ASKING THE NOT SO PRETTY QUESTIONS

“Ignoring the questions doesn’t make them go away.”

Another day, another BS overnight session that saw more interest in temperature fluctuations in Butte, Montana than in gold; from where the Comex closed USDJPY rallied 60 PIPS, and gold yawned its way to maybe a $2 break if you caught it right before recovering back to the Comex close. So here we sit yet again, 8^th day in a row HVALUES coming out of the Asian & European sessions below $5 per Oz. Right here before the New York open gold has an HVALUE of a mighty $4.05, and is less than $1 off the closing price last night; the last 7 hours a complete range of $2.18 from high bid to low bid price; “seriously man, what’s wrong with you”? Why do I have this feeling in my stomach that today is going to be an insult to the word “dead”?

The Asian Chuckleheads did their part last night, lightly selling from the open on Yen weakness but we’re only talking about a $3 decline in price at the worst, hardly a barometer of sentiment you want to heavily rely on; still, whatever they do most often the New York bullion banks “undo” hours later, so it would not be unusual to see higher prices in the U.S. session at some point. “But Toto, we’re not in Kansas anymore … so keep your eyes and ears open … cuz anything can happen”.

There isn’t any way to sugarcoat what’s happening to financial markets; not just gold, but every financial market since the start of 2015. They’ve taken turns going from active, vibrant markets to slowing down ..,. then to barely breathing and on life support … and now to some of them completely dead in the water floating corpses … followed by bat excrement hyper volatility that explodes trader’s capital and accounts to mere bits & pieces … then crickets, rinse & repeat. Take any market you want to name and just look at it; this is what has/is happening. This isn’t by accident nor is it some kind of anomaly; to be brutally honest, the world’s central banks are attempting to destroy volatility, and in the process dictate preferential outcomes that serve their purposes.

So, the $64,000 questions that beg to be asked are simply this: “did the start of 2015 with the CHF debacle [EURCHF unpeg from 1.20] mark the starting point of an entirely new era of trading? One where, going forward volatility is the outlier, and stagnant low range days the norm? Where selling the new 2^nd,  3^rd, or 4^th new high of the day or buying the 2^nd, 3^rd, or 4^th new low of the day is the “ticket” to consistently profiting every day by buying/selling the imminent rebound in price that is coming?

This isn’t simply a paradigm shift in the ordinary sense of the definition; what I’m asking is, “is this a seismic structural shift in the way markets ARE GOING TO BE ALLOWED TO OPERATE by their overlord masters the central banks and by default their partners in crime the bullion banks & LP’s”? Cuz the way things are trading these days, when watching markets under these guidelines, all of a sudden things start making complete sense. “We’ve had approximately 35 – 40 years of wonderfully volatile commodity & financial markets; can I stand here today and say this is the norm for all time going forward? What if we have entered a point in human history where all markets go quiet for 10 – 100 years; where volatility is the exception and not the rule; where $6 - $10 ranges per day in gold are “it”, with the number of days exceeding $15-$20 a handful over the course of years; what the hell does everybody do then when your algorithm is screaming for volatility”?

I remember years ago when I first arrived on the trading scene, just as commodity trading was entering its “heyday”; the first gold & currency pits had some traders who just a few short years earlier had been trading eggs & butter; they had a very tough time adapting to the volatility in the currencies, and would tell me about “the good old days” back in the egg pit, where things were “normal” and a guy could make a good living … now in currencies … yikes what a difference.

I’ve said before on these blog posts, living through history ain’t the same as reading about it; very few people see the changes. Has trading from a structural standpoint changed? Am I now the “anti egg” guy, looking for volatility where there isn’t any, and wondering where the hell its gone to and not being able to recognize that the structural platform and backbone of trading [namely, volatility] in the “modern era” is over and there’s a new Sheriff in town?

It’s still early in the game, but I can categorically state I do not like what I’m seeing in the trading universe regards volatility; it’s not entirely gone, but it’s been severely crippled from days past, and while occasionally it gets to come out and play, these last 2 years it’s been the exception and not the rule. Something is not right in “traderland”.

