the market is 114.170 bid … you figure, “well, if it goes under 114.130 I’ll liquidate no questions asked, but let’s see what happens with my gain”. So, it stays there and goes higher up to 114.230 … “well, if it goes under 114.190 I’ll liquidate, but again let’s see what happens”. Then it goes up and hits the exhaustion line at 114.350 and you liquidate; what started as a “scalp” ends up a “free trade” that makes you 25 PIPS.

Waiting for at the least 3 M1 counter trend M1’s before you enter is the reason you have an upper probability advantage in the very short term; this is where most traders get “antsy” and lose discipline, and in their haste to “rake up" all the money, they lose sight of the fact that you always have to have probability [from a market history perspective] on your side to be successful over the longer term. Easy to explain, not so easy for many to do in the heat of battle.

It’s that time of day … beach beckons … the dog is “antsy” to say the least … and most importantly, it’s Friday and I could care less if the world melts between now and Sunday night. I’m sooooo outta here … until Monday.

Have a great day everybody!

-vegas

OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”; REFERENCE ID# 6952 WHEN OPENING YOUR ACCOUNT] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”

 
 

LOOKING AHEAD TO 2017

“It’s shaping up to be one hell of a seesaw battle!”


We’ve maybe got a couple of days next week that perhaps could show some kind of intraday volatility for trading purposes, but sitting here today looks & feels very much like a pre Holiday nothing burger. The USDJPY volatility algorithm’s threshold HVALUE has yet to be seen, and gold is so dead I’ve seen better EKG’s from cadavers at the county morgue; so, not much to report on today, which means it’s a perfect learning day.


What can we learn from 2016 markets, and how do we project that into 2017? The first lesson to be learned from 2016 is that there are no such things as “fundamentals” in any market; you can break down the MT4 markets into stock indices, FX, precious metals, energy, and USDJPY.
 

Stock indices, at the moment, are a complete trading joke; intraday volatilities have collapsed to the point where you could be stuck inside the spread on a CFD for hours, and not see the other side. World wide manipulation by central banks to eradicate volatility and create the illusion of stability through stock prices is doomed to failure; you’d think they would know this, but anybody who dreamed up negative interest rates to cure deflation is stuck in an alternative universe anyway, and in their collectivist delusional mindset this makes perfect sense. It remains to be seen how long this charade can continue, but I do know one thing, “never underestimate the power of government to either change the rules of the game or continue the Ponzi scheme unabated, right up until the time you have no more money left.” At some point in 2017, world stock indices have a “reckoning” with reality, most likely caused by some perceived disappointment with the Trumpster , and volatility returns with a vengeance.

However, one of my major disappointments with brokerage houses and LP [liquidity provider] banks is that their CFD’s [in pretty much all of the stock indices] are grossly mispriced in favor of “the house” and grossly overpriced for retail specs [you & me]; and when you add in round turn commissions [RT], if applicable, and it’s even worse.

For example, take the best spread available, which is in the DOW30 at ASSETS FX of 1.8 index points, add the RT of another 1 point, and your “net” trading cost is 2.8 index points. Assume you have $1,000 in your trading account and use leverage of about 10X; that translates into 0.5 lots [1 lot = $1 per index point; DOW30 at approximately 20,000, so ½ lot = approximately 10,000 notional value]. Let’s also assume you trade, based on algorithm signals, about 4 times each day; your cost for the day’s trading = $0.50 * 2.8 * 4 = $5.60; for the year, assuming approximately 240 trading days [20*12] = a cost to your account of $1,344. 
 
Now compare this to USDJPY; at current rates you would be trading 0.12 lots 4 times per day, with total “net” costs of 0.7 PIPS. The math looks like this: $1 * 0.7 * 4 = $2.80. For the year, $2.80 * 240 = $672.

