YOU ARE WITNESSING HISTORY TODAY!

“If only Spicolli ran the FED … how could it be worse?”

If only the country had bright, energetic, selfless public servants running the nation’s central bank; well, I can dream can’t I?

“Hmmm, 1252 and change … I seem to remember way back in the past all the way into yesterday afternoon when we were here … right before FED Pie Hole Fischer opened his cherry pie and set off the HFT algos in Yen & gold [was this planned or just a ‘coincidence’?] on a frenzied search for stops late in the gold trading session … and found some. And I said in jest yesterday afternoon, where can I now sell it and dig a deeper account hole … well, it appears pretty much anywhere actually, cuz here we are right back to 1252 - 1253 as if nothing had happened”.  Only thing that happened is of no consequence to the non trading public, who could care less if you got stopped out of your gold longs. For the FED manipulators, though, it’s “mission accomplished”.

 And so you sit here and wait … and wait … and wait some more, watching M1 candles with 11 cent ranges get put in and wonder where have all the traders gone? And really folks, they’re dead … shadows now … cuz yesterday afternoon, with Pie Hole Fischer just being the latest great manifestation of this “makes no sense” trading 101, gold goes on a short trip to “Nowheresville” as some HFT algos clean out sell stops that had been building all day; and after they are cleaned out, some backing and filling into the Asian open, where our favorite “can’t spit and hit the ground” Chuckleheads sell it right out of the gate for confirmation of a bottom, and you have the perfect recipe for where we are at right now; namely, right back to “square one” after a stop hunt attributed to Fischer, but in reality he was just “noise”, the “excuse” if you will of the “talking heads” on CNBC who have nothing better to do than become HFT shills and fill airtime.

And more than anything else, traders around the world in whatever market they are attempting to trade, see this “circus” of lies & deceit being played out over and over again, day after day, and are rapidly becoming “paralyzed” because they have no idea how to handle these type of events that infect financial markets today. As I said yesterday, it’s a new game of “musical chairs”, and when SHTF and either news breaks or some Pie Hole “yada yada’s”, you better be scrambling for a seat cuz the fat kids are right behind you waiting to crush you as the music stops! And when the dust settles … crickets; and if you were on the wrong side of the “yada yada”, you got almost no chance at making what you lost back, cuz there is nothing left but the “WTF happened?”, and of course … moar… crickets!

I don’t think any of this is by “chance”; it’s coordinated by the large trading banks [JPM, Squid, etc.] and the various central banks around the world led by the FED, and truth be told, they’ve all learned the hard way from the Japanese years earlier how to “bend” markets to their will and attempt to determine outcomes; and believe me, outside of making sure the top 0.01% of the elite rich keep on making money, their other top priority is to hurt retail specs … especially in gold, where the stop hunt “freight train” is ready, willing, and able to run right through your account … gold represents everything evil to a money printing central banker & his/her globalist, crony capitalist pals.

Here we are again, about an hour before the New York open with an HVALUE of $3.14, and very much looking like day 6 of “Dojiville” is in store for us; 2 FED Pie Holes speak today, one at 11:30 and one at 1 P.M. New York time … “go ahead punk, make my day”!

The good news of course, is that Mrs. Watanabe & pals sold the Asian open, so now look for their buy stops to be set off higher between 1255 -1260 sometime later today. Seriously, where do they get all the money they lose over time? And here at the New York open it’s …. Crickets … “Now back to our regularly scheduled coverage of YMCA Champions Tournament in Junior Women’s figure skating compulsory prelims from Norway” … [might as well, it’s got more going for it than gold at the moment.] And, for what’s it worth, we open and try to go higher and can’t … although I’m left wondering if the high at 1254.32 is high enough to take Mrs. Wantanabe & pals out from the Asian open … 60/40 says it’s probable.

Another hour, another new marginal high by a couple of pennies, taking the HVALUE to a mighty $4.16 … then the immediate smack down cuz there ain’t nothin’ up here but Mrs. Wantanabe’s buy stop … anybody see a pattern here besides me? And this is what happens when you are trading “inside” the $5 HVALUE for the day … reversals all over the place [statistically], new highs then maybe new lows then chop, spikes everywhere to nowhere, and you end up trading 27 times and got nothing to show for it except “thanks” from the brokerage house. I guess we have to wait until 11:30 & then 1 PM for the “Oracles of the Mariner Eccles Building” to impart their collective wisdom upon the uneducated and unenlightened masses so we know what to do, knowing of course that the HFT’s will get the info first and … well, you know the rest.