Ok, turning to today’s gold trade … well Chuckleheads, on the FED Pie Hole Dudley comments you got your buy stops clicked off [again] from earlier sells … HVALUE still right around $4 … once again Pols and/or FED Pie Holes responsible for movement in markets, with once again no follow through after stops are hit off … same old shit, different day with the “good cop bad cop” routine with interest rates and the FED’s desire to manage outcomes all visible for everyone to see … and I’m wondering can gold recover and return to its normal behavior, or is what we are seeing now the new “normal” behavior going forward?

As I stated yesterday, this isn’t just specific to gold, this is happening to all markets including USDJPY, and when you add everything up, new lows aren’t making for further new lows and new highs aren’t trailblazing the path for more new highs where HVALUES and daily ranges are expanding to anywhere near the levels normally seen these many years; and so, unless you are gonna put your head in the sand and pretend everything is “A-Ok”, it begs the questions I’m asking, cuz clearly something is wrong with these markets using standard algorithm parameters.

It’s Noon in New York, and gold providing tortuous entertainment watching it struggle to make new highs by pennies and then watching it get clobbered lower as stuck longs on the pennies upside breakouts get caught and then liquidate on any USDJPY rally over 1 PIP… rinse & repeat how many times now? … and still has an HVALUE of $4.05 and not feeling from the struggling action like it wants to expand that anytime soon. From just literally pennies off the high of the day, now 14 of the last 16 minutes the M1 is down on a 5 PIP USDJPY rally; if you’re long, good luck cuz normal intraday volatility is on vacation and nobody has seen nor heard from him in a while and the bullion dealers are in firm control once again.

Again today, it’s PIE HOLES & politics running things … look at the SP500 here at Noon ESDT; it’s got an 8 index point range and the market at present is about 2 index points off the high, with the index at approximately 2371; when this index was at 1071 10 years ago, the market had 15 – 20 index point ranges EVERY DAY, UP & DOWN. Now of course, that’s not permitted as some financial elite might get his “big girl” panties bunched up and lose some money to those “trader types” who trade markets and pick him off … when you extinguish volatility, this problem for the most part goes away, and now the person “squirming” every day is the SP500 trader, cuz he knows he’s only got 1 shot at making money this day, and he better make it count cuz if he’s wrong the day is over and he’s out money … and how the hell do you make a living flipping a coin? In a nutshell, this is the problem with the stock indices.

Moving over to USDJPY, and really the entire spectrum of the FX crosses and other Dollar pairs as well, the Yen is a special case because it has become its own asset class; however, there are structural problems here as well. To name just a few, 1) liquidity vacuums, 2) stop hunts both buy and sell, 3) slippage, and 4) since 2015 a significant slowdown in volumes across the world some 30%+. Add it all up, and you might as well be trading gold the way you’re gonna get treated.

Gold does have one major advantage over the entire FX arena, though; there is always demand for it, and will always attract buyers at some point. Meaning, off of any exhaustion line or SDEV low it can be bought for profit of usually $2 - $3 within a few minutes; on the upside, unless the “bullion wall” dealers are suddenly going to allow this stuff to freely appreciate [not on your life], and unless there is over riding news to substantiate a good gold move up [i.e. sustained buying all day], the dealers will be up at the high selling you all you want.

Outside of the few minutes ± Dudley’s comments this morning, gold hasn’t moved but about $2 & small change… some market huh? … sitting here waiting for volatility is like going out into a prairie and trying to catch butterflies with my hands … the results about the same. And while dealers in FX are as bad as they are in gold, I’d have to give the edge to the bullion dealers for being the worst on the planet … their penchant for screwing their clients and running stops are legendary within the biz … which leads me to my final $64,000 question; “with hedge funds, FX funds, and a retail public that’s been getting ‘wasted’ these last 2 years and as a collective whole has been decimated with losses [especially in gold, EURUSD short positions & the short SP500 calls], who have been the prime beneficiaries of this ‘transfer of wealth’ with non existent volatility [except briefly, to suck more people into the matrix from Brexit, US elections, a flash crash, and the Greece Crisis]”? ANSWER: “bullion dealers, bank LP’s, and bank dealing desks”.

And to put it all in perspective, as if right on cue from central casting, here a few minutes before 1 PM, gold spikes up, makes a new high, takes the HVALUE to $6.94, and blows out the last remaining short from this morning with most likely a fill at or very near the high … and then what? A new move higher? Continued expansion of the daily range? How about the following directly below.