So, comparing the two, by trading the lowest “net” cost stock index, you’re paying the LP & the brokerage house almost 70% the value of your account EVERY YEAR for the privilege, OVER AND ABOVE WHAT YOUR COSTS ARE IN USDJPY WHICH HAS MUCH DEEPER AND BETTER LIQUDITY AND MUCH MORE CONSISTENT VOLATILE RANGES.

Now, this obviously begs the question of “then why trade it if I’m giving substantial sums of money away for free and getting very little if anything in return?” Cuz here’s the secret folks; with 10X leverage, as your account grows so do your volumes and that approximate 70% you’re giving away, over & above USDJPY, to the lovely scumbag LP every year as a percentage of your account stays exactly the same! EXIT QUESTION: “Is the DOW30 consistently 70% more volatile than USDJPY? SHORT ANSWER: “Bwaaaahahahahaha!”

Let’s turn to FX; outside of USDJPY, a complete disaster with flash crashes du jour, substantially lower volumes [about 30% in 2016] as retail specs & hedge funds abandon the markets in record numbers, and last but not least stop hunts & slippage on the rise. Unless the Euro collapses, and broken into its component country parts, what’s going to propel volumes here in 2017? “Me neither.”

Gold … crickets … Any idea how many people got totally crushed trying to pick a bottom in gold, and/or stayed long from “Brexit”? Well, I’m here to tell you it is significant, and those traders won’t be back in 2017; they bought into the “gold is the best performing asset class of 2016” financial press BS, and if continues like this I’ll be rich! Outside of intermittent rallies from short covering, unless there is a complete global economic meltdown, it’s hard for me to get excited about gold; it very much looks like a dead market on life support. Until $15+ ranges start appearing again with regularity, you can expect intraday volatility to be lower than average, and slippage to be greater than normal from LP games; all in all, there are better sandbox’s to “play”.

And if you’ve been paying attention to the gold versus USDJPY correlation matrix, literally the second USDJPY stops going down is when gold gets crushed by the dealer & bullion bank community in their never ending zest to sell, sell, and sell some more. The way it goes down isn’t smooth and it isn’t pretty, and liquidating into this leads to some “eye watering” fills that are guaranteed to be off the market.

The problem I see with crude oil right now is simple: seems like every day is an “NFP Friday”; what with rig counts, IEA inventory reports, the DOE inventory reports from Cushing, OK. every Wednesday morning, and last but certainly not least the constant “blah blah” from OPEC & Russia about either production or production cuts, any position you take is akin to being in a dynamite factory when somebody walks in the door with a lighted cigar. “What could possibly go wrong here?”

Another problem is the fact that one day you’ll see a $3 range and the next it’ll be $0.75; the wide discrepancy in ranges makes it difficult to stay with a position with any degree of probabilistic certainty. The spread, and contract specs at LMFX are the best you are likely to get anywhere in crude oil; “net” trading costs are $0.03 per 1 lot [1 lot = 100 bbls.], so it’s not the cost of trading that prevents, in my opinion, from making WTI crude oil a “primary” trading market, it’s the total uncertain “news flow” that creates “bat excrement” volatility over a few minutes time frame. Now, “that’s great if you’re on the side of the bat; not so much if you’re the statute in the park.” Cuz, remember, if you’re on the wrong side, you have a stop somewhere in there, and that stop is going to be nailed up on a cross; God help you with the fill. So, it very much becomes a very delicate exercise in risk management.
 
Which brings me full circle to USDJPY; unless Kuroda & the BOJ suddenly wake up and smell the coffee, which is highly unlikely, I can’t see anything on the horizon which would make me see this “asset class” of “risk on … risk off” going to sleep and intraday volatility taking a significant hit. And even if it did somehow, that would mean everything else, with the possible exception of crude oil, would be in the doldrums as well; stock indices & gold would be dead.
 
