SANITY TAKES A RAINCHECK

 

“EURUSD: Testing your sanity each and every day.”

There are only 2 rules in FX; 1) check your sanity at the door, and 2) there

are no rules in FX … and as the intraday volatility picks up to levels not seen 

since the Greek crisis in EURUSD, it only makes things more insane … 

Today being a very good example.

I got to my computer screen a few minutes after the European open … I 

missed the low at 08:15 server time, and got to trading about 5 minutes later. 

And while the low today came off quickly, that’s the only thing about it that 

you could look at and say, “well, that might be a low”. No bullish engulfing 

pattern, no nada … simply a quick move of about 10 PIPS … and then the 

rocket climb upward, that saw no retracement whatsoever until we are about 

110 PIPS higher above 1.24 … “Oy is an element best avoided”!

And the speed & scope at which up spikes go higher off very small 

retracements [3 - 10 PIPS] lasting a couple of M1’s, is truly astounding … if 

you look at today’s M1 candlestick chart, there are dozens of M1 up spikes 

10+ PIPS and higher that dot the landscape … truly treacherous &

dangerous. Add to that, as I’ve said before, if you happen to buy on the uptick, 

the slippage from the scumbag LP banks is horrible … and quite frankly, even 

if you buy on the downtick, it doesn’t guarantee a decent fill, only a better 

chance at one … ditto with liquidations as well.

And here we go again with POL’S opening their Pie Hole; today’s installment 

of abject stupidity, none other than Mnuchin, who now says, “Of course, I 

absolutely favor a strong dollar over the long term”, and it’s a race to the 

downside in EURUSD… nothing like 80 PIPS down, 120 PIPS up, and now 

60+ PIPS down, with very little in between … “Any of you bigger players got 

any capital left, now that both sides of the order books have been taken out and

shot in about 3 hours”?

Meanwhile, now that we are in the New York afternoon, trading has ground 

to a halt around the 1.23850-ish area … so far, the market isn’t seeing any 

more big spikes, up or down, but a slight drift sideways to up, and the “talking 

heads” I’m sure, will now say everybody is waiting for the “State of the Union” 

address tonight with President Trump … and with the market officially up for 

the day, about 5 - 7 PIPS as I write, “hey, just another unchanged day … right”? 

There’s no way I can predict intraday volatility, just as there is no way I can

 predict when one of these asshat POLS shows up in front of a camera and 

says something stupid that roil markets … “apparently, Mnuchin owes 

somebody some money, otherwise why state the obvious? … what’s the point”?  

Simply put, volatility begets more volatility, and today is a good example of 

that … once shorts felt trapped, and we passed the early 50% retracement 

line around 1.23610 on the upside, volatility ramped higher again. Remember 

what I have always said; “he who panics first, gets to panic again later”. Not the 

best choice, obviously, when you’re getting “monkey hammered”, but better 

than waiting for far worse results. And if you weren’t participating in 

EURUSD today, trust me, things went out of control rather quickly.

A couple of trades today in this hyperbolic volatile clusterfark … neither got 

what I consider good fills on either entry or liquidation ...not that they were 

horrible, except to say they weren’t the usual “right on the money” I am 

accustomed to getting even when it’s volatile … no matter, the PAMM is up 

just a couple of bucks short of 0.1% on the day. And while I would have loved 

to capture more, this is the kind of day where about 99.99% of traders got

 ‘whacked” one way or the other, and wish they had stayed in bed … to be up 

anything in this clusterfark is a miracle, that’s how bad the price action was 

earlier. 

I have said before, but it bears repeating until I’m convinced you have it

 tattooed  on the back of your eyelids so you can see it while you sleep: 

 “successful trading begins and ends with risk … identifying it, controlling it, and 

then trying to eliminate it the best you can … only then does profit matter, but it is 

always secondary. Risk can be sharply curtailed by concentrating on “trade 

setups”, and not by traditional technical analysis or the “fun-der-mentals”; those 

only allow you to win enough to get you to come back after you make another 

deposit into your account after you got whacked, for the umpteenth millionth 

time. Think about it … no trade is worth getting whacked … why? … cuz the 

market will be here tomorrow and every biz day after, and opportunity is always 

infinite … your capital, though, is finite”. And what this means, is simple;  

“don’t chase a market … look for the setup, cuz that’s where the highest 

probability of profitable trades lie … do you end up missing some? … sure, so 

what? … would you rather get whacked and lose money, but you were right it 

was going up today”?

And while I’m not happy about the lack of setups today to get long, it is what 

it is, and we just move on to tomorrow … yes, still made money, and sure, 

there are tons who would trade places after getting whacked, but I expected 

more from today and didn’t get it. Tomorrow’s another day … back at it to slay 

the market dragon once again … I’m outta here … ‘till tomorrow mi amigos … 

Onward & Upward!!