 

As clear a case I can ever be able to show you of “let’s clean out the buy stops” and call it a day. Not a damn thing behind this bloodletting except regrets. And if you bought this, I don’t have a clue what comes next except it most likely involves a loss of some kind. This is a perfect example of what I’ve been talking about. We’re about 50 minutes from the Comex close, there is no volume and no trade to speak of; whoever it was that pulled the trigger to new highs about 45 minutes ago isn’t feeling too well, and if you’re still long this stuff you have to be thinking what if this guy comes back and liquidates that buy stop? If that happens, it won’t be a pretty picture at all going into the close.

It’s the end of the month & the end of the quarter today; good riddance to rubbish. Over the weekend I plan on doing a ton of statistical work [mostly from the risk side] on gold and taking an entirely fresh approach and see where it takes me; I’m not ready to “chuck it all” into the trash or anything like that, but I would be less than honest with all of you if I said this type of trading activity we’ve been seeing lately doesn’t concern me; it very much concerns me cuz there is a very big part of me that says “volatility” as a structural construct for trading is over for the foreseeable future. Oh, to be sure, there will be days when news flow will provide the necessary fuel to fan the flames, but overall it might just be finished. If my trading instincts are right, then I need to get with the proverbial program and adjust accordingly.

I have been professionally trading a long time; I’ve seen what I thought was just about everything there is to see; when President Trump was elected, I thought, “well, just wait until he takes office and we get into February & March, we’ll see volatility explode through the roof”! Instead … total crickets most days! None of this makes any sense, and that tells me that serious structural changes are afoot; nobody is going to send us an email and tell us what the deal is; why would they, they want to profit off of our ignorance.

Avoiding risk has always been my top priority as a trader from day one in the biz, and now more than ever markets present us with risk challenges daily, especially in gold. With few exceptions, though, when you “think & trade” like a bullion dealer, you will be profitable in your trading rather easily. The version 3 algorithm incorporates some dealer concepts, but the structural nature of the algorithm requires above average volatility; what if we don’t consistently get it? Then what? And that’s where I’m at right now.

I can tell you “flat out”, I’m not gonna sit here day after day waiting for gold [or any other market for that matter] to get its donkey in gear; hell, we could be waiting a very long time. No, I’ll simply make the necessary adjustments and move forward; look for those adjustments as we start trading next week.

Here we are at the Comex close, and truth be told, this has been one of the worst “action” weeks I can ever remember; all told we’re about $4 from last Friday’s close, and outside of a couple of HR1 candles, not a damn thing happened trading wise. Today’s $5 “necessary to trade” HVALUE only got breeched around 1 PM, about 90 minutes from the close; still, on the retracement no valid buy signal to get long, so no activity for today. Even if we had gotten one, the subsequent rebound has only gone about $1 max, so not much there late on a Friday.

One final note: here’s that “pretty picture” of the close when your buy stop attempting to “muscle” the market doesn’t work on a Friday directly below.

 

PAMM/MAM Spreadsheet directly below.

 

Beach beckons … I’m outta here … until Monday mi amigos.

Have a great weekend everybody!

-vegas

OUR ‘TURNKEY FOREX’  PAMM/MAM  IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM MANAGED MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD] AND START YOUR JOURNEY FROM WHERE YOU ARE AT TO “ESCAPE TO SUCCESS”!

  

INVESTING IN PRICE

Hidden clues from the “fingers of fate”!

When I wrote yesterday how I thought the current up move in gold would end, I didn’t mean to give the market advice for the day; apparently, somebody was listening. Which brings me full circle to the “bullion wall” of selling by the bullion banks, women’s perfume, and of course volatility; “You didn’t know they are all connected”?

Step back for a second, and place yourself in a world of complete perception; not expectations, needs & wants, or economics, just one of perception by a sample size great enough to statistically be representative of the entire population at large. Individual perceptions are driven by socio-economic status and the absolute need to “project” your rank and/or status to others; the subliminal suggestion always is, “I’m better than you or at worst I’m equal to you”.

Take any perfume for women and put it in a peanut butter jar with a sprayer on top that looks like weed killer from Home Depot; price it at $5 per Oz. and sell it at BigK in a nondescript plain brown box. Good luck with that sales volume. Now take the exact same perfume and sell it in a perfume store, or a high end retail outlet like Saks; gussy it up with fancy packaging, put naked models on TV hawking it cuz they spray it all over themselves every day “don’tchaknow”, price it at $150 per Oz., and voila!! the stores can’t keep it in stock. What happened?