From a macro perspective, I think the surprises will come from 3 areas; 1) people will be surprised at how fast Trump implements his priorities and programs, and thus the impact on interest rates have the potential to be significant [up and down], 2) a more rapid deterioration and disintegration of the Eurozone; I can’t see Merkel hanging onto power in Germany, and Wilders is poised to take power in the Netherlands; add to that the disaster that is Italy & Spain, and it will be a miracle if the E.U. can make it to 2018, and 3) never, ever underestimate Kuroda & the BOJ to do utterly “stupid shit” at anytime and turn “risk on … risk off” into a roller coaster.  

Given this, 2017 looks to be full of trading opportunity galore. Until tomorrow …

Have a great day everybody!

-vegas

OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW! USE LMFX BROKER ID# 6952 AS YOUR REFERENCE. THANKS!

 
 

MORE ON THE USDJPY TUTORIAL & TRADING

“The King of Asset Classes.”




As we wind down to the Christmas Holiday this Sunday [and New Years the following Sunday], this week is a very good time to focus on trading concepts rather than specific trades; with “Peter Pan” Kuroda out of the way, with last night’s uninspiring BOJ meeting where absolutely nothing happened outside of consensus, trading from here on out to the New Year will most likely be a “chopfest”.


There are 2 things I want to focus attention on today; 1) patience & discipline with the volatility algorithm, and 2) an item from yesterday’s blog post about getting you to “your finish line”.

It’s easy to sit here and pound the table on the virtues of discipline & patience; forget trading for a moment, every adult in the room knows the importance somewhere in their life of maintaining discipline. And just as importantly, making rash decisions or acting impulsively isn’t in your best interests either. I’ve literally seen people agonize over which dishwasher to put in their house; they’ll spend 6 months pouring over ‘Consumer Reports”, driving a total of 200 miles + over several weekends to the various Lowes and Home Depot’s in the burbs, as well as various local appliance stores, looking for the best deal they can possibly squeeze out of somebody, in the hope they can save $50. These same people will open a trading account, and before you can say “WTF!”, they’re out $1,000 and their attitude is one of “meh, it happens.” 

I have known, in my trading career, way too many people that are completely undisciplined and lack patience, in their utter thirst for profit; they can’t sit and wait for the algorithm to give them the signal. And so, I hear things like, “ohh man, it was so close to a buy [sell] signal, I just went ahead and did it anyway”, OR my favorite, “this stuff is going up [down], so why not just buy it [sell it] now?”
 
I initially got involved in trading for the money; and as a result of the money you get the freedom from corporate & government tyranny and can live life on your own terms. I don’t need anybody or any thing to motivate me when it comes to trading, hoping I stay disciplined, focused, and show patience in my trades, because I know that everything I value in life from a physical standpoint comes from trading, and that to continue the lifestyle the Mrs. has become accustomed to [“Work? … honey, that’s a 4 letter bad word … please don’t ever mention that world again, OK? … OMG! You’re scaring me … here, gimme some cash so I can go shopping and calm down.”], I can’t do “stupid shit”.

When I turn my computer screen on for trading each day, I don’t have to figure out anything … zero … zip … nada … zilch. First and foremost, I have the algorithm; I know exactly what to do and when to do it and there is zero guesswork involved. All the “thinking”, all the “what if” scenarios, all of the higher analysis math along with probability theory, all of the market history … it’s all sitting in front of me in a visual display that I simply have to react to and “press the order button”.


Secondly, away from the market action, I have predetermined the amount of money in my account and leverage that I will be using along with my profit goal; I know exactly the volumes I trade, and I pay absolutely no attention to the money … I pay attention to the trade … when the trade tells me via the algorithm it’s time to exit the trade, then I exit it … only after I’m finished for the day and I know there will be no more trades, will I look and see how much I’m up … now it’s time to “book the money” and add it to yesterday’s capital for tomorrow’s starting capital.

Last, but certainly not least, when you withdraw money from your account, make sure you always do 2 things; 1) always see to it your account balance is growing, and 2) take at least 10% of your withdrawal and place it in an emergency “rainy day” fund for potential slow periods during the year where you just might need cash and don’t want to make a withdrawal request on your account. Try and build it up to a level that meets at least 1-2 months of expenses for you; once you do that, simply replace when needed.

