“The face of GBPUSD … & it doesn’t take you 6 minutes either!”
“Lunge violently up, lurch violently lower”, and as I said yesterday, and I’ll say
it again today, “kill the longs … crickets … then kill the shorts … crickets
… rinse & repeat at least twice or three times before even the dumbest trader alive
gets the hint”. As for the “trend is your friend” mantra … define “trend” [devil is
in the details] and then give me the right time period … “trend” for me, means
long enough for any position to get into profit mode, so I can unload it onto
somebody else who thinks there’s more room to go, and what defines and allows
a very long trading career is my opinion that, “he who panics first, gets to panic
again later”, and by default the corollary, “he who waits gets “whacked” &
punished” … And when dealing with LP bank’s, the “mood of the market”
changes before you have any chance to buy the bottom or sell the top.
Make no mistake, to be sure there are identifiable and legitimate trends that
pop up every few years for months at a time, but the mistake people new to the
biz make, is assuming trading is like that “all the time” … “sorry Skippy, it ain’t
so”. And the dirty little secret is, Cable is and always has been, a neurotic mess
since day one 4 decades ago when it first burst onto the trading scene at the
CME in futures. Why do you think they called it “The Widow Maker” back in
the day on the trading floor … “cuz it was easy to make money trading? … cuz
it’s trends were easily identifiable and you could jump on for profit? … cuz
trading never got disorderly and totally chaotic? … cuz, you get my point”?
What has made Cable a truly wonderful market to trade, is that throughout its
history of the last 40+ years, it has the consistency and staying power to put in
above average daily ranges far greater than other U.S. Dollar pairs, so that
even the smallest trend you pick up on can be used for profit … that’s called
intraday volatility for you “Newbies” … what makes it “The Widow Maker”,
are trader beliefs that somehow it can’t move the way it does without creating
a brand new trend that, in actuality, isn’t there, and in the process gets you to
buy the highs and sell the lows, sometimes multiple times in the course of a
day.
And when volatility shrinks noticeably, like the last 10 trading days [excluding
Sundays] for example, you have to shorten your “profit horizon” even farther,
and that means the market has to move “F-ing now”, not 5 minutes from now,
but “NOW”, into a profitable trade position where you can explore your
options … you can’t do that when it’s a loser … cuz with Cable, most often,
there are no second chances … and many traders have the “deer in headlights”
phenomena hit them, and this market will not wait while you sit there and
decide what to do. And as today shows with not one but four “blitzkrieg” rallies
out of nowhere, with the third being 40+ PIPS in 7 minutes, that killed some
shorts, you can’t hang around a trade and say to yourself, “well, we only got a
50 something PIP range, and that’s not normal … so I’m gonna stay with it cuz
it needs to expand … and when it doesn’t, you’re buying the top and puking and
end up complete toast”.
I would have all the money in the world accumulated into my account if I
simply knew one thing you didn’t know; “what’s the likely range today”? And
when Cable is its “normal” schizophrenic, pathological, meth addicted self,
and runs 100 - 150+ PIP ranges from late Asia to the U.S. mid to late
afternoon, making shiploads of money is “Standard Operating Procedure”
[SOP] … get into the 60’s and lower, and your looking at a potential
nightmare, where you can’t seem to wake up, cuz it’s one big stop hunt and air
raid drill wrapped into one.
Just cuz it’s rallying now doesn’t mean it won’t break, and just because it’s
breaking like “Thelma & Louise” now, doesn’t mean it can’t rally … and what
my original Cable algorithm attempted to do was bring some kind of
systematic momentum studies to the table and get a grip on when exactly to
sell the rally, and by default also when to buy the break … keeping in mind,
that if I’m wrong it won’t cost much, but if I’m right it will take off again and
my profits will be large. “Well, that’s all great and good if the ranges are there,
and don’t come predominantly via news event gaps … but if there’s no range,
what do you do”?
“Well, 3 things are what I do; 1) I spend the money to get the long term
historical raw tick data in ASCII format, learn computer language, and become
proficient with statistical software professional mathematicians use, 2) I redo my
original algorithm to make it as close as I can to unbeatable, and 3) I shorten my
trade horizon up and until the market starts to get back to normal, where I again
will adjust my time horizons depending solely on action in the market”.
And most importantly, I will realize that everything must happen eventually,
and that the period we are in right now will pass, and not to do “stupid shit”,
cuz I won’t care about now when things return to normal whenever that is and
however long it takes … maybe it ends tomorrow, next week, next month, I
dunno, but historical “mean reversion” comes back cuz it always does, and at
that point nobody remembers or cares about early May 2018.
Turning to today’s GBPUSD market … “good grief … seriously”? … what a
bucket of hog slop … but I will add, that the market is appearing to be close to
exhaustion on the downside … that doesn’t mean “up, up, and away”, it means
rallies come viciously and quickly, and to prepare for them, and not stay on the
long or short side of the equation for too long … “if it’s not going down [up]
when you’re short [long], and the downside [upside] momentum wanes, time to
leave the scene … the likelihood of a drive by shooting/mugging is about to
occur”.
Three trades today … PAMM up just a few bucks short of 0.1%.
When I see more normal trade flows, I’ll increase my volumes, but today I cut
things back due to the unbelievable choppiness, mystery ticks, lack of volume
& liquidity, and downright “nobody gives a crap” tone to the market … fills
were excellent today, no issues at all … no matter the direction today, outside of
the 3 upside “ramps” to nowhere that killed shorts, did the market show any
conviction to one side or the other … both sides a real struggle, and then in 2
seconds, the other shoe drops and it’s an easy ± 10+ PIPS that is almost
impossible to make back in a session like this.
Directly below, first the Cable algorithm M5 from today, and below it the daily
candlestick.
“Look Skippy, a “doji” day on the daily candlestick chart! … gosh, we hardly ever
see that”! [Note: See my eyes roll back into my head.] And of course, when you
get days like this, sometime around Noon EST., give or take a few minutes,
Europe goes “buh bye” for the day, and now it’s just the New York banks doing
biz … “good luck with that”.
So, another “I can’t believe this is happening”, happening 10 days in a row, with
today’s stellar performance giving us a 65 PIP range from the tips, with 99% of
the day hanging around 40 PIPS … where does it end? … I dunno, nobody
knows … it ends when it ends … the important thing is to focus and not get
caught in the “chop”, and sit back and be disciplined while showing patience
… trust me, it will end … and now, I’m outta here … until tomorrow mi
amigos … Onward & Upward!!
PAMM spreadsheet directly below.
Have a great day everybody!
-vegas
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