Move this thought over to gold trading; the world’s on fire, chaos in the court’s, chaos in the Middle East, tensions with Iran & Russia, articles everywhere about gold going up … and then everybody meets up close and personal the dealers at the “bullion wall” of selling above 1240 and gives everyone everything they want and more. And when you’re done shopping, they aren’t finished selling, and the price goes a tumbling.

And so, next day, here we are $20 or so lower and the market looks and feels like a bar in an Irish neighborhood in Chicago the morning after St. Paddy’s Day; not so active and pretty moribund and dead.

It’s called volatility, more specifically for us intraday volatility, and without it we might as well be hawking the perfume in the aisle’s of the BigK; no matter what we do [buy or sell], it isn’t gonna work, cuz nobody is interested. The enigma of trading each day is coming to grips on a scale of 1 – 100, where ‘O where is the volatility meter today? Levels of price don’t put money in the bank; intraday volatility puts money in the bank. Specifically, it is these rapid changes in short term sentiment that allows us to buy/sell on the 3 M1’s+ that are contra trend the current sentiment; without volatility, how are we supposed to take advantage of the current dislocation in price?

The good news? Well, it’s this; the 2 volatility algorithms in gold [scalper + regular], when combined properly, track volatility automatically because without it, the 2 price vector fields [plum, yellow, and white lines] will either be “flat” or not in sync with each other thereby nixing any trade you think you might have. In other words, it keeps your donkey out of trouble.

“And who wants his donkey out in a row boat in the middle of the lake”? 

Now, this doesn’t guarantee success [nothing does], but I really like my chances knowing that prices are moving, and the fact that the version 2 signals are significantly better at reducing chop than before, thus increasing my total returns. I know full well that I give up some gains from this, but I’m not interested in batting 50/50 or worse, and I really want to avoid the ebola virus of trading, a succession of losses in a row from false positives that make it seem like I’m bleeding from everywhere. No thanks.

Turning to today’s trade … well, it looks like Mrs. Wantanabe & friends bailed on the very early Asia open, sending gold prices lower by about $10 before you can say, “has my check cleared yet”? … “Do I really have to tell you what this usually means for U.S. prices later in the day?” … It’s Friday, and after yesterday’s bloodbath [6 hours of price taken out in 30 minutes], unless news hits the market in some unexpected way, as we move towards the close of trading for the week, I would expect a firmer tone to prices unless we get under 1220 … and if that happens, it could get rather ugly on the downside … at 1240 everybody and their sister wanted this “gold perfume”; 24 short hours later and there is almost zero interest $15 lower. Amazing how a few candlesticks on an hourly chart can change your perception isn’t it?

Early in the day, 3 trades from the algorithm directly below.

 

A cursory view of the M1 candlestick chart from mid morning may give the impression that I skipped some algorithm signals; not the case. If you zoom in the chart, both buy and sell signals had flat standard deviation lines [plum and yellow] at the appropriate “crunch” moment, thus voiding the trade. What I want to see are clear rising or falling signal lines, and what we got were lines that went flat a minute or two earlier. Granted, sometimes it is a very subtle difference; make no mistake though, it matters greatly to the probability of success in the trade.

Finally, here at mid morning, we got the algo signal that captured a decent scalp and now things are starting to heat up; maybe?

Well, that escalated quickly. Trade #5 directly below.

 

When the market failed to hold 1230.10 on the spike I hit the liquidate button.

Importantly, notice how with increased volatility in price in trades #4 & #5, with the signal lines clearly rising, once the signal was given [green M1] to buy, how quickly the market bounced straight in our profit direction; this is exactly the reason why I tell you volatility, specifically intraday volatility, is the crucial key to making great trades and therefore money.

My last trade of the day; I’m past my goal for the day, but I’m taking this last signal and risking 50 – 70 cents per OZ. … my mental stop here is if it gets below 1230.25 … after I’m in, the signal lines go basically flat, and on the rally back to my entry I take the few pennies per OZ. loss and call it a day. Directly below the action.

 

All of my trades today should point out to you, “that when the ponies are running, you run with ‘em; when the ponies stop running you aren’t anywhere on the track”!