Sitting here watching this stuff aimlessly drift … I feel like I’m in high school detention waiting for the clock to run down to freedom … only this is worse. A little after a couple of hours into this “Clusterfest”, and gold has made a trip down to the 50% retracement line for the day, thus establishing its “bona fides” for another doji day on the potential horizon; this would be the 6^th in a row, a feat I can’t find on the daily candlesticks going back as far as the MT4 will allow me, which is August 2010 where the price was … you guessed it … about 1250! It’s not that there weren’t time periods with doji’s, it’s there weren’t any time periods that were 1) 6 days in a row, and more importantly 2) the doji’s that did appear had much higher HVALUES & daily ranges; it’s one thing to have a small doji with a $4 HVALUE and a $7 range, but it’s quite another to have a doji that has a $13 HVALUE and a $17 range. The latter can be successfully traded, while the former must be left alone.

So, almost 7 years worth of data, and before that you’d have to go back to when gold traded sub 900 – 1,000 … back before the financial crisis of ’07 – ’08, when nobody was paying any attention to gold and the parameters for trading were different given the price level [threshold was $3 HVALUE when gold was sub 900]. Before 10 years ago, the market to trade was the e-mini SP500 futures contract [no CFD’s at that time], where you’d have absolutely marvelous HVALUES, daily ranges, and most importantly intraday volatility that would see the market trade back & forth 10 -25 index points during the day; that’s when the index WAS HALF WHAT IT IS NOW. “Thank you FED & other central banks for ruining this once splendid market, since you decided starting in 2011 to begin managing ‘outcomes’ for the financial elite and thus killing any volatility”.

By comparison, and to continue my analysis, before the turn of the new millennium, back in the 80’s & 90’s when gold was dead to the world for lack of any movement and prices were pretty much locked into the $250 - $450 range for 20 years, the threshold HVALUE was $1.50; but remember, this was during a time when there was no internet trading and everything was in a physical gold trading pit; things moved a lot slower back then, and most ranges for the day were $4 - $7, with an occasional day either above or below that level. On a percentage basis, things were wilder when the market was dead!

And so now, here we are in basically “uncharted” gold territory; it’s like we’re on a raft out in the middle of the Pacific Ocean and somebody says paddle to Hawaii; great, if I only knew which way to paddle cuz I got nothin’ to tell me which direction Hawaii is, let alone find it. We now have today, 6 small doji’s in a row [excluding Sunday]… something not seen in the modern era of gold trading … and while you would be hard pressed to go back on the daily candlestick and find 2 in a row that weren’t inside the week of a major Holiday, what do you now say to “Mr. Tail Risk” when 6 in a row show up? … “Yea, me neither”.

Cuz when you get right down to brass tacks, what we are witnessing right now this very day is as “earth shattering”, is as “mind numbing”, and finally is as “damaging” to trader’s psyche’s as the great stock market crash of October, 1987. You’re talkin’ two completely different “tail risk” and “black swan” events nobody but nobody saw coming. I sure as hell didn’t see this coming “implosion” in gold on the horizon; so from a completely objective “tail risk” point of view, and nothing more, they are both similar in their “shock” to me and fellow professionals I can assure you. EXIT QUESTION: “What do doctors do when seeing a brand new disease they’ve never seen or heard of before, and have no clue how to treat it and allow the patient to live”? SHORT ANSWER: “It starts with ‘WTF is this?’ and then works its way down from there; in other words, you begin to figure out how it can be defeated”.

Thing is, unless the whole market is just going to completely die and just sit here … an unlikely event as I can possibly think of at the moment given the state of the world… the only thing that defeats this “tail risk” is patience & discipline.

In so many ways, and in so many major markets, I feel like the world’s stability is hanging by a thread … a thread made possible by idiotic central planners that think they can either do away with the business cycle or can get rid of volatility through their financial derivative machinations; at some point … and we are closer rather than far away … this thread is gonna break, and when the world gets “reintroduced” to volatility, it will be eye watering to say the least. What can’t be sustained forever won’t be, no matter how much money they print or try and manipulate for their desired outcomes. So maybe … just maybe … what we are witnessing now in gold is the markets “eye” of this hurricane that is surely coming … and when the backside “eye wall” hits, look the hell out!

And so now, at 11:30 here in New York, a couple of FED Pie Holes just hitting the wires and saying maybe 4 more rate hikes in 2017 … “excuse me, wait … what”? … “anybody wanna buy some swampland in Haiti for development I got for sale”? And the markets “yawn”; been there done that seen that and most importantly heard that line of BS before, and right up there with Mr. Credibility himself Mr. “Peter Pan Kuroda” of the BOJ, nobody believes the FED Pie Holes or are willing to bet money on this steaming pile of garbage known as “guidance”.

Gold for its part, along with every other major market, laughing itself silly with this “song & dance” rate hike routine we saw repeatedly throughout 2016; “you’ve raised rates 3 times in 11 years, and now in the next 9 months we’re gonna get 4 rate hikes? Yea, sure … Ok … whatever. How come the Dollar isn’t going higher and gold lower on this ‘breaking’ news”?