PATIENCE … show some … I fully realize everybody reading this would love to have a 6 or 7 digit account balance and be able to trade USDJPY in the millions and be able to book $5 - $20K a day; at that level who’s worried about the price of cheese? And the Mrs.? “Fugetaboutit!, give her some plastic and fund it, and she’s in hog heaven; you might even get her to bake you some cookies [wait … what? … Yea, it’s nice to dream now and then isn’t it?]”

And even though I wrote it yesterday, let me repeat it again today so it becomes “tattooed” on the inside of your eyelids going forward; from yesterday’s blog post:

***

In the past I have done the math before, so let me repeat the result again: “No matter the size of your account ($200 minimum) at the start, if you make on average 3 PIPS per day AND USE CONSTANT LEVERAGE OF 10X, by the end of year 6 EVERYBODY IS A MILLIONAIRE (assuming no withdrawals)! Obviously, the more you start your account (i.e. over $200), the quicker you beat that 6 year time frame to death. So, unless you are 110 already and maybe you figure you don’t have 6 years, for everybody else, even this extremely modest PIP goal gets you to the finish line. So, I don’t wanna here about how 5, 10, or 15 PIPS doesn’t matter; it most certainly does matter, and the sooner you realize it the better. EVERY DAY YOU FINISH WITH PROFITS, YOU ARE DAYS CLOSER TO YOUR GOAL OF“ESCAPING TO SUCCESS”!

***

Ok, so imagine where you’ll be in a very short time period with a steady diet of 20+ PIPS per day when your profit goal is 20 – 40 PIPS? And what will life look like for you when you’re trading Inter-Bank “paper clip chump change” volumes of about $2 million stuff at a whack? That approximate $4K per day IS your million bucks per year. SHOW SOME PATIENCE, FOLLOW THE ALGORITHM, WORK TOWARDS YOUR GOAL, AND IT WILL CHANGE YOU & YOUR FAMILY’S LIVES!

I practically get “tingles” down my leg [“Umm, which one?”] thinking about all of you 21 to 110 “somethings” out there who 1) are over educated [most likely over indoctrinated] and/or under employed, 2) think life sucks, and 3) got a lifestyle that demands champagne but your pocketbook screams beer. Time to do something about it don’tcha think?


As I stated yesterday, in the history of trading, conditions have never, ever been better than they are now for retail specs [you & me], with zero disadvantages. One of my goals heading into 2017 is to provide you every single thing you need to be successful in trading; 1) I got the [almost] perfect place to trade for you with the very best conditions, 2) you have the volatility algorithms you can view online or download from “the cloud” for FREE along with the mq4 file [computer code] that goes into the MT4 trading platform, along with hundreds of charts and spreadsheets proving my premise, 3) complete instructions for Newbies that is “Grandma & Jr. High Kid” tested and approved so you got no problems setting things up, 4) manuals & tutorials for your study, 5) “continuing education” from the blog posts daily during the biz week, and 6) email support from me when you need it. “Do I literally have to come to your house and take you by the hand over to your computer?”

And if all this above is just too much for you cuz maybe you got small business’s you run and/or are involved in other professional ventures that eat up your time, the –vegas PAMM should be ready by the end of Q1 2017 if LMFX keeps to their timetable, with the only cost to you a 17% incentive fee on profits. In other words, I got all the bases covered for you. NONE OF YOU READING THIS SHOULD BE FARTHER THAN 6 YEARS [FROM RIGHT NOW!] FROM A VERY HIGH 6 DIGIT TO 7 DIGIT ACCOUNT BALANCE! Now, if you’re gonna sit there and tell me you don’t have $200 to start this, then my response is you’re trying to find ways not to do this … not to take this seriously … I dunno, maybe you can’t handle the thought of more money in your life … who knows, I’m not a psychiatrist … maybe you think this is all BS, that it can’t be true … Ok, do as I advise and demo it first with play money and see for yourself … “You do realize none of this costs you anything, right?”.