The Turnkey Forex PAMM/MAM is now open; more than likely I’ll start trading the master account either on Monday, February 20, or Wednesday, March 1; this gives time for those of you who have signed up to get all documentation into the brokerage house, some time for wire transfers to be sent and received, or a little time to move money around so you can participate from the beginning. I’ll keep you posted here on the blog, and in the meantime for first time visitors to the website, all of the program’s details are available over in the “Download Links” section in the right hand column [up in the “cloud”], along with the POA form. If you have any questions, please email me at traderzoogold@gmail.com and I’ll respond personally ASAP.

“Hey … U in da chair! … where’s me bacon & when iz da beach”?

I can feel the stare … hunger and sand in his paws, fighting for room in his thoughts … all it’s gonna take is one little push of the chair backwards and …. BOOM! … man, can he take a hint or what? Bacon slices & beach, in exactly that order … We’re sooooo outta here … beach beckons … until Monday.

Have a great weekend everybody!

-vegas

OUR ‘TURNKEY FOREX’  PAMM/MAM  IS NOW OPEN; SEE “PAMM/MAM MANAGED MONEY PROGRAM” IN “DOWNLOAD LINKS” SECTION IN RIGHT HAND COLUMN FOR DETAILS [VIEW ONLINE AND/OR DOWNLOAD].

 

 
 

 

CASUALTIES ARE MOUNTING

“Oh hell yea … more screens = more profits … why didn’t I think of that”?

I’ve been writing for some time, that the nature of trading financial markets is changing … gone is the “give and take, up & down” … replaced by “speed of light” moves that send volatility to bat excrement levels … only to be followed by … crickets … rinse, repeat … “who is left standing in this pile of rubble”?

Absolutely nowhere is the manipulation more blatant and “out in the open” than in present day stock indices; “my oh my, look what has become of the SP500 as a trading market, where intraday volatility has been taken out and shot, much to the delight of the financial elite, central bankers, and mega corporations engaged in massive stock buy back schemes.” And fittingly, outside of a brief spasm of HFT madness every now and then that gets prices moving, traders have suffered significant casualties on both sides of this once great market.

Gold, for its part, has already been shot … sure, market dynamics have started to show some life after the Brexit & the U.S. election massacre, but its going to be a while before retail specs in masse come back. The only thing to do here, more so than any other market, is to make sure you buy right and then sell right; meaning, you have to liquidate longs as the market is rallying and not worry if it keeps going; wait until it rolls over, and it’s an open invitation by the LP for an off the market rotten fill.

Again today, 3 hours into the New York session and I’m looking at about a $3.50 range in gold with the day’s range of about $7 & change; pathetic, and given the market moving ranges we’ve seen the last 2 weeks, some consolidation is expected before the “bullion wall” of sellers shows up and hammers this stuff lower once again.

Not much better in USDJPY, as we move closer to inauguration and the Trump Presidency; market bounced off the top of the Ichimoku cloud formation on the HR1, so after 9 out of the last 10 days being down, it’s not surprising we’ve seen a bounce here. However, it looks to me like the “Trump USD rally” because interest rates have no place to go but up, is over for now.  Two things of note here; 1) the most crowded trade in the world right now is “long USD’s”, and 2) VIX futures shorts are at or very near record levels. Neither of these 2 are bullish for USD longs, and it’s gonna be a climb to get USDJPY back on the upside; something to consider.

No trades today I really want to highlight; everything pretty much “chop” with some small gains on the scalper algorithm to show for the day’s efforts. At least USDJPY has a small enough “net” cost to make some money; everything else looks like a casualty of war. The world is very much waiting to see 2 things; 1) will the inauguration be peaceful, and 2) what does Trump do next week when he is actually President. Answer to these 2 questions and you’ll know where things are headed.

Five hours into this, and I don’t see anything of substance happening one way or the other … I’ll deal with the consequences if I’m wrong. Time for the beach … I’m outta here … 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!”

  

MY OPINIONS, A BUCK, & COFFEE AT MICKY D’S!

“Where traders who trade on opinions end up!”


Well, that escalated quickly didn’t it? Although I haven’t seen any Tweets from our new President, the Fed’s decision to raise the “dot plot” of interest rate increases in 2017 from 2 rate hikes to 3, set off a firestorm in gold and USDJPY as they both “Thelma & Louise’d” off a cliff. Both got hit hard, with gold dropping into the 1130’s and USDJPY went “to the moon Alice” almost hitting 118 in early Asia; 24 hours earlier it’s in the 114’s, so you can assume Mrs. Watanabe needs another check to clear.