Well folks, even the crickets are complaining that there are too damn many crickets; and if it wasn’t for the 5 preceding days before it, I might call this the worst trading day evahhhh in the MT4 era. All of you reading this [I would bet] only thought “tail risk” could come from the “wild” side of the probability equation; remember, there are 2 sides to every probabilistic event.

And just when you think the “comedy gold” hits are finished, along comes a straight up 10 minute $2 blitz to a new high for the day to … wait for it … “oh Mrs. Watanabe, why’d you leave that buy stop in there just above the old high”? … and of course, like the sun setting in the West, there is “ZERO” follow through buying and we head immediately lower by about $2 before recovering a few pennies… “again, anybody here but me see a pattern when you buy/sell breakouts”? Hang on while I stop shaking from the excitement of seeing the HVALUE balloon to $4.51 from $4.16 on that blitz less than an hour from the close. And why shouldn’t the market hit a new high; after all, chumps sold the “FED Pie Hole” rate hike hoax 2 hours ago [cuz rate hikes are “bad” for gold] and have been patiently waiting for this stuff to fall, which it hasn’t at all and now are being forced to cover. Why cover with a very small loss when you can put your stop just above the old high and take a larger loss when the bullion dealers go hunting for you, which if you’ve been trading for more than 5 minutes in your life you know without a doubt they will do cuz they need your buy stop to get out of what they sold you 2 hours ago; per chance, do you own a shirt with a red circle painted on the back?

What the last 6 days has shown you, is that EVENTUALLY EVERY SYSTEM, TRADING METHOD, OR ALGORITHM HAS TO WORK! Even if its premise is the most screwed up, twisted, and illogical piece of work a central banker could come up with; eventually it has to work, cuz if it didn’t that would mean there are “guarantees” in trading, and as we all know that does not exist. So, at some point in history, this [now] has to happen … the trick is to “sidestep” it and not fight it; fighting any market has the distinct tendency to take all of your chips away and forcing you to go “buh-bye”.

“Alex, I’ll take ‘Stupid Poo Poo’ for $1,000 please; what is trading inside the $5 HVALUE”? Comex close now at 2:30 EDST; not much more to say or do in regards to this crap, except see if the record books can be extended to 7 doji days in a row since the dawn of the electronic trading era [regardless of what the daily chart looks like at 8 PM when the market closes for the day, we’ve just been through 6 consecutive non Holiday trading days where trading action collectively was/is the worst I have ever seen, each day getting successively worse than the previous one]. In any event, I’ll be here when it moves; we keep our “powder” dry and wait for our opportunities.

PAMM/MAM Spreadsheet directly below.

 

Beach beckons … I’m outta here … until tomorrow.

Have a great day 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”!

 

IN THE EYE OF A HURRICANE

“From this hurricane what leaves you first: your wallet or your sanity?”

There is no question in my mind, that right now as we sit through this boring, nothing USDJPY market [3^rd day running], that we are in fact smack dab in the middle of a financial hurricane; first “eye wall” will start to hit on the afternoon of Wednesday, March 15^th, and depending on what happens in the Netherlands later in the New York day after the FED and U.S. Treasury announcements, either pick up further steam or reverse and catch everybody on the wrong side. Either way, most likely we’re looking at a 300 – 500 PIP move over a few days before things settle down some. At least in this particular case, the event risks are well defined and known to the market, and we aren’t sitting in uncharted waters.

Hurricanes come in many forms, and as my “cousin” pictured above so aptly proves, make sure you understand what you’re dealing with when close to one, cuz the “upside” is limited and the “downside” is something has got to go; either your wallet, your sanity, or both.

Over all the years I have used the “40 PIP rule” to trade U.S. Dollar pairs [either XXXUSD or USDXXX], I have 3 observations to share with you; 1) when I’m stuck in mud, i.e. a boring, dull market that can’t make 40 PIPS to save its life, I hate it and think about [but don’t cuz I know what the consequences are] maybe trading a little anyway, 2) when it’s “over” and volatility returns I’m so damn glad I didn’t trade and end up doing “stupid poo poo”, and most importantly 3) the fact that the reason the “40 PIP” rule works so well isn’t because it’s a “function” of volatility, but rather a “dynamic variable” of the version 3 volatility algorithm.