So, if in 6 years you’re still  sitting there surfing the net, trying to figure out how to make ends meet, and wondering how you’re ever going to get, not only the lifestyle, but also the freedom and financial security you want for yourself and your family, THEN IT IS SIMPLY & PURELY YOUR OWN FAULT. PERIOD.

Turning to USDJPY today … Kuroda has run out of ideas … nothing new from the BOJ interest rate decision last night as everything in “Peter Pan” land just got put on hold until next year… got a little short covering to take the market up towards 118, but from almost 4 hours ago USDJPY has a 15 PIP range … nothing to get excited about as it appears markets are in “holiday” mode; therefore, no trades today as I can’t see anything moving that makes it worth while to trade. Until tomorrow …

Have a great day everybody!

-vegas

OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”

 
 
 

USDJPY TUTORIAL & LMFX

“WHOA!! Santa visits little Timmy & he smells $$$$.”


Ok, the USDJPY tutorial is up and available for viewing and/or download over in the “Download Links” section of the website under “USDJPY VOLATILITY ALGORITHM TUTORIAL”. Please realize, that when I write these documents I am attempting to be as brief and concise as humanely possible, while at the same time imparting to you as much valuable trading knowledge as I can; obviously, I can’t begin to answer all of the “what ifs” all of you might have in the course of reading it. One of the main goals of the blog is to be a “continuing education” series of helpful trading information you simply can’t get from 1) any bookstore, 2) any seminar, or 3) anywhere on the internet whether you pay them or not [and hopefully you don’t].


The USDJPY tutorial is 13 pages in length; I could have easily made it 200. I know from experience, that I simply can’t write documents that you have to spend hours pouring over to understand. Basically, my goal is to have you read it in 15-20 minutes; think about what I’m saying; and then maybe go over parts again in your mind to “nail down” certain criteria. From there you transfer your “thought  process” and either demo the implementation, or watch from your real account with the manual & tutorial in mind and watch closely how it all works to make you money. Most importantly, compare and contrast how you used to trade and how the algorithm requires you to trade, and notice the subtle differences in how you approach the market each day. That’s why I have always said: “READ. THINK. STUDY. ACT. PROSPER.”

As I approach 2017, my goal for each of you out there reading this is to make you aware of just how close many of you are to jettisoning the dreaded “Pudding Business”. And since we are getting plenty of Newbie first time visitors to the website, who just might not know what the “Pudding Business” represents, the following photo should clear it up.

Yes, my Newbie friends, this is “your life”; “been there … done that … ain’t ever gonna be a part of that again! … did it for a couple of years after I graduated from college many, many years ago and realized quickly corporate America in all its manifestations is a gigantic ‘con job’ … you work your donkey off for slave wages, under people who have no clue what they are doing or why, except to promote themselves in a corporate bureaucracy for their benefit not yours … all for the ‘illusion’ of a paycheck and supposed financial security … now, you can lie to me and others and tell us all is well and good, but I know the truth, and the truth is you most likely don’t like your job, utterly hate your boss and/or bosses, and really aren’t happy with the money you are making … How do I know this you ask? … Cuz you ain’t sittin’ here in the Caribbean livin’ the ‘Dream’ with no worries like I am.

There are 3 critical trading concepts not included in the USDJPY tutorial that I want to write about today and amplify in further  detail; 1) time of day trading and my mathematical formula [which I’ve used for years in teaching people how to trade] for the probability of making money each trading day, 2) the absolute necessity of having your own personal identifiable trading goals in place before you start trading and then how to properly achieve them so you can “escape to success”, and 3) how much do I need in terms of capital to make trading a full time career.


Long time readers/clients have seen the formula I will present again today; it is my personal proprietary mathematical formula I have used in my trading career both on and off the floor since “pits” went the way of the dinosaurs. It is as follows:

P(x) = Δ(MP) – Ʃ(t)

P(x) = probability of making money today; Δ(MP) = delta (change in intraday VIX, or volatility); Ʃ(t) = the sum of the amount of time in the trading day that has already expired.