Stock indices didn’t do much right after the report, although they tried to climb before the sellers showed up for some … are you ready for it … some CNBC talk here from the chattering heads … some “profit taking”. [“Ahhh, let me write that down so I can remember it for later it’s so valuable.”]

I must admit, I’m a little surprised the Fed came out a little more hawkish than consensus; you’d think after the embarrassment of last year at this time when they predicted 5 – 6 rate hikes for 2016, that they would learn that credibility once squandered is tough to get back. Now that they have “spilled the beans” and the world knows their stupidity for 2017, my trader analysis from yesterday + $1 = a coffee at McDonalds. It’s a glorious world isn’t it? And now you know why I’m a trader and not an analyst; acting on opinions and analysis before the facts are known from market moving events is akin to playing slots in Las Vegas and expecting to go home rich. In other words:

Following the algorithm always keeps you on the right side of things and makes sure your donkey isn’t out in deep water where it isn’t supposed to ever be. And now that I’m 0 for 3 in analysis from yesterday, let me give you my “secret” powerball numbers that “can’t miss”!

One disturbing development from yesterday is the reaction of gold to the Fed; you’d think 10 YR Treasuries are at 6% given the carnage we’ve seen in this market the last … what? … how about 6 weeks for starters. Given how many trader’s have been literally taken out and their accounts metaphorically “shot in the head” trying to pick a bottom, should tell you 2 things; 1) nothing is too low that it can’t go lower still, and 2) we may very well be witnessing the start of what I would call the “Reagan Gold Redux”; a rapidly falling price to lower levels and then nothing for years.

Of course, it’s too early to say for sure; a lot can/will happen that will shake things up, but 2 inescapable facts emerge from the great debacle in gold we are seeing now; 1) way too many retail specs got crushed in gold and won’t be back anytime soon, thus leaving order flow diminished, and 2) unless interest rates go on a different “dot plot” down the road, there is no reason for the bullion banks to take down their collective “bullion wall” of selling and for gold to see any rally of substance. 2017 just might be a very, very long year for the gold market.

And as good as gold is when it is trading with $17- $20+ ranges, approximate “net” trading costs of about $0.24 [about a tick and a half off from the futures market], decent liquidity for small trades, and not much slippage when bought or sold properly, it can’t hold a candle to USDJPY. In fact, no market on the MT4 even comes close to the advantages offered the retail spec trader. As I have stated before, what you can get today in MT4 trading from either ASSETS FX or LMFX is CHEAPER than USDJPY trading that cost $500,000+ in the 1980’s & 90’s for an exchange membership that put you in the pit in Chicago.

I don’t want you to get the impression, or try and read “between the lines” and think that I am abandoning gold as a trade; I’m not. But I’m not blind either, and I can clearly see that USDJPY is a far superior trade right now in so many ways I could almost write a book about it; yesterday being a perfect example.

For the sake of brevity, and to prove my point, I’ll just give you one example; the spread. ASSETS FX “net” trading cost [bid/offer spread of about 0.6 PIPS + RT commission of $6 per 100,000 traded = 1.2 PIPS]; LMFX “net” trading cost [bid/offer spread of 1.4 PIPS + RT commission of $0 = 1.4 PIPS]. You’re looking at right around a 100% difference in trading costs with USDJPY versus spot gold; add to that much deeper liquidity, and better intraday volatility, and it isn’t even close.

The USDJPY tutorial will be finished this weekend and will be up sometime on Sunday; I’m adding some new material I think is important. Starting with Monday’s trading, I’ll be highlighting USDJPY rather than XAUUSD up and until gold makes a comeback. Who knows, it could be a month, a year, or like the early 80’s to about 2002, 20 years. One thing I know for sure; I’m not going to sit around and miss superior trading opportunities in the world’s largest spot market while gold piddles around and doesn’t do anything of substance with small ranges [except when it gets monkey hammered lower on gaps]. Been there … seen that … ain’t interested in that. I’ve seen first hand, back in my pit trading days, what happens when markets go dead, and trading money switches to another asset class; it ain’t pretty folks, and the traders that stay beat themselves up every day they remain cuz they aren’t making any money. “I’m a professional trader for one reason, and one reason only … TO MAKE MONEY! … I’m not here to confess my love for gold or any other market … you know the drill; I’ll trade dirt futures if the conditions are right … I want the cheapest costs, highest liquidity, best above average intraday volatility, consistent with algorithm profits … and right now that ain’t gold but USDJPY.

