“At the top of the list? Trading days
like today!”
Coming in this morning, it took me about 5 minutes to
figure out this day was a “nothing burger”; Ok, sure … we got a very tiny rally
to about 1.4107 – 10 area in EURAUD from the lower 80’s, but volumes were
horrible, the trade flow very erratic and choppy … now time to chop lower a
while, putting in reversal patterns and engulfing patterns all over the place
to entice you into doing something you know better than doing. As I have said
before, unless the market is moving clearly up or clearly down, the formation
patterns lose their statistical significance and are no better than flipping a
coin; trade off of them in a “nothing burger” market and you will be
disappointed.
Of course, tomorrow is the big event risk day for
EURAUD, and I don’t mean the FED interest rate hike decision, which truth be
told is the world’s most telegraphed policy move ever … no, it’s the
Netherlands election, where if Geert Wilders wins it’s gonna set the financial
elite’s hair on fire where it’s going to have 2 implications; 1) the Euro is as
good as dead, and 2) momentum for Marine Le Pen in France in about 2 -3 weeks,
where like Wilders, promises to crack down on immigration and pull out of the
Euro ASAP. Grab the popcorn, the fun should start right around dinner time in New York and most definitely carry over into Asia and the European open.
It really shouldn’t come as a big surprise today, that
trading is almost non-existent in FX, gold, & USDJPY; USDJPY for its part
doing absolutely nothing for the better part of 2 weeks now … intraday
volatility way down, and HVALUES as low as this market has seen in a good long
while. Gold? Please, I just ate; no market on the MT4 is more sick than gold,
what with trade flows very low while dealers dominate and run stops continually
on both sides of the market.
And while I don’t like to sit here watching grass
grow, it’s better than losing money in a market that has no clue where it’s
going right ahead of its biggest event risk day since the Greek crisis erupted
2 summers ago; Trading is “tight”, which means on days like today you aren’t
[most likely] going to get expanded HVALUES, and you have to contend with
position squaring among institutional types that makes today look and feel
like late Friday afternoon before a weekend.
The main thing, though, is that statistical signal degradation
occurs when markets get “tight” and more or less chop, even if there is a
slight bias up/down during the day; now, I’m not saying things have to be
straight up or straight down, but we’re gonna need more than 10 PIP corrections
over the course of 30 minutes or so, and a moving market, before I risk
capital; anything else is not worth doing. Trust me, once tomorrow is over,
those of you who are trading crosses, you’re gonna get all you want and then
some.
With increasing frequency over at least the last year
and a half, and probably as far back as the spring of 2012, trading has morphed
at times into nothing more than a “roulette bet”; we find ourselves consistently
waiting for the “next piece of news” that’s going to move the market, and as
time moves towards a specific event, trading dries up, volumes slow down, daily
ranges & HVALUES collapse … and then … “welcome
to ‘speed of light trading’ followed by … crickets … rinse & repeat until
you’re all out of money and back in the Pudding Business”!
So, just how hard is it to survive this type of
terrain? Two items caught my eye today over at Zero Hedge; directly below the 2
link headlines:
1) Valeant
To Open At 8 Year Lows After Ackman Exits With $4 Billion Loss, AND 2) Oil-Trader
Andurand Loses $130 Million In First Two Months... And Then Prices Plunged.
I understand completely the problems they face, but
ultimately even the biggest and “smartest guys in the room” have to face
reality and swallow the bitter pill that comes with sitting on your hands when there isn’t a damn thing to do, and avoiding
the temptation of shoving “chips” into the center of the poker table and then asking,
“by the way, who’s the chump here”? Fact is, nobody likes to sit … but
there are times.
And my question to these guys is twofold; 1) do you
understand the term “risk tolerance”, and 2) you didn’t lose this kind of money
on a scalped trade, so where is it in the “professional trader’s handbook” where
it says hang on to losers for big whoop ass losses?
And through it all, people put up with this crap and
shovel them even more money! And somehow, cuz I got my hands dirty on the trading
floor for more than a decade, I’m somehow the “cowboy” like I’m living in the
1980’s movie “Trading Places”? Wait ... what? It never ceases to amaze me.
How come, almost on a consistent monthly basis, I see
headlines like this over-and-over again? And remember, these guys [some women,
but mostly guys] have the Ivy League degrees, are supposedly so smart, sophisticated,
and worldly; don’t get me wrong, everybody makes mistakes, gets involved with
bad trades or positions … nobody comes to the table perfect … no, what “kills”
these guys is their hubris and arrogance bestowed on them by the faculty lounge
members with tenure, that truth be told, couldn’t run an ice cream stand at the
beach in July without FUBAR-ing it into oblivion.
Wrapped up in their “hedge fund universe”, all they
can see is what they want to see, not what’s right in front of them plain as
day; if you haven’t seen the movie “The Big Short”, rent it out and watch the
hubris & arrogance on both sides of the Credit Default Swaps in the
financial crisis of 2008, it’s breathtaking in scope.
So, here we are, the day before SHTF and once again
markets most likely go “Full Metal Jacket” orbital at the speed of light;
EURUSD, in my opinion has the most to gain or lose, and by proxy the Euro
crosses like EURAUD. If Wilders wins the Netherlands elections, the Euro
will undoubtedly go down, but the world is mostly short Euros, and I’m sure the
ECB will unleash the “Plunge Protection Team” to inflict damage on those
accounts that get “too short”. A Wilders loss, and the way the financial world
is not only underweight EURUSD, but short as well, and we could easily see a
massive “melt up” in the Euro crosses. The FED I believe is almost irrelevant
at this point. In any event, the worse outcome for the Euro would be a very
slight victory for Wilders, but he can’t put a coalition government together,
and political uncertainty hangs over the entire continent going into the French
elections a few weeks later; this could lead to a “drip, drip, drip lower” in
EURUSD that would take its toll.
Stay tuned, the “fun” starts tomorrow.
PAMM spreadsheet totals 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
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