LEARNING CURVE 101 BASICS

 

“If only somebody had given me advice a little earlier!”

The “learning curve” in trading is steep, and I’ve compiled some of what you 

need in the “non-computable” attributes area; trust me, you won’t find these 

in any book on trading … “I’m talkin’ “inside baseball” here”, and a firm 

grasp of these will increase your profitability greatly. In no particular order 

of importance, they are as follows: 1) know the volatility of your market 

[“Summary Volatility Table” in the “Download Links” section in the right-hand 

column], and what to expect from it when you trade, 2) know and understand 

the proper “fingerprint” for retracements in the market you trade for best 

execution, 3) understand that for any FX pair, the bull and bear moves are not 

“symmetrical”, and have very different characteristics in how they trade, 4) do 

NOT place your stops where the entire universe of retail spec accounts have 

theirs as a collective group … if you do, you will get hurt, 5) try and liquidate 

positions on spikes in your profit direction, 6) do NOT buy rallies or sell breaks, 

and 7) you must develop “situational awareness” regarding the 6 items listed 

above.

When I talk with traders who are consistent losers over time, the problem 

usually boils down to one of the 7 criteria listed above, and while the solution is 

easy to define and identify, getting a trader out of his/her losing ways and into 

 “profit mode” is another story entirely … “cuz at crunch time, they want to 

revert to what’s “comfortable & knowable”, not necessarily what’s profitable 

… in other words, the brain says one thing and the guts say another, and the urge 

to do “stupid shit” is extremely high … this is why I tell new traders that your 

biggest advantage in trading in the modern era is your “newness” … you don’t 

have any bad habits to break … meanwhile, you think it’s your biggest liability, 

when it isn’t … the hardest thing is to get veteran traders who can’t shake losing, 

cuz it’s as if it’s almost ingrained in them”.

And what most people don’t realize, is that today is much easier to learn the 

biz than “back-in-the-day”; no commuting, you got a demo and can practice 

first, and you can do a limited amount of back testing of your trading model 

… all that didn’t exist when I learned the biz from my mentor Bert … “it was 

very much head first into the deep end of the pool”.

For newer traders and veterans alike, I’ve got 4 different algorithms over in 

the “Download Links” section to keep you busy for months … 7 different 

markets, with 7 distinctly different personalities, and a multitude of time 

frames from which you can attack the markets from your own reward/risk 

profile. As most all of my regular readers know, I’m trading EURUSD and 

using 2 of the algorithms simultaneously; “The Scalper’s Algorithm: The Final 

Solution” and “The Teacup Handle Turn”. In essence, they compliment each 

other brilliantly. However, if your style is different than mine, the other 2, 

along with different time frames, work as well … I’m trying to give you the 

benefit of my trading knowledge and experience, so you can match what’s best 

for you and the market you trade.

Turning to today’s market … if you like “vicious choppy slop”, then you will 

love today … good grief, could the M1 spikes [up & down] on “vapors” get any 

worse? Throw in a range that’s truly pathetic in a classic “Flying Wedge of 

Death” [FWD] pattern from the European open, and you got a recipe for 

disaster right in front of you … buying any kind of rally today, or selling the 

mini-waterfalls, got you killed within minutes, if not seconds … your classic  

“yo-yo” FWD, all wrapped up with a Christmas bow in a “doji” daily 

candlestick. “Six months from now, somebody looks back at today on the daily 

candlesticks, and sees the tiny “doji” formation and thinks the day was a dull 

waste … quite the contrary … as I’ve stated before, these kind of days can be the 

most vicious account killers traders will ever witness, and over the course of my 

career I’ve seen plenty of people get buried in the “Trader’s Graveyard” cuz of 

FWD small “dojis”, of some shape, manner, or form”.

Only one trade today … PAMM up slightly, a couple of bucks.

The ‘setup” was good, and for 90 seconds I looked like a genius in liquidating 

only a few tenths of a PIP off the high for the M1, when price stopped going up 

and stalled … that “hesitancy”, when it should have been moving higher, is all it 

took to get me to liquidate … from a 5+ PIP drop, price turned around and 

marched straight up about 20 PIPS … it is what it is, and it doesn’t really 

bother me, cuz it comes with the territory [“Stop complaining about the 

screaming Fido, and get out from underneath the wicker sofa … geesh, Mr. 

Sensitive over there”!]. And after that little run on short covering, EURUSD 

price is back within a few PIPS of where I made the trade … another very 

tough day to trade from the long side, in a market that has suddenly become 

totally paranoid of higher U.S. interest rates. 

