SPEED OF LIGHT TRADING

IMPORTANT NEWS WORTH NOTING

Thank you retail sales in the era of “Hope & Change”; “unexpectedly” of course. And with that “unexpected” horrible number came the official yawn for stock indices; after all, as I have said before, nothing can interfere with the official narrative going forward that “everything is F-ing awesome baby!”

However, the gold shorts took it in the … well … shorts; nothing like a good old fashioned “melt up” on a Friday morning that sees prices surge by about $13.50 per Oz. in 17 minutes, half of that coming in the first minute. And to be sure, afterwards we get to see 2 down moves to the lower exhaustion lines just like yesterday; one of them eminently tradable and the other to be left alone because the range is too high for the day and the day is getting a little short in the tooth.  As Captain Obvious would say, “Who knew Gatorade wasn’t for alligators?”

Now, one of the hallmarks of a very long and storied trading career is to NOT trade reports; hell, go to Las Vegas if you want to “roll” and get the comps; trading houses will be the last place you’ll even get a kiss before they 1) rape your fills, and 2) not even say “Thank You, come again!” So, to be sure, I’m not gonna trade the retail sales report; I could care less if I miss something; the algorithm will be there later to guide me, and that’s all I need.

Besides, who wants to look like this being on the wrong side of a Department of Unicorns & Fairy Tales economic report?

So, after seeing the gold price “melt up” past the RM=1 exhaustion lines, it’s time to show some patience and wait for the plum line to get near or below the yellow line and then change slope OR if we get a decline to buy at the lower exhaustion line [rare, but it does happen every now and then like today; thank you retail sell stops who bought the high]. Directly below is the trade of the day.

Now, it’s important you understand the algorithm here; at the initiation of this trade, the daily range is now slightly over $21 per Oz. Exactly where do you expect the range to be at on the close? It’s not a rhetorical question, since the probability of seeing the range expand from here [up or down] is small. Having said that, I know I have to be somewhat nimble on the way back up; shorts a little too late in buying the break will prop the price up for a time, so what I’m looking for is what the algorithm calls for to liquidate. AND THAT IS AN ABOVE AVERAGE “UP” SPIKE SINCE THE INCEPTION OF THE TRADE; when I see it, I’m not waiting for the M1 red candlestick to liquidate because my fear is that I will give up too much in slippage to get a decent fill. I have to use the up move and when it stops going up in this spike, I have to liquidate; it’s the only way to get a good price. I understand and accept the fact it could go higher, but seconds matter here, and if you are trading numbers [large volume] you have to be early and leave the last pennies for somebody else.

OK, so here I am with about a $3 profit and the day has hardly started; the problem is the range is $21 and for me to get in another trade on a Friday is not likely. To be sure, there were other algorithm trades that were available after this initial trade, and all of them had slight profits; but the point is I don’t care about them because of the range. That range has a very small probability of expanding, which means quite simply trades going forward are going to run into a “wall” and are likely to back off quickly leaving you disappointed in the trade.

If you think FX moves fast, nothing moves faster than gold; watching the bid/offer in a “stop hunt” will show you just how fast price can go down in just seconds. The pain will only last a few seconds, but the memory will linger for a very long time; therefore, it is imperative you make the “high probability” trades the algorithm calls for and leave the rest alone.

As I write, gold has gone over the cliff “Thelma & Louise” style, and skidded along the RM=1 lower exhaustion lines down to the low 1340’s; is the market price hitting these lower exhaustion lines a buy signal? Simple answer: NO. Why? Because once the daily range exceeds the $15 - $17 per Oz. area, no matter the number but usually between $15-$17 on the low side to $22-$25 on the high side, gold is finished for the day.

This represents about a 1.25% to 2% intraday move, and if you look at gold throughout history going back about 40 years, you’ll see that very rarely does gold ever go past ± 2% of price intraday. It happens, like in 2012 after a huge bull market run up prices started to collapse, but I surely wouldn’t trade off of a probability that has less than a 2% chance of happening on any given day.

All of this goes to the heart of what it takes to be successful trading gold from the long side; namely, use the algorithm signals and rules as the daily range is expanding, and when the “run” is over, quit for the day. You hang around and try and get more, and what you don’t realize is that the probabilities have shifted due to the higher daily range, and what you will see happen more often than not is your profits taken away from you.

Have a great weekend 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!”

OUR LMFX GOLD TRADING PAMM WILL BE READY AS SOON AS LMFX GETS THROUGH WITH UPGRADES TO ITS PAMM SOFTWARE! WE ARE VERY CLOSE; OPEN YOUR LIVE TRADING ACCOUNT TODAY, FUND IT, AND BE READY TO PARTICIPATE!