I said yesterday, and I hope all of you understand the subtle significance of what it is I’m saying; “all very large traders [HFT’s, hedge funds, banks, etc.] use proprietary computer code in their algorithms to trade USDJPY [and the rest of FX as well]. We will never have access to that code either individually or collectively, and very few even if they had it would understand the math behind it … but … I can guarantee 2 things the code does without knowing what the specific code is spread amongst all of them; 1) they ALL track, analyze and attempt to profit from short term momentum, and 2) they ALL attempt to run retail stops through textbook support/resistance models so they can liquidate their positions at the most advantageous prices at tops or bottoms. Compared to their networks, our MT4 platforms are “tin cans with string”; but, we have one thing the computers don’t, and that’s the ability to “project” final M1 formations before they close the minute and inform the computers it’s time to buy/sell.

As my great grandmother used to say when she was alive when I was a kid, “You don’t want to work? Then you’re a bum! You don’t want to come over to my house for coffee? Then you ain’t my friend! You aren’t in church service on Sunday morning 7 A.M. sharp? Then you’re a heathen and deserve God’s judgment!” In other words, PROOF IS IN THE PUDDING!

I have stated many times that when it comes to trading, it is neither “associative” or “commutative”; just because A = B, does not mean B = A. Just because a short term bottom/top or a retracement bottom/top has been put in, doesn’t mean it “has to be” an engulfing pattern or reversal of some kind; however, when price moves in one direction or the other at least 15-20 PIPS and retraces the day’s trend, an engulfing pattern or reversal at the bottom/top happens plenty of times, and when it does it sets off alarm bells at the HFT’s and other large trading desks that the correction has come to an end. BEFORE ANY MOMENTUM INDICATOR YOU WISH TO PUT ON YOUR MT4 EVEN HAS A CHANCE TO RESPOND TO THE ENGULFING OR REVERSAL PATTERN, the market moves and the bottom/top has been put in. No matter what you code, when you get the buy/sell signal they’re now ready to buy/sell back to you! THEREFORE, IT IS IMPERATIVE YOU UNDERSTAND THAT THE PATTERN FORMATION IS “THE CODE!”

If you have been observing USDJPY these last couple of days, you have your proof right in front of you of what I said before; namely, the version 3 volatility algorithm is the “general case” of prior versions. Before, when the market would get slow like this, the signal components would collapse onto themselves and give off “false positive” all over the place. With version 3, the signals still work, but their effectiveness is limited because the market isn’t going anywhere and intraday volatility has fallen rather sharply over the last few days; BUT THEY STILL WORK! So, as I said before, even though they aren’t worth chasing, in very slow markets the version 3 still works.

The “40 PIP” rule, therefore, is a “dynamic variable” in version 3 in the sense that exceeding it means there is room for retracements and higher intraday volatility which gives us the ability to treat trades as either “scalps” or “free trades”. When it’s not there, the market does not give us these options.

Therefore, the “40 PIP” rule isn’t a function of volatility, but a dynamic variable function of the engulfing and/or reversal patterns; it is specifically the “code” of these formations after the market has told us intraday volatility is present [HVALUE > 40 PIPS], and thus allows these formations to be statistically significant [some kind of profit] precisely because there’s “room to run” up/down after 40 PIPS has been achieved [“And we know this for a fact because the profit ratio (PR) when 40 PIPS achieved = approximately 4.3, and when it isn’t achieved = approximately 1.6, over the years and decades USDJPY has traded”.]. All along I was right, but for only half the reason I thought; when the market is active, these formations shine when they show up, and they show up plenty of times.

So, it should be obvious; “we want to be trading when the signal parameters are at their most effective and statistically significant, and we want to sit on our hands when they aren’t”! And this is what the “academics” in finance [the same ones who say I can’t exist] don’t take into account; 1) they mistakenly believe all time and price parameters are equally significant and that none have an advantage over others, and 2) they can’t see the “code” in the formation on the chart and therefore treat it as “voodoo”.

And what I’m telling you, is if you strip away the known problem areas [days HVALUE < 40 PIPS, and potential bottoms/tops that aren’t engulfing or reversal patterns when H VALUE > 40 PIPS] where trading conditions are problematic for profits, what you are left with is a trading environment better than owning a casino in Las Vegas! Cuz what I’m saying to the market is, “give me the highest probability scenarios possible that put me in a profit position; from there I will make the call to scalp or ‘free trade’ it; that’s all I’m asking, now do whatever the hell you want”.

Turning to today’s market … I came, I saw, harrumph! … It didn’t take but a few minutes to see that EURJPY was in no mood to be any more active than USDJPY; when the Euro would go up the Yen would go up, when the Euro would go down, the Yen would go down, and thus the cross was going nowhere … quickly! So, that yielded nothing, and I’m back to waiting in USDJPY for it to do something.