Once I get the USDJPY tutorial up, I’ll finish the stock indices manual and then over the Christmas & New Years Holidays I’ll get the exhaustion charts for gold, DOW30, & USDJPY up and archived for your viewing pleasure and research. As 2017 starts, all the archived charts and manuals [plus appropriate tutorials] will be up and posted and we will be ready for anything that happens during the year. I got a busy next couple of weeks.

Have a great day everybody!

-vegas

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

   
 

YOUR “HOLY SHIT” MOMENT

That moment when … EVEN YOU … realized you could be a Senator!

I want to expand some from where I left off yesterday and reiterate that it is the concept of “the exhaustion lines” as I have defined them in the trading manual that give power to everything else; i.e., the rules and strategy of the volatility algorithm. Taking into account the different “personalities” of different markets, and by default adjusting some of the rule parameters for individual markets, theoretically the volatility algorithm should work perfectly in other above average volatile markets as well. When I’m done releasing the tutorial document on gold, I will start on the tutorial for the DOW30, the other “low net trading cost volatile market” where the evidence is as clear as it is in gold of highly successful trading during U.S. market hours.

Of course, anytime I release new information on the website I get a blizzard of emails; let me just say to those wanting more info on Gann’s “Square of Nine” and how to get it on your PC; 1) view online or download, from my shared files account at box.com [which is totally free, no sign up; just click to view or download from the links] the “components” document in PDF that goes into detail [In other words, RTFM (read the fucking manual)], or 2) for those that find that obstacle too much of a chore, follow the link directly below:

http://www.bonniehill.net/pages.aux/gann/sq9.html

This link to Gann’s ‘Square of Nine” is a great tool I use often in my research; everything you need and want to levels you most likely will never get to, are available at the click of your mouse. Data I use in the manuals, and charts with commentary are derived from this link to the “Square of Nine”. [Note: if you are at all having trouble downloading or viewing my shared files by following the links I have in the “Download Links” section of the website, at box.com and getting some kind of error message that “file not found”, I need you to email me and let me know. Sometimes the links get corrupted at box.com and I will change them when necessary if they become corrupted and unworkable. Thanks.]

I can’t emphasize enough how important the concept of “acceleration” is to trading; math & physics people know well this concept, but for traders it is one that doesn’t get much attention [which is great, cuz I don’t want it to be “mainstream” and in some assclown’s book the Mrs. sees when we’re in a bookstore and she says, “Oh look honey … his ideas are just like yours!”].

Next time you see gold moving quickly up or down, think of the fuel [i.e. the intensity of the volume buy orders (up) or volume sell orders (down)] that is necessary to drive the market. That “fuel” will eventually [usually sooner rather than later] get used up and that my friends means an end to the up/down acceleration! And who is on the other side of that acceleration 99%+ of the time? That’s right, dealers & bullion banks, who are only too happy to now “bid it up” after a drop or “offer it down” after a rally. And while other popular technical indicators are always “lagging” because they need data to “confirm” a short term top or bottom, the volatility algorithm’s exhaustion lines are there in REAL TIME to get you out [or long] at the exact moment acceleration ends.

Search the world over fellow traders; scour the bookstores and financial pages until Jesus comes back; you won’t find any other technical indicator that EVEN COMES CLOSE to the algorithm’s exhaustion lines for predicting short term tops and bottoms with an accuracy & profitability [that I show via charts (hundreds) and prove via Excel spreadsheet] I prove in the tutorial PDF document you will have in your hands in short order. It’s that powerful and should lead every one of you to your own personal “Oh shit!!” moment. YOU WANT PROOF? I GIVE YOU PROOF!

Turning to the gold trade today, I see the chuckleheads traders in Asia bid it up last night about $6; some things never change. So, right out of the gate you should know if you’re a regular reader, that’s a negative for prices in New York [at least early].

Ok, that didn’t take long for a buy signal; in @ about 1268.60. Chart directly below of this first [and maybe last] trade.