PAMM spreadsheet directly below.

 

Have a great day everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND

 OPERATIONAL; SEE “PAMM/MAM 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”!

  

 

          

WELCOME TO “COSTANZAVILLE”

 

“It’s official: “bizarro” world is the new norm … now deal with it!”

I get to my screen today, a few minutes before the European open at 08:00, and what do I see? “Wait … what? Range’s that can’t even make it to the teens … twelve something in EURGBP, and teens EURUSD, with Cable in the low 20’s … seriously, we’ve sunk to this level now”? And for 2 -3 solid hours, I thought at varying times my internet connection was down, cuz nothing was moving. Now, I know that you know what I’m thinkin’, which is, “from which direction does the C4 explosion come from, how bad is it gonna be, are reversals, double reversals, or the “Flying Wedge of Death” gonna be a part of today as a result of this, and how do I sidestep the complete “shit show” I know is coming at some point”?

Last night, after some trade analysis and some Homer Simpson “deep thoughts”, it finally sinks in that the trading environment we find ourselves in has been renamed to “Costanzaville”, and that the norms, strategies, & trade executions have to be thought of in terms of how George Costanza would handle it and screw it up beyond recognition [your basic FUBAR]. I can simply think of no better analogy, than George, of what not to do at crunch time … and so George came to the conclusion during an episode of “Seinfeld”, that his entire life up to that instant had been “by the book” with all due manly logic applied … and nothing had worked out right for him ever … but what if, he says, I do exactly what I never have done and it works out beautifully? Well …

And if you need a trading day to become the “poster child” of everything wrong with trading, this day is it … round up the usual suspects, but what’s really going on is nothing more than “GBPUSD terrorism” … and quite frankly, it isn’t gonna stop anytime soon, given the nature of both the U.K. & the E.U. via “Brexit”; it has become, and will be for many more moons, a complete “shit show-a-rama”; “simply put, it’s the C4 explosive you can’t see hidden in your car”. Every day, rumors start either with large hedge funds, scumbag dealer LP banks, and/or Government Apparatchiks paid under the table by the aforementioned hedge funds and banks … first they start it, then they front run it, then the “rumor” is floated to corporate types who need orders filled, then the scumbag LP banks start “jacking” GBPUSD into stops, then the corporate orders are filled and the people who did the front running fill the other side, and then the market dies … until the next time, some indeterminate minutes later, when it all starts again with the usual “rinse & repeat” cycle in play.

Today sees Cable get “Thelma & Louise-d” on more “Brexit” BS … apparently, yesterday’s delusional strength forgot about this … the point being, that everything … and I do mean everything … that Cable touches or is involved with gets “torched” … bottom line, is that in Cable, we have nothing but euphoria or panic; take your pick, cuz there isn’t anything in between. Of course, that sends every cross with GBP in it, reeling to floor 1 from the penthouse, ‘sorry, no stops along the way for you to get off … and when the sell stops are filled at or very near the bottom, thanks for showing up and playing”.

There simply is no way to quantify “panic”; every attempt you make will yield unsatisfactory results; and in anything Cable related, your market trade executions will get “butchered”, right along with your “limit orders” that don’t get filled on the spikes; this FX pair is the Ebola virus of finance. I made the decision last night, “if EURGBP can’t get its head out of its ass and start moving somewhere in a coherent fashion, I can’t sit here and watch “grass grow” while Cable figures out who to kill next. It isn’t a EURGBP problem, it’s very much a GBPUSD problem; everything is vicious large spikes that come out of nowhere, clean out stops, and then die on the vine seconds to minutes later … and the problem is, there isn’t any way to consistently trade this without risking exponentially more money in losses for what your reward is if you are right … and after witnessing for the umpteen time another blowup in Cable this morning  cuz some Apparatchik in Europe says negotiations going forward will be tough, I simply can’t take this pair any more in its current state of complete insanity and wish it & George much happiness in their new seemingly permanent residence in “Costanzaville” … and so, goodbye Cable, see ya later”.

Now, I want to emphasize this to avoid any confusion; this is the very reason I instituted “The Magnificent Seven”; through the weeks, months, and years, pairs go through stages. Sometimes they are good to trade, and sometimes they aren’t; right now, anything that has GBPUSD in it, is an invitation to a sizable loss. Sure, when all this “bat guano” Brexit crap is behind the market, it will probably revert to its former self … which is somewhat insane, but without the C4 explosion gap spikes that are here now. I’m simply not willing to risk 2% - 5% of capital ON EACH TRADE, cuz some Brexit rumor knocks us down with a 50+ PIP spike in less than a second; it makes no sense pursuing that kind of strategy, when that kind of risk is present every day. This is the reason pairs like GBPJPY, GBPCHF, & GBPCAD are untradeable at the moment, without risking 50+ PIPS, cuz you have no shot whatsoever of sidestepping either the Cable rumor mill or the spike that is coming your way in less than a millisecond because of it … none, as in zero … so when I sit here trading GBPCAD for example, and there is no news to account for it, what am I to think of a 60 PIP spike up in one M1 candle, only to be followed by a 70 PIP down move in the next 3 M1’s? Any idea what the collateral damage is from the stop? Well, this extends to EURGBP as well, only the disaster gap spikes aren’t quite as bad on average, but here the problem is how do you make it back if it hits you?