Gold for it’s part, if you’re watching it, has no trade flow to it whatsoever … watching the bid go 30 > 65 > 95 >99 >71 >48 >30 in about 5 seconds … then rinse & repeat, and you quickly realize that if you are trading any size at all, you will [not an option on your part] be doing 2 things; 1) giving a shipload of money away to the dealer LP in slippage, and 2) biting off more risk than you can realize if the market turns and you have to get out. Ok you say, “well, use limit orders, that solves the problem doesn’t it”? MY RESPONSE: “1) you’re only going to get that limit fill if the LP can arbitrage it somewhere else and make money (just like a market order), and 2) just because you have a limit buy/sell doesn’t mean you get your price! [Hint: see customer agreement you agreed to when opening account.] If you have a limit sell in gold at 1220.00 and the market rallies from 1218 up to 1220.03 bid, and then immediately the next bid is 1219.58, there is a very good chance your fill is going to be 1219.58, and the LP will say to you that they couldn’t get your price so they filled it at the next bid possible. Oh … you didn’t know that”?

So, take whatever you’re doing for your own account and jack it up to 400 OZ., or 500 OZ., or 1,000 OZ. or more, and then tell me just how bad it’s going to be from these LP sharks when either my stop gets hit or I have to liquidate at the market the wrong way; cuz I don’t know, you don’t know, and the only thing for sure I know is that the LP will fill me just over “outrageous” and just short of “indicted”. How many of these does it take for the “money boat” to start some serious leaking? [Hint: not very damn many, and this is the reason I’m not trading gold right now. Reward not even close to the risk, so leave it alone.]

Looking out a little, directly below is the USDJPY daily chart, with Ichimoku cloud formation. As you can see, daily highs have been bumping up against resistance on the cloud, and since this indicator is very widely followed in the Pacific Rim part of the world, you can’t totally dismiss its significance … kind of looks like a “flag” formation is being put in, and if true indicates the half way move up to a retest of the highs around 118 … that could easily play out with 1) Fed hikes ¼ point fed funds rate and gives hawkish rate guidance forward for 2017, 2) Treasury gets debt ceiling lifted, and 3) Wilders loses Netherlands election … we’ll see, but I wanted to point this out today.

 

Here we are at Noon time in New York, and again today it appears, unless somebody decides to do something, that we have another day of HVALUE < 40 PIPS; right now as I write, HVALUE = 23.9 & LVALUE = 18.9; even considering event risk next week, this is pretty pathetic in scope. Really, I think it has as much to do with event risk as it does shorts getting wiped out on February 28^th in the reversal; nobody it seems wants to go out on the proverbial limb right now.

For Newbies to the website, and those that have only been here a short while, and/or those who are thinking about participating in the PAMM/MAM program, I’d like to share some thoughts on “escaping to success”; 1) finally, I have the house that I want, not the house I have to accept, 2) I trade on behalf of clients the deepest, most liquid [except when they ain’t], and lowest “net” cost markets in the world, 3) my fees are about the lowest in the world, 4) I use moderate to low leverage and am primarily “risk averse” rather than “profit oriented” in trading, and 5) over the years, my profit goal of achieving 1% per trading day is accurate.

Finally, getting the trading conditions I wanted in the PAMM/MAM at Turnkey Forex is something that I have been waiting for going on 5 years; yes, it’s taken that long. And what this means is more money in everybody’s pocket and account, and less going to the LP bank and brokerage house. What we finally have in the 4 markets I’m primarily interested in are the lowest “net” trading cost available to the public; and then to have that carry over into the PAMM/MAM is truly ground breaking. Because up ‘till now, every place out there had conditions that were less than ideal; high spreads, high round turn commissions, and volume requirements, and that’s not even mentioning slippage and other issues. And the savings all get passed to my clients!

The very best market to trade right now is USDJPY, the last 3 days notwithstanding; best liquidity [except when it ain’t] and largest spot market on earth, which means no matter how much money I manage, I’m never going to move this puppy one iota. Add to that, the absolute lowest “net” cost to trade [about ½ PIP] with better conditions than if you bought a CME membership!

I charge only an incentive fee of 17% on cumulative high water marks on profits; that’s it, no other fees. I consider 17% “fair”; not expensive or exorbitant and not dirt cheap. If I were a customer of myself, this is what would be acceptable to me. Others can charge whatever they want, and I can’t speak for their reasons. In the interest of total disclosure, I do get a rebate from Turnkey on their share of round turn commissions, which amounts to less than $1 per 100,000 notional value; this doesn’t affect a client’s spread, cuz whether I get a rebate or not the client still pays Turnkey $2 per 100,000 notional value of the trade. All it means is that Turnkey is willing to share their commission with me for bringing in the business to the brokerage house; nothing more, nothing less. So, since it has no affect on any client’s cost to trade, I might as well take the money they offer. If it in any way added to my client’s cost of trading, I wouldn’t do it.

