WHEN POPSICLES MELT

 

“Walter Sobchak: the perfect metaphor for FX!”

"You think there are “rules” in trading today? The only rule is that there isn’t any rules. I feel like a Popsicle, sitting in a kid’s hand, dripping away as the sun and heat hit me, wondering how the hell I survive this”. And then along comes Walter Sobchak, who makes it clear “this isn’t ‘Nam Smokey, there are rules; this is bowling”! And about the only way to enforce anything is at the end of a gun".

I get to my screen early this A.M., ensuring the gerbils here in paradise are happy and fed so the F-ing internet works [I’m still not convinced they have a clue], and what do I see; “wait … what? … ranges in the teens? … Oh God, won’t the scumbag LP’s have fun with this “Flying Wedge of Death” [FWD] disaster & stop hunt as the day progresses. How many new lows/highs today; 4, 5, 6 more? This is what these assclowns live for”. Little did I know, the extent of the chicanery & shenanigans that were about to take place.

Before the U.K. data dump on inflation, EURGBP ramped quickly up to 0.88370, and it was the “same old, same old” bullshit “shit show-a-rama” in Cable that was 100% responsible, as sell stops got taken out on a 30 PIP plunge to the lows, before immediately rallying. Then comes the data dump, and of course right before the data comes out, the scumbag LP’s expand the bid/offer to almost 15 PIPs, the offer going to 0.88380, thus taking out any buy stops above the market … if you had one in there, you were toast. And we’re just getting warmed up! Directly below, the FWD on the M5, in all its glory.

  

 

And the amazing thing is, from the low to the high to the new low, when the signal generator changed, it didn’t give a signal until either the top or the bottom was put in … and then it simply charged the other way. “Is this the same market I was looking at yesterday”?

What’s worse; coming in to start the day and the day’s range is in the teens, or coming in and it’s at 100 PIPS? “Well, I’m glad you asked, cuz quite frankly, it doesn’t get any worse than tight ranges as Europe starts the day … and the reason is simple: it gives the scumbag LP’s the opportunity they always look for to gouge stops and create price gaps, and then “turn it around” and take it the other way cuz it’s such a short trip in terms of PIPS … they win, you lose. This is why I have always warned of tight daily ranges in Europe and/or the U.S. … anything can happen in a “bat of an eye” and often does; however, it’s almost impossible to capture profits cuz it happens so fast, but don’t worry, they’ll take your stop out and “shoot it” for you cuz they’re so fair and all. Scumbags top to bottom”.

And so we start the day rallying; “Ok, back off some, give me a buy signal and then …”, but EURGBP heads straight to a new low. “Ok, rally some, give me a sell signal and then …”, but EURGBP heads straight up and hits another new high. “Gads, make up your damn mind … Ok, back off and give me a signal for cryin’ out loud”. But no, it’s straight down the slide to another new low … “Ok, no way am I fallin’ for this crap … not gonna get caught up in the FWD and then need “prayer” to break even”. And there basically, you have the entire day.

And up until about 9 or 10 A.M. it’s all Cable; and then EURUSD starts to slide and now things are getting complicated, cuz both markets are “zig-zagging” at different rates. Quite frankly, GBPUSD scares the livin’ hell out of me at the moment, for 2 big reasons; 1) anytime this market gets within 20 PIPS of a high/low, the probability it could “blow up” 40 – 60+ PIPS in a millisecond is very real, and 2) the scumbag LP’s seem to relish the stop hunts and very large gaps, and seem ready, willing, and able to screw every order imaginable. And that means 20 – 30+ PIP lunges in EURGBP at a minimum. Taking a look at the day’s ranges over the last 10 days or so, and it quickly dawns on you that at least 50% of everything came on some bullshit spike out of nowhere to nowhere … the only thing that gets accomplished is that your stop gets destroyed, and the money put in their pocket.

EURGBP is at the same place it was 10 trading days ago, and outside of 2 days last week that had “Brexit divorce drama” written all over it, which resulted in complete insanity in Cable, the market hasn’t done a damn thing except hit off buy stops and sell stops on its way to “Nowheresville”. Big money shoves it higher, hits off buy stops … fills them … then shoves it lower and hits off sell stops … fills them … rinse & repeat for 10 trading days, inside about an approximate 50 – 60 PIP range! From strictly a “day’s range” perspective, everything appears normal, until you realize 50%+ of it is coming in a nanosecond and then disappears as fast as it arrived; today being a perfect example, as the market blasted up 20 PIPS, and was immediately 12 – 15 lower from that high in a second or two … thank you very much psychotic GBPUSD.

Ever wonder why casinos in Las Vegas have the table games they do? Surely, there are others that people could play, so why aren’t they there? Simple: the casinos will only host table games that have a large “Variance” [which is the standard deviation squared] in the random mathematical outcomes. The large “VAR” absolutely, mathematically insures wide swings in winning AND losing streaks for players, and since they know you aren’t Bill Gates when it comes to money, you have a limited bankroll and will stop if losses mount … and the “VAR” of craps, baccarat, black jack, & roulette is very high, which means it’s almost a certainty at some point you get “hit” with a losing streak and will stop … which is just what they wanted from you when you hit the Strip. In trading, LP banks & large hedge funds shove markets the same way, knowing most retail specs have short pain thresholds, and will thus pull a market into stops to take the other side; the FWD achieves this goal beautifully on their behalf, while it kills you.