In other words, your probability of making money on any given trading day is directly a function of 2 dynamic variables; one you can control and one you never will control. You can’t control how volatile a market is during the trading day, except to notice it and take advantage of it via the algorithm signals; it should be intuitive to you that the more intraday volatility a market has the higher the probability you will be in an algorithm position that captures at least one good move for profit, and that if intraday volatility is waning or is at already low levels, the risk for “chop” and/or not very good moves increases.


The second part of the equation deals with time; specifically, my premise is that the more you move into the trading day and closer to the close, your probability of making money for the day decreases; why? There are 4 reasons; 1) there is a high probability of not having enough trading time left in the day to recoup potential losing trades, 2) the less time left in the trading day sees a higher probability that the HVALUE and daily range highs have been achieved for the day, thus more than likely denying you a good gain from being either long or short, 3) you can clearly see from the M1 candlestick chart when the day’s trading is starting to slow down and volatility decreasing for the day as we wind towards the close, and if you get yourself into a position during this time the probability increases you aren’t going to like the outcome, and 4) as a professional trader your “goal” is to make money every day; granted it would be nice if I could hit my PIP goal [e.g., in USDJPY] and that is my objective, but under no circumstances do I want to risk my “PIP goal” later in the day and have a winning day that’s in the bank already possibly turn into a “losing day” because I did 4 trades in a row when things died down and ended up a loser on the day. And while the volatility algorithm in USDJPY has an extremely high “win rate”, and thus you might conclude that “a trade is a trade” and therefore time makes no difference when initiating a position, remember that the algorithm cannot differentiate between a 1 or 2 PIP winner and a 30 PIP winner. My point is that late in the day trades could see very small winners and/or chop as your best outcome, while losses are potentially still there in the 5-7 PIP range; so what’s the point of trading this?


All of this, of course, begs the question then of when is the best time to trade USDJPY? First and foremost, via algorithm rules, we have to see an HVALUE [the higher of either (the day’s open) – (low of day) OR (the day’s high) – (the day’s open)] of GREATER THAN 40 PIPS before we make any trades for the day. For this reason alone, unless we have news [economic, geo-political, or Central Bank interest rate decisions] out of the Asian session from Japan or China, I most likely will avoid trading this session altogether; besides, if you live in the U.S. and stay up all night, what do you have left in your tank the next day in the U.S. session? About the only way you can consistently do this is to become a meth addict and/or zombie; neither of which is particularly an attractive option in my book.

The first part of the European session, which opens up at approximately 2 A.M. – 3 A.M. New York time, is usually somewhat subdued, although it can be very active as the Asian session closes; if you like getting up early in the U.S., then go for it.

The time frame where you will find the best liquidity, biggest volumes, and about 90% of the day’s action [i.e. seeing the high or low or both expanded] is between about 5 A.M. – 6 A.M. New York time, to about 2 P.M. [± a few minutes either way depending on the day] New York time. This is your 8 – 9 hour window of opportunity for optimal algorithm use.

The second critical point is your “trading goal”. First and foremost, you got to sit down with yourself and figure out 1) how much capital do I have for trading, and then 2) using approximately 10X leverage [maybe a little higher if you are an aggressive trader and have a higher risk profile, but I wouldn’t go past 15X; maybe a little lower if you are more conservative in your approach, but I don’t see the point in going lower than 7X or 8X] figure out how much volume you should be trading.


For example, let’s say hypothetically you have $1,000 to put into a trading account; at 10X leverage that means doing $10,000 worth of USDJPY. At current rates of about 118, that equals approximately 12,000 ¥, so a conservative trader might do a volume of 0.10 lots and an aggressive trader might do a volume of 0.15 lots [1 lot = 100,000 base currency unit].