When I trade for clients, I use moderate to low leverage consistent with a “risk averse” philosophy, rather than some who are totally obsessed with profits [and then never get them]; what this means, is that my very #1 top priority is “not getting whacked”! Now, nobody goes through a trading career with no losses … anybody who says or intimates this is a liar and/or fool. The first rule of trading is DON’T LOSE LARGE AMOUNTS OF CAPITAL, and the 2^nd rule of trading is never forget rule #1. The key to “escaping to success” is meaningless, small losses that can easily be recovered. Hand-in-hand with this is moderate to low leverage; “I don’t take shots with high leverage; losers have this attitude. I have the statistical advantage when trading versus others; therefore, my strength is cumulative over trades, NOT taking extraordinary risks via a high leveraged trade hoping to hit the moon”.

Over the years, yes I have made a tremendous amount of money trading … most people know that, and the results speak for itself without any need of embellishment from me. There are really only 2 things I want to point out; 1) in the past over the years, my track record shows that money grows roughly about 1% a trading day, and 2) besides making people a shipload of money, which I view as secondary, my proudest accomplishment has been throughout my career THAT NOBODY AT ANY TIME HAS EVER BEEN DOWN DOUBLE DIGITS AS A PERCENTAGE OF CAPITAL … EVER.

There was a time back-in-the-day when I was on the trading floor, when I had a Big 8 accounting firm crawling up my backside every single trading day FOR 3 YEARS … yea, 3 years. I told them at the beginning that’s what I wanted, and through their laughter they told me I was nuts; nobody does this amount of time … nobody. Too many things can go wrong … markets change … you’ll lose money … I will lose interest … blah blah. Over that time, which is audited and in the public domain, there were quarters [that’s 3 months for you almost college graduates getting free tuition at State U.] where I only made a couple of percent. And then there were months and quarters where the accountants begged me to stop making money cuz nobody would believe it and they would have to attest to it and people would think they were lying … seriously, it’s true.

Bottom line is it came out slightly above about 1% a day; so, this is through crappy weeks, a couple of dead months now and then, good times and all the rest. So you don’t have to do the math, it was about 1,400% annualized. Now, maybe I do better or maybe I do worse … I dunno, cuz I can’t predict market behavior or volatility. What I can tell you is I have “floor trading” conditions at Turnkey and that is critical for our success. And just so somebody out there doesn’t get the wrong idea, I’m not predicting or projecting past success into the future for you … like I said, it could be better or it could be worse, I’m just telling you what “has been”.

I have always taken a very careful approach towards client money; I’m not some “cowboy gunslinger” from ‘Trading Places’; my philosophy has always been to “stay out of trouble” first, then seek profit. On those days we do very well, it won’t be because I went out on a limb and bit off more risk or took a shot with high leverage; it will be because I “position scaled” and chose the least risky approach to the market consistent with profit potential.

When I started the PAMM/MAM, I was still using the version 2 algorithm; a series of failed, losing trades in gold & USDJPY that amounted to a few hundred Dollars or so [at the time a little less than 1% of capital] got us off on the wrong foot. Instinctively, I knew something was up with the model, and made the necessary changes which prior blog posts have highlighted. I take losing personally and always have; I’m not gonna sit around and just say, “Oh Ok, no big deal … stuff happens … it’ll be alright … it ain’t much … blah blah yada yada”! I’ve been at this rodeo too long for that kind of cavalier approach.

Since the introduction of the version 3, action has been very slow in USDJPY, the market hasn’t gone anywhere or done anything so the trades have been scalps for very small profit, but believe me, things will pick up shortly; even in these crap markets signals are good [which I predicted the general nature of the model would produce cuz it has to], and these “cluster” days of less than 40 PIPS HVALUES will disappear. So, it’s pretty much onward & upward from here, as soon as USDJPY and/or EURJPY [2^nd choice] gets in gear and starts moving again.

Well, it’s 2 P.M. in New York, and again we have no trades today in either USDJPY or EURJPY; USDJPY because the HVALUE is still 23.9, and in EURJPY cuz both the Euro and the Yen are moving in the same direction most all day and it’s HVALUE is 20.5 PIPS [which I’m having a very hard time believing, this is so low]. Forget gold; if you’re interested in losing 10% of your account in 60 seconds be my guest, cuz the risk is there and it’s very real, not just theoretical. The risks are simply way too high commensurate with reward for trading this market right now; sometimes you just have to “walk away” and stay away from the certain “stupid poo poo” you’re gonna step into.

Latest PAMM spreadsheet directly below … beach beckons … I’m outta here … until tomorrow. 

Have a great day 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”!

  

THE TRUMP EFFECT HITS USDJPY

“Simply a tsunami of money.”