As you can see, market is above the daily calculated white horizontal line; that means “buy” on plum line slope change from negative to positive WHEN the plum line is below the yellow line. Stop here is below 1267.50. As the market starts going up, I have a choice to make; 1) do I look for any spike up to liquidate, or 2) do I hang with the trade and keep raising my stop level as it moves higher? Well, since the ranges are pathetic, and the Dollar amounts rather small, I chose on this trade to “hang with it” some and see what happens if/when it can make a new high for the day; are there buy stops above the current high that would give us a spike to get out, or the “bullion wall” of sell orders from dealers and bullion banks?

As the market makes its second leg up, I keep raising my stop level. After it hits a new high by 3 cents, what’s next? Well … nothing; if there are buy stops up here I don’t see ‘em getting hit off. Add to this we are now back in the low 1270”s again and the question pops up, “can you sustain this Mr. Market and go higher still?” My gut reaction to that is probably not; I want to see evidence that the daily ranges can be expanded back to normal [$15 -$20 +], and the pathetic $7 - $11 [tops] ranges done away with and forgotten like a bad dream. So far, I don’t see this happening, and until I see “proof” things [meaning volatility] are returning to above average “normal” conditions, I got a pretty fast trigger finger when it comes to trading & liquidations, especially if the first trade of the day is anywhere near acceptable profit wise. Because lately, after the first trade, it’s been nothing short of “chop city”.

So, when I see a new high by 3 cents and nothing after it in terms of additional buying, “red flags” are going up the flag pole quickly with a very big, fat warning that tells me there is a very high probability this move is over. So, I’m looking for the very first M1 that goes “red” to hit the liquidate button and close the position; this trade captured about $2.40 after commissions.

And although this move up didn’t hit the exhaustion lines, tying in what I said earlier about the tutorial that is coming your way, the spike up is in and of itself a mini exhaustion that the algorithm isn’t formally measuring, but is in fact occurring; it’s just that this move is too small for the algorithm to measure accurately. So, instead of ‘measuring it formally’, we can measure it visually by looking for above average spikes since the trade started and use that as our yardstick. Once I do that, I only have to continue looking at my screen for the next ‘red’ M1 candlestick to know when to liquidate. Since the market hasn’t officially turned yet, my liquidation fill should be Ok to decent with little or no slippage.

And so, the “rule” to liquidate on above average sized spikes [next M1 that is red] that do not “hit” the exhaustion lines, is in fact based on acceleration; however, the fact remains the algorithm can’t measure every single spike during the day and come to any conclusions. When the math is internalized and made visual for everybody [including myself] to see in real time on the MT4 … well, how easy is it to follow and make money now? [Hint for Cankles voters: Easy Peezee.] And it isn’t just this rule, the exhaustion lines are the foundation for all the others as well.

So, here we are half an hour later, and the chart below tells the tale of the tape.

Use the spikes up to sell, realizing not every spike is going to take you to the exhaustion lines; but also realize that every spike is to some extent an “exhaustion”; most during the day aren’t worth measuring because they are too small and not significant to the short term trend. But when we get ourselves into a long position, the momentum of the trade, by DEFINITION OF THE MATH, is on our side and we need to be cognizant of spikes up that mean the end of the upward movement, and just as importantly we have to liquidate in favorable conditions and not on the way down.

Dogs have a way of knowing how to “pay you back” don’t they? We get to the beach yesterday, and while I’m setting up the umbrella and lounge chair, along with his towel and bowel of water in the shade, off he goes to the first good looking babe walking on the beach with what looks like a bag of Doritos chips in her hand. I see this and I’m thinkin’, “she might as well be handing out $100 bills in a ghetto”.

And with that first chip, he’s now got a new BFF [until the chips are gone of course]. She walks over to me and says, “Can I pick him up … is he OK with that?”

And with that, I get the look from him below.

“Hey Boss, look what I found … Can we take her home?”

And I see this and I’m lookin’ back at him and speaking telepathically:

“Ummmm, yea … remember that other human female life form we got at the house? … yea, the one you run too when Mr. Cat kicks your ass – remember her? … I’m just sayin’ it won’t go over well … so fugetaboutit.”

And with that she runs out of Doritos chips … and that’s the end of that love affair. No golf today, the dog is already running around looking for his leash and nurfball cuz he knows trading is finished. The turquoise waters beckon; I’m sooooooo outta here. Until tomorrow …

Have a great day everybody!

-vegas

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