 

FACTS VERSUS “THE NARRATIVE”

POLITICS & MARKETS: WHAT’S THE DIFFERENCE?

We live now in an age where nothing means anything anymore; language has been cheapened to the point where you can make it mean anything you want, anytime you want. We don’t just see this in the political arena, we see it now in markets as well.

For instance, take the stock indices; pick any of ‘em, it doesn’t make any difference which one, as they are all under the hypnotic umbrella of Central Bankers worldwide [most notably the Swiss National Bank]. The consistent meddling of desired outcomes for the financial elites mandates no volatility and no “upsetting the apple cart” going into the U.S. elections. Therefore, daily ranges have shrunk; intraday volatility has imploded, and stock indices remain upward to range bound for the foreseeable future. THE NARRATIVE MUST BE MAINTAINED AT ALL COSTS.

Which brings me always back to gold, because here the “narrative” almost always gets destroyed [ultimately] by the “truth”, and right now the truth is ugly and getting uglier by the day/week/month and year. The fact is global growth and productivity are plunging, money printing is rampant, Central Banks are in panic mode, the public everywhere is angry, and sooner or later gold is set to “explode” higher.

As we have seen over the last 10 years or so, the vast majority of the up moves in gold occur in Asia, as true money flows “West to East” for fiat, and the manipulators use New York and the U.S. session to sell and push the price lower; give them any excuse, real or manufactured [like Friday’s fairy tale jobs report] and they will sell gold into a frenzy. After all, they just print the money for margin anyway, so who really cares?

Which brings me to today’s action; as I said yesterday, you always have to keep in mind what Asia and early Europe has done for the day so far in terms of “trend” and be wary of the New York session in terms of continuing that trend. Coming in and turning on my screen, I see an approximate $15 range with price hovering about $3- $4 off the highs but far above the white horizontal daily line. I know 1 of 2 things is going to happen; 1) move slightly lower and then retest the highs, maybe making a new high by a few pennies to maybe a buck or two and then a sell off, or 2) a quick move up followed by a reversal sell off that picks up steam throughout the day. In any event, I’m going to be happy with my profit goal of $3 - $5 per Oz. because the range is already $15 and could quite possibly remain that way for the rest of the day.

What we ended up getting is scenario #1, and the algorithm captured a move up to the exhaustion line a few minutes after the start of New York trading. The chart is directly below.

A couple of things to note; 1) after the highs were hit on the exhaustion move [or spike, take your pick], the range is now a few pennies short of $17 for the day; at this point, you’re officially in the “danger zone” for continued new highs going forward from a probability standpoint, and 2) given #1, AND THE FACT THAT MY PROFIT GOAL WAS HIT [about $4 per Oz. on the trade and my goal is $3 - $5], why take another signal from the long side given the fact the news cycle isn’t supporting a daily range above $20? Maybe it happens, I dunno, but it is August [vacation time and trade desks are light] and probability theory says it isn’t in the “cards” at below a 50% chance of occurrence.

Now, in retrospect [20/20 in hindsight is a great technical indicator], the market has moved sharply lower after a large sell order has hit the market and taken us down to 2 lower exhaustion moves within an hour of the highs. Do I take the buy signals from this? Short Answer: NO. Why? Because the range of the day at approximately $17 tells us upside is limited and the market is still above the white horizontal line.

When we buy lower exhaustion hits on an expanding daily range above $13 per Oz. moving lower, and the white horizontal line is above the market, we do in fact have an above average probability of capturing the bottom [for the day or short term] and can expect a decent bounce off of that low IF there’s nothing in the financial news cycle that overrides buying [like an NFP report or interest rate decision]; that scenario isn’t present today, and so I don’t trade going forward today. “Hey, the probabilities simply aren’t there to risk money.”

Now that the market has moved equidistant from the high and low and is sitting on the fence, it’s anybody’s guess what happens from here today; as for me, who cares. There isn’t a cloud in the sky, the water is turquoise, the sand is pure white and the beach beckons with some very cold Corona’s with limes. I’m so outta here.

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!”

OUR LMFX GOLD TRADING PAMM WILL BE READY AS SOON AS LMFX GETS THROUGH WITH UPGRADES TO ITS PAMM SOFTWARE! WE ARE VERY CLOSE; OPEN YOUR LIVE TRADING ACCOUNT TODAY, FUND IT, AND BE READY TO PARTICIPATE!