The second thing you need to do is establish a reasonable PIP goal for the day; the key word here being “reasonable”; it doesn’t do you any good to set a goal of 200 PIPS a day, you’re only fooling yourself. Anything 50 PIPS or less is what I would call “reasonable”; as for me personally it’s 30 PIPS. Now, just because you are in a trade and you pass your PIP goal, doesn’t mean you get out of the trade; you let the algorithm tell you that. Don’t watch the money, watch the trade!

In the past I have done the math before, so let me repeat the result again: “No matter the size of your account ($200 minimum) at the start, if you make on average 3 PIPS per day AND USE CONSTANT LEVERAGE OF 10X, by the end of year 6 EVERYBODY IS A MILLIONAIRE (assuming no withdrawals)! Obviously, the more you start your account (i.e. over $200), the quicker you beat that 6 year time frame to death. So, unless you are 110 already and maybe you figure you don’t have 6 years, for everybody else, even this extremely modest PIP goal gets you to the finish line. So, I don’t wanna here about how 5, 10, or 15 PIPS doesn’t matter; it most certainly does matter, and the sooner you realize it the better. EVERY DAY YOU FINISH WITH PROFITS, YOU ARE DAYS CLOSER TO YOUR GOAL OF “ESCAPING TO SUCCESS”!

The third criteria, “What do I need to turn pro?” I get all the time. Let me first say that you don’t get into this business to make what the majority of people in the “Pudding Business” make; if that’s your goal, then stay there. Now, don’t get me wrong, if you have to start low and work your way up like I did, then fine, it is what it is; you do the things necessary to get where you want to go … simple as that. 


In today’s Dollars, if you’re looking at trading as the only source of income, my advice would be to have as a minimum goal your first year of making about $50k; that would translate into having capital in your account of a minimum of $5k to start and a “PIP goal” of 20 per day. From there you can build accordingly to where you want to get to in terms of earnings. One of the great advantages of USDJPY is you will NEVER, with a capital “N”, ever get to a point where you have to scale back your trading cuz the market can’t handle your volumes without disruption. You are only limited by your comfort zone in what you want to make, and believe me, if your desire is to make $1 million a year or more, this market will have no problem accommodating you; remember, this is a $3 trillion PER DAY business, and your millions are “paper clip” change and rounding errors!
 

I had a great conversation via telephone on Friday with LMFX management, where we talked about a number of issues. Over the last 6 months, they have basically rebuilt the website, changed email procedures, replaced LP’s, hired new people and got rid of some others, and replaced some deposit/withdraw vendors. As far as the deposit functions via debit/credit card, I have been told they are operational now and working effectively.

I was told that their PAMM should be ready to go sometime around the end of March 2017; yes, I know it’s a far cry from last August when it should have been ready, but in their defense they have totally revamped the process, gotten a new software team, and additional LP’s for better liquidity. I have stayed with them these last months because they are the lowest cost alternative that accepts U.S. clients, and the fact they have plans to bring on new products. The “back office” area is also improved, and that will reduce problems going forward with regards the PAMM. The bottom line is this: I would rather face delays now so they can get it “right” and as a result there are very few problems in the future after trading commences, than see them hurry things and after trading starts there are problems all over the place.

LMFX has also brought on board new LP’s in the FX arena, and their ECN MT4 platform [Zero Account] has an average spread in USDJPY of 0.3 – 0.4 PIPS with a round turn [RT] commission of $4 per 100,000 volume. This is the most competitive “net” trading cost I have witnessed in my years of trading on the MT4. [Note: I switched my account over to the ECN on Friday, and couldn’t believe what I was seeing … best I’ve ever seen really] 