It would seem logical, therefore, that buying near the bottom or selling near the top [every traders dream] would be the “way to go”; I mean, what can go wrong when you buy 93’s with a stop at 87 … you’re only risking 6 PIPS, and if it’s the bottom you’ll make a killing! “The problem is always the most volatile component of the cross, and in this case it’s the denominator GBP … it blows through its highs for the day and gaps higher, making the cross go lower; when it hits 88, and all you see is the big down draft and a price at 36, you can congratulate yourself on losing 57 PIPS when you thought you had 6 at risk. Same scenario on the upside for Cable downdrafts.

And while I [nor anybody else for that matter] can eliminate risk, I can sure as hell lower it substantially by doing and observing 2 very simple rules from the algorithm; 1) never be long when 5 EMA LOW [PLUM] is under 9 EMA LOW [YELLOW, OR never be short when 5 EMA LOW [PLUM] is over 9 EMA LOW [YELLOW], and 2) only take long positions when the market is above the 50% retracement line of the day’s range, or short when the market is below the 50% retracement line of the day’s range. You observe these 2 things, and you’ll almost never [unless there is sudden impacting news] have to worry about very large spikes against you.

And while I would love to buy very large spikes lower as they are occurring, lately that has been almost impossible, simply cuz they come back so fast, your fill gets shredded by the scumbag LP’s … same with the other side when selling large spikes up … today, for example, the high at 45 put in, and literally within a second [probably less] EURGBP is in the low 30’s … hit the “sell market button” and good luck getting a fill that’s decent and anywhere near where you thought it might be. And, as I have said before, cuz it has happened to me twice in the last 2 years with different brokerage houses, having a limit order sell in above the market is no guarantee you’re going to get filled if the market goes through it. If the LP can’t fill it [so they say, which is bullshit], you get the next bid price, which can be a helluva ways away from the price of your order ticket. So, today it’s very conceivable an order to sell EURGBP at 0.88440 gets filled at 0.88320, and the market is sitting at 0.88380. With these erratic spikes, it’s extremely difficult to get anywhere near the price you want, cuz it’s gonna disappear quickly … and this is a very real problem Newbie traders face as they climb the “learning curve” of trading. At least if it’s a liquidation order, your lousy fill does not leave you hanging in the market with a loss.

So, I’m sitting here waiting for signals, and first I want to get long, then short, then long again, then short again … hang on, I don’t think I want to do anything in this bucket of slop, cuz all that’s gonna happen is I get in a position and they “jack” it against and force me out. As I said before, “we’ve been here for 10 days … where’s it gonna go with 3 … count ‘em … three central bank interest rate decisions in the next 48 hours [with pressers], and at least one of them will be a surprise? Ok, does that mean I just “find an average” as it goes against me, cuz I think it can’t go anywhere? Cuz we all know, it can do whatever the hell it wants, and so a very large loss it somehow “OK” now cuz I was thinking it can’t happen?” Cuz if you let things slip, you know how the universe reacts to that, right?

Today, after the first 4 hours are in the bag, it dawns on you seeing the FWD jerking people around, that anything you do risks 15 PIPS and maybe gains you 3 or 4 if things shake out right; sorry, this isn’t gonna see me hit any buttons. And while I’m at it, somebody tell me where yesterday’s market with good signals deserted to, and left us today with the law firm of “Zip. Zilch, Nada, & Zero”? Some days folks, I can see the Hindenburg blimp disaster in these markets before they occur and just want to throw my laptop into the ocean … I know there isn’t gonna be anything but sorrow; and, that sure describes today’s action in EURGBP.

It’s not that I’m surprised by the range’s or even the FWD; what surprises me is that Cable especially, continues to exhibit psychotic behavior with huge price gaps via stops, and there is no reason for this to happen … how many times do people need to get “monkey-hammered” on a stop before they say, “screw you and your market”! And the dirty little secret is, that this robs the market of fuel [both up and down], and a market only has so much fuel for the day before traders give up on it. When you blow a market up, what’s left for later in the day?

It’s about 12 hours since I started my day, and the market is where? How many “blow ups”? How many stop hunts, both long and short? And we’re less than 10 PIPS of where we started 12 hours ago? And the obvious answers to my questions give you the day in a nutshell … where only bad things can happen … well, that doesn’t mean you couldn’t have made a couple of PIPS, but what did you risk to get them? AND THAT’S THE QUESTION THAT MATTERS.

And, once again, yes it’s frustrating seeing this kind of action unfold, and knowing it’s just one big clusterfark waiting for the FED and then the BOE, quickly followed 30 minutes later by the ECB. And then what? What do we wait for next, in this world of “hurry up & wait”? Last week we had all of the “Brexit divorce” BS; this week sees all of the central bank interest rate decisions, but that doesn’t mean it can’t go orbital against you on news or some government Pie Hole that needs to “blah blah yada yada” on something that shakes markets up. Bottom line: you can’t get stupid just cuz it’s a news week.

No trades today, simply cuz there weren’t any decent trade signals during our 8-hour period from 08:00 – 16:00; there was one, I think, right around 10:50 server time, that went about 1 PIP in favor of the long position, before moving straight down to a new low almost 3 hours later. I didn’t take the signal cuz of 2 immediate failed attempts above 0.88400 right before, and I didn’t think it had the “juice” to go higher at that moment. Other than that, there was nothing to do. Tomorrow sees the FED, so that will shake things up in the P.M. … what the A.M. brings will be interesting, but I would just like to see the GBP spikes toned down and more reasonable in scope … heady wish, don’t have a clue if it will.

PAMM spreadsheet directly below … until tomorrow … Onward & Upward!!

 

Have a great day everybody!

-vegas

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