Any time you have an imminent event risk, no matter the type, those piling into a move before the event takes place, more often times than not are the ones getting obliterated a very short time later. Late yesterday New York session into early evening Asia got somewhat nasty … “well, more like really ugly as USDJPY rallied 150+ PIPS almost straight up… I warned in yesterday’s blog post about “lightening hitting twice” if it got above 112.25 … in reality it wasn’t so much Trump, but 2 other factors at play; 1) hawkish Fed speakers with the usual mantra of  “hikes are on the table for the March meeting” (“sure they are”), and 2) too many people short below 112 looking for some kind of “train wreck” from Trump later.

Here an hour before the NY open for stocks, what has me concerned and cautious is the absolute “euphoria” in U.S. indices at the open … “I’m not predictin’, I’m just sayin’! … today, this morning, this is what tops look like when you are going to get this type of opening sharply higher after spending the entire last month going straight up … DOW30 up 1,200+ points since Feb. 1! …

Turning to today’s trading … 12 hours since the European open and a 35 PIP range in USDJPY; everything happened last night … order books pretty much wiped out on both sides [again] with the wicked action from yesterday afternoon and evening … 3 trades today, 2 were slightly positive scratches for the most part on bullish engulfing patterns that went nowhere and the other trade was a buy “mistake” when I dragged my mouse across my screen to remove an indicator on a chart and went through the “buy” button in the order box [“stupid poo poo I know] … so suddenly, I’m long and don’t want to be and it cost us a couple of bucks … apologies, it won’t happen again … not that it matters much in the scheme of things trading wise, cuz nothing happened today except chop, but it’s a mistake that doesn’t need to be made.

Like I said yesterday, ranges need to be better in Europe & New York so that I can “position scale”; all it would do in today’s kind of market is produce scratches cuz there is no follow through. Coming up here shortly, now that political events are out of the way until the March Fed meeting in a couple of weeks, trading should resume back to more normal conditions; when that happens, you’ll see more volume and better trade results.

Here in early NY afternoon, it looks like we have another reversal day going in gold, EURJPY, and USDJPY is moving lower also; gold especially is about as erratic as I’ve ever seen it, with no flow to the trade at all, but simply “herky jerky” bid/offers tripping up position stops on a daily basis. And of course, when it reverses and makes a new high by taking out buy stops, there isn’t anything left to move it higher; such is the state of the gold market today.

I’m really disappointed in the action today in Europe & the U.S. session in USDJPY; outside of my mistake [which I’m wondering if I should go to the pharmacy and ask for an “anti-putz” pill … the Mrs. says get the whole bottle], the trades I made were good signals, they just didn’t go anywhere. I expected, with the stock market going bananas and yields rising to see much, much better action; instead USDJPY traded like it was Christmas Eve, and the best move of the entire European & U.S. combined day comes 2 hours from the close. Oy.

Onward & upward, tomorrow is another day; PAMM/MAM spreadsheet directly below … I’m outta here.

 

Have a great day 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”!

  

HOW DOES THE UNIVERSE KNOW?

“Physics ain’t got nothin’ over trading when it comes to problems.”


Albert Einstein called it “spooky action at a distance”; trader’s call it, “statute meet pigeon’; stuff, whether it’s “color” of entangled protons [always perpendicular, and when separated if the angle changes in one the angle changes in the other immediately without “knowledge” passing between the two], or cosmic trading karma, the universe is here to let you know you’re in the trading biz so “get used to it”. In any event, it’s a little spooky when about 5 minutes after I post yesterday’s blog Turnkey’s IT web staff decide it’s a great time to do some website maintenance and take down their website for a few hours along with my links. 

Well, I’m happy to report maintenance is finished and everything is back online, and the link [which is below] does work.

http://www.turnkeyforex.com/login/register/58940038b7ea51486094392

I can relate directly with management when the “computer guys” take control and do “stupid poo poo”; before I came back to Google Blogger [which is always up, always here, and linked to files in the cloud which are always available for you, 100% of the time!], readers/clients remember the problems I sometimes had with the website hosting service Square Space. Some days it worked and some days it didn’t, and when it “didn’t”, the web geeks at SS wondered out loud “what’s the prob man, just a little maintenance is all .. geesh”, when I would send a “less than friendly” email wanting to know what’s going on.

And usually within minutes I would start getting the obligatory fan email wanting to know, A) did I go “belly up” today, B) did you die, C) are you “hanging it up”, D) do I know how “discomforting” it is not to have my website up, or E) all of the above. So, when your name is on it, but you have very little control or input over the process, and they take it down without any notice cuz they think nobody cares and/or totally understands why it’s being done, you end up being like a basketball coach who tells his team with 2 seconds to go in the first half NOT TO FOUL, and then exactly 1 second later 50 feet from the basket somebody fouls and the other team gets 2 free throws. Is it any wonder coaches got no hair and when they’re 50 they look 90? So yea, I sympathize with ‘em a little [but not too much cuz they’re a brokerage house (hehe)].
 