What this means is that, as of now, there are only 2 pairs that don’t have Cable influence; EURUSD & USDCAD. And while both pairs have been stellar performers, the clear favorite for me is EURUSD, where the spread is usually 1/10^th of a PIP to maybe 2/10^th’s of a PIP, and sometimes is zero as well. The amazing thing is, I was “half right” all along, cuz if you go back and look, the way EURUSD trades now, it looks a lot like the way EURGBP used to trade, before large spikes started to make everyday appearances.

Today, I was looking at EURUSD from the get go, and took one algorithm trade … which was a small winner … we got a signal, and it didn’t go very far before reversing … today also saw a reversal in EURUSD, as the initial rally to a new high faded and new lows were coming later in the day … not a very impressive range, coming in around 52 PIPS so far … the main thing, though, is that the trade is somewhat orderly, unlike Cable which is gapping lower on stops via the rumor mill.

On Sunday night, I’ll b posting the “Scalper’s Algorithm” for EURUSD & EURGBP ONLY; right now, because of Cable, I’m not going to be doing EURGBP trades anymore until Brexit completely goes away, therefore the examples in the manual will be EURUSD. The manual is much smaller and compact, and there are only 2 critical rules for success; it’s an easy read, and it’s an incredibly easy setup on the MT4. Today saw the algorithm call for approximately 11 buy signals between 08:00 to about 15:00 server time, and after that it was all “sell side”; I took one of them, and simply tracked the others to compare with USDCAD & EURGBP during the same period since it’s Friday, and I’m never crazy about trading on Friday afternoons. And most importantly, not only were all the signals profitable, but they were significantly better than what was available in the other 2 markets … this is good news and what I needed to know before I start trading EURUSD in earnest on Monday. Get ready for a blizzard of trades, compared to what’s been done lately, and while I’m not looking for 100% profitability on every trade [would be nice, but not dreaming here], the market gives us what we need in terms of “tradeability”, that we aren’t getting right now in anything Cable related … all with the lowest spread in the biz. What’s not to like?

Today saw one trade, as I explained above … the signal I took wasn’t a very good signal, and I waited about 2 seconds to long to liquidate … nonetheless, it’s profits and I don’t care how much, something EURGBP hasn’t been able to consistently give me the way I want this week or last cuz of utter insanity in Cable. My job is to make consistent money on a daily basis WITHOUT subjecting accounts to high risk, and I will go to whatever market I have to towards achieving that end goal. And while I got nothing against CAD, I think EURUSD is a better market overall; either way, though, unless EURUSD puts in small “dojis” on the daily candlestick day-in and day-out endlessly, there isn’t any way you don’t make money with the algorithm … simple as that cuz it’s just not mathematically possible. I don’t care what kind of games LP’s play, or how many FWD’s there are, or how many reversals the market puts in, the math doesn’t lie … unless there are small daily “doji’s”, the signals will produce profits … unless of course, the laws and proven theorems of mathematics don’t exist in “Costanzaville”, but I’m not goin’ there, and we aren’t trading there either!

So, here we are today, looking at the big blow up of EURGBP, with all the big spikes up, taking out stops left and right on its push to above 0.88500 … and where is it now, after the dust settles, accounts are killed, and LP wallets fattened? … right back in the 0.8820”s.

I want people to understand, it isn’t that there aren’t large spikes that occur in EURUSD, but the vast majority of the time they come on either E.U. or U.S. economic news; the same can be said for general dollar strength or general dollar weakness, and yes, you need to be aware of the daily and weekly candlestick support and resistance areas, that if breached, can ignite stops one way or the other … but this is simply “situational awareness”, nothing more than you would do for any market.

I simply can’t take anymore “sitting” around waiting for the market to put in a signal while watching it move a bundle of PIPS, and then die, leaving me with Mr. Jack Squat … those days are over … there will be plenty of signals in EURUSD, and I plan to get our share of them in the bank. Onward & Upward!!

PAMM spreadsheet directly below … until Sunday night mi amigos.

  

 

Have a great weekend everybody!

-vegas

OUR TURNKEY FOREX “PAMM/MAM” IS NOW OPEN AND OPERATIONAL; SEE “PAMM/MAM 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”!