Ok, February is in the books, and we got a fresh new month kicking off with 

NFP on Friday, and Italian elections on Sunday … plenty of volatility to be 

sure dead ahead. Problem with “doji” days, is that you don’t get the “setups”, 

and when you do they are too close to the day’s low in a very tight range to 

make the trade, simply cuz you can’t assume a 5% [or less] probability event is 

gonna hold … if you consistently make the trade off the ‘special situations” in 

the manual, you end up with early losing trades before the eventual low of the 

day is put in, and that will hurt profitability … better to leave them alone and 

wait for a bigger range, cuz 95%+ of the time, you’re gonna get it.

Nonetheless, a profitable day … many would trade places with us I’m sure 

… again, disappointed in lack of range, and in the number of “setups” the 

market gave us … so, we take the crumbs and come back tomorrow, while 

remembering the goal is to “add to equity” … it’s early afternoon in New York, 

Europe has closed, and market action has slowed noticeably; no way I’m 

getting caught in this slop heading towards the close … I’m outta here … until 

tomorrow mi amigos … Onward & Upward!!

PAMM spreadsheet directly below. [Note: sometime over this upcoming 

weekend, I’ll be uploading a new PDF over in the “Download Links” section in 

the right-hand column. I’ll now be archiving PAMM results at the end of each 

month going forward … therefore, there will be a New file, “PAMM RESULTS: 

2018 JANUARY - FEBRUARY”. When March is completed, I’ll update the file 

and add it, and on we go throughout the year, each month adding to 2018 

results. This way, everybody has a very quick and handy reference guide, 

without having to wade through all the past blog posts.]

 

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”!

  

 

THE NEW WIZARD OF SMART IS GONNA SPEAK

 

“New FED chief to speak … markets on suicide watch!”

The U.S. has a new FED chief … although, Spicoli could do just as good a job 

as any of the clueless Twits they march up to Capitol Hill to lie through their 

teeth … somebody explain to me why 2% inflation is “good”? It robs people 

of savings and devalues the currency, and makes passing an inheritance to 

future generations a joke … you realize since the FED was formed in 1913, 

the value of the U.S. Dollar has been debased over 98%? … “who says we 

aren’t Venezuela”?

“Oh wait, I forgot … the middle class are supposed to be “worker bees” 

… you’re not supposed to accumulate wealth over time, cuz your job is to be in 

the “Pudding Business” ‘till you drop from exhaustion … your family and kids 

don’t get free health care, government benefits, free college tuition, etc. like 

illegal aliens & immigrants do … nope … your job is to STFU and take it, while 

assclowns that run large U.S. corporations into the ground and thus kill your 

job, get “golden parachutes” worth hundreds of millions of dollars for the 

worthless effort … meanwhile in D.C., the POLS run the country into the 

ground while opening the borders to every dirt bag who wants in … sure, what’s 

not to like while they destroy traditional institutions, destabilize the country with 

asinine policies, and then to rub salt in your face, they then devalue the worth of 

your money and wealth”! It’s been this way since I graduated from college 

many years ago … why do you think I became a trader?

And since the website gets a lot of new readers, and it’s been a while since I 

put the image up, directly below is your application for the “Pudding Business 

… if the shoe fits, wear it”!

 

“I’m sure this was your dream job when you were in 8th grade … right?”

We’ve all been in this position … question is, what do you do about it? I’ll put 

up with all the bullshit trading puts on my plate, cuz it’s my plate and I call the 

shots … I never was, nor will ever be, the kind of guy who can diligently work 

for some assclown company and take marching orders from a clueless manager 

who is more like an SS Commandant, simply for a measly paycheck.

So, the world is in “hurry up & wait” mode ‘till Powell makes his first 

statements as the new FED chief, taking over from Grandma Yellen, where the 

countdown to a seven figure “gig” at JPM or Vampire Squid as a “consultant” 

has commenced … his prepared statements to Congress will be released at 8:30 

A.M. EST. My only question is, “has he learned the proper way to speak 

“bullshit”, or is he a little rough around the edges … soon enough we’ll find out”.

Turning to today’s market … the first 13 hours plus a complete waste of time; 

first, the Chuckleheads in Asia did “their thing” [“buy Mortimer, buy”!!], and 

coming into the European open, EURUSD is on the high of the day … “you 

know what this means, right”? … and then it’s “4 steps down 3 steps up” to 

below even [1.23000]  5 hours later. A ton of news hitting the wires affecting 

EURUSD, but the main event for today is Spicoli giving his virgin FED 

Chairman “snowjob” to Congress … and sure enough, he puts his foot in his 

mouth and rattles markets … apparently, he hasn’t learned the fine art of 

talking for an hour and saying absolutely nothing anybody can understand, 

while everybody within earshot reaches for the aspirin bottle. So, a non-event 

until 13:30 server time. Basically, today trades like it’s an NFP Friday, which 

by the way, we get in 3 days [oh joy].

