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:
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!”
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