When I was on the trading floor, and it is still like this today, the inter bank spot market trades as USDJPY and the futures market at the CME trades as JPYUSD; this is due to the fact that the overnight rollover interest differential is priced into the expiration cycle [March, June, Sept, Dec] via the price and doesn’t have to be paid out in Yen or collected in Yen from market participants every day like in the spot market [something the Chicago banks would have nightmares with if they had to deal with it]. At the time [1980’s & 1990’s] the futures market had as a minimum tick fluctuation of 1 PIP; today, because offshore brokerage houses and LP banks are “kicking their ass” in terms of volume, the CME has changed the minimum tick fluctuation to ½ PIP to try and stay competitive.
Well, do the math with the “net” trading cost from LMFX, and once you make the switch from USDJPY to JPYUSD, you find it is ½ PIP. In essence, you’re trading EXACTLY the same as an exchange member in terms of spreads and “net” costs to do business, and you have 3 additional GIGANTIC ADVANTAGES over the lovely folks in America’s murder capital Chicago: 1) you can pick the size of your volume and are not “pigeon holed” into standardized futures contracts which the CME only offers, 2) by trading through LMFX, an offshore broker, there are no 1099’s or other tax forms that are sent to anybody anywhere CUZ THE LP BANK THAT HOLDS YOUR MONEY AND PAYS OUT ON YOUR PROFITS USES SAP [SECURE ANONYMOUS PROTOCOL] AND HAS NO IDEA WHATSOEVER WHO YOU ARE OR WHERE YOU LIVE, and 3) you don’t need to purchase a membership [current membership for sale at the CME today is … are you ready … the low, low price of only $206,000] “Do I get a set of Ginsu knives with this or no?” So, somebody please enlighten me why anybody would want to own an exchange membership [for $206,000 no less] when they can get the exact same thing FOR FREE WITH 2 OTHER VERY LARGE BENEFITS TO BOOT?

Bottom line is conditions for you to be in this BIZ have never been greater or more in your favor than they are right now … NEVER. Your trading business through LMFX requires 1) no physical office [called rent], 2) no employees [called no employee expenses and no government hassles], 3) no inventory of physical products [called “stuff” you haven’t sold but pray that you do], 4) no permits necessary [called “government get the fuck out of my business”], 5) no need for accountants & lawyers [called saving you money they will legally steal from you], 6) no need to be tied down to one specific location [called get me the hell out of Buzzard’s Breath, Wyoming where I have my store that sells stuff, and get me to the Caribbean ASAP], and 6) you decide your income and lifestyle [called no boss; throw your monkey suits away!].

For me it’s always been a slam dunk, no brainer calculation … and now that you have the roadmap for success in the algorithm, it’s only you holding yourself back.
 




Ok, turning to USDJPY today … looks and feels like some traders are becoming cautious ahead of tonight’s BOJ meeting release of “Peter Pan’s” latest & greatest experiment in monetary policy; quite honestly folks, who knows what Kuroda & Crew have in store for markets tonight at 10 P.M. New York time when SHTF becomes the market operative. 
 
A handfull of good algorithm trades early this morning; HR1 first line of major support at 116.90 came close to being penetrated, but so far has held. Second line of major support is down at 116.25. Directly below the trades in succession.

Made 4 algorithm buy trades in about 2 hours 10 minutes; made money on 3, and basically scratched 1; all in all captured about 24 PIPS of profit. Since today is likely to be slow in New York due to tonight’s BOJ release of their brand spanking new efforts in monetary policy, I’m happy with the gain and won’t “push it” with further trades going forward; I don’t know when the “chop” will set in, we’ll have to wait and see, but I don’t want to be in anything when it comes … early or late. I’ll wait for tonight and size up the trade again against fresh info from the market.

Meanwhile over in gold … crickets … can’t even muster a $7 range … I’m not saying this market is dead, but I can feel retail spec enthusiasm for this market has cooled to the point of almost being frozen … so many traders took a bath in this stuff over the last few months … in my opinion, they won’t be back to trade for a long while, and that reduces order flow which constricts HVALUES & daily ranges and makes trading much more difficult.

A lot for many of you to digest today; tutorial plus today’s blog. Enjoy! Until tomorrow …

Have a great day everybody!

-vegas

OPEN A DEMO AND/OR LIVE ACCOUNT [CHOOSE THE “ZERO ACCOUNT”] AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”