I sent a reader/client today 4 trading books I wholeheartedly recommend people read; 1) ‘Fooled by Randomness’ – Taleb, 2) ‘The Black Swan’ – Taleb, 3) ‘Tunnel Thru the Air – Gann, and 4) ‘Gann Square of Nine’ – Mikula. The first 2 by Taleb are excellent at giving the “big picture” in trading and lessons in “situational awareness”; Gann’s book is his only novel, and operates on multiple levels of trading and discipline … written in 1940, he predicts WWII and gives you plenty to think about and research; finally, Mikula’s book is a great primer on Gann’s ‘Square of Nine’ and will give you plenty of ideas you can explore with the computer link for the creation of your own ‘Square of Nine’ in seconds directly below.

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

If any of my readers/clients would like copies of any of these PDF’s, simply email me at traderzoogold@gmail.com and I’ll send them to you ASAP; simply tell me which ones you want [any or all]. You don’t need to be a client, I make them available for everyone to enhance your trading education and broaden your horizons; they’re all a worthwhile read and worth the investment in time to read them. [And no, I’m not gonna sell your email address or flood you with vitamin offers]

Turning to today’s markets … gold continues to stay up near the highs established the last few days … supporting gold is pressure on the Dollar, where sentiment has changed sharply due to falling treasury yields. The “bullion wall” of dealer selling is getting a little shaky, as any selling pressure recently is being met with buying demand. If prices can get above the 1250 – 1260 level, we could see an explosion higher rather quickly. USDJPY [and to some extent GBPUSD] seems to be slowing some in terms of intraday volatility … we aren’t getting the “knee jerk” moves from gold translating over into this market … the correlation trade is unwinding some.

The other thing I wanted to mention about gold, is that it is starting to emulate the steady buying pattern seen in the last great bull market that started in 2008 [about 700] and ended in August – September 2011 [about 1900]; where, it would just go steadily higher with very few breaks day-after-day, week-after-week, and this upward “drift” would absolutely spook trader’s because we all know what gold can do on the downside when it decides to “waterfall” lower in seconds. It’s called the “wall of worry” that bull markets climb.

As a side note, the higher gold climbs, the higher intraday volatility should … key word should … climb as well. However, as seen in the DOW30, intraday volatility there has dropped significantly even though the index is close to 20,000. In the entire universe of trading, there isn’t a better market to trade [especially with the spread & RT commissions we got now] than gold when HVALUES and/or daily ranges get consistently above $20 per OZ. Hope isn’t an investment strategy, however, “here’s for hoping”!

First trade of the day, from the Turnkey live server directly below.
 

[click charts too enlarge]


Notice, right before the second buy signal, a couple of minutes earlier there was a buy signal also; they’re so close to each other I simply put the second one up. Either way, they both basically yielded the same result. One very important feature of the updated algorithm, is that it is difficult in an up/down trending market to get the requisite 3+ M1’s to cooperate all the while the 3 lines [price vector momentum fields] are trending up/down; this is the attempt to drastically reduce chop and put your trade in a profitable position rather quickly. From there, you hold all the cards; take the scalp profit or make the “free trade” and let the horses run so to speak. There is no “right” answer in real time; hindsight is easy and a fools errand, so don’t fall into the trap of beating yourself up cuz you scalped the trade and 20 seconds later it screams leaving you in the dust. Simply move on to the next opportunity.

Algo lines changed to negative, the second trade directly below.

The market changes short term trend, and the signal now is from the short side; we’re too close too the highs for me to want to “free trade” this, as I’m thinking the probabilities of a big reversal day isn’t showing itself. After this second trade, I’m now up approximately 1 ½ % for the day based on approximate 10X leverage; why trade more when I’ve hit my goal about 2 hours into the day? [Hint: I’m not.] Whatever happens from here, I could care less. [And yes, I see the immediate rally after I liquidated, but it was still a good signal; like I said, too close to the high for the day to hang on. Another thing on this subject while I’m thinking about it; you don’t have to take every signal to be profitable. If you skip some, just be ready to accept the consequences if you weren’t right about it. All you’ve lost is opportunity, and there’s plenty of that in abundance each and every day.]

One more thing about the PAMM/MAM before I exit stage left and go to the beach; I will be archiving the P/L spreadsheet and all PAMM/MAM trades in the cloud for viewing online and/or download; everybody can see the algorithm trades on the charts and also see the math. So, no need to wonder, “hmm, wonder what he did that day?”, cuz it will be available. Beach beckons … I’m outta here … until tomorrow. Oh, and once again, if you want any of those books in Adobe PDF, email me.

Have a great day 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].