“Well, that escalated quickly, didn’t it”? And here is where “situational 

awareness” means everything; you simply got to know that EURUSD price 

under 1.2280 spells big trouble for being long … that doesn’t mean it has to go 

lower, but you have to know that the last 5 days has seen this level hold, and if 

price gets underneath it and your long with a cozy stop, you run the risk of 

getting filled nowhere near your stop price … reward/risk ratio is definitely not 

in your favor here, cuz any long position gain is dwarfed by potential stop loss 

selling … “you simply must pass on the temptation to get long; all you’re doing by 

getting long is hoping to make some money that will someday go towards a large 

loss in the same situation … that’s it … and more than likely, the money ain’t 

gonna be there to eat the loss … therefore, you lose and lose big”. And, that’s 

exactly what I did … I left it alone.

Seeing price go lower, I know trading from the long side I have to be almost 

perfect in both entry and liquidation … short selling is still premature for 

EURUSD at this point, simply cuz all we are seeing is the long awaited 

correction I wrote about weeks ago. And after support level after support level 

from the last 1 - 2 weeks gets taken out on stops, you can see from the M1 

candlestick just how ugly it can be … “why the hell would anybody want to get 

caught in this kind of selling by trying to pick a bottom; you need to see some 

support, and more importantly a failure to go down and then looking for “The 

Teacup Handle Turn” for entry, and then a pop to get out … it’s the only chance 

I know I have of turning a profit without getting butchered like a hog in the 

slaughterhouse”.

Only one trade today … PAMM up slightly, about half way to 0.1% … 

understatement of the day: “being long today is not the place to be”. 

I want to go into some detail on the trade I made, cuz it will give you insight 

into my thought process as to why then, and why at the price I made it. 

Directly below the M1, with commentary.

 

Think for a second about what it is that got me “profit” out of this trade; it 

wasn’t my good looks [“wait … what; no”?], gut feeling, instincts as an analyst, 

or I got lucky … “it was 100%, solely the setup; nothing more nothing less, and 

the extremely high probability that “The Teacup Handle Turn” will be profitable 

over 95% of the time … and when it fails just over the neckline, you got to take 

the small profit and then come back later, whenever that is … especially on a day 

longs are getting whacked by the truckload”. You simply can’t “blink”, or stop to 

 “think” about it … “you snooze, you lose”! … you have to know beforehand 

what it is you must do, and that’s called “situational awareness”. As newer 

traders tend to stumble, simply cuz they don’t know any better, well now you 

know how it has to be … and if I’m wrong, and it goes higher 2 milliseconds 

after I get out, so what? … Remember, “opportunity is infinite, capital is finite”!

One thing I should also mention, is over the course of the history of EURUSD, 

quite often the big bull runs it has made since its inception in 1999, price has 

seen 400 - 600 PIP corrections over multiple weeks before the bull run 

resumes. What that means, is that we could easily see EURUSD price go down 

to the 1.21 - 1.19 area and still be in a bull market; it most definitely isn’t out 

of the realm of possibility. I’m not saying it will, but just keep some perspective 

about market action before you flip from bull to bear and pay the consequences 

for being way too early … “we’re traders, not analysts”.

We are now in the early New York afternoon, and EURUSD has seen some 

short covering back up to the 1.22400 - 500 area, from the low on panic selling 

while the SP500 was getting “monkey hammered” … it’s hard for me too tell 

which market is watching which market … all of them scared literally shitless 

over U.S. higher interest rates, which Spicoli gave his blessing for earlier to 

Congress. If the market stays here at this level, it’s gonna make for an 

interesting next couple of days … a literal data dump capped off with NFP on 

Friday … question is, does the 1.22000 level get taken out via sell stops in 

EURUSD, and how big are they? … will strong data and a strong NFP report 

do the trick, or is this simply a “suckers dump” by weak longs, and EURUSD 

rallies quickly and strongly from here? I dunno, but what matters most is that 

volatility will stay high and provide plenty of opportunity.

A tough day to be long … only after price goes down 120+ PIPS do we get a 

bounce on short covering … maybe a few fresh longs coming in, but I doubt it; 

the trading action suggests short covering. I really don’t like these shortened 

days due to news; as I’ve said before, it skews action and creates panic in the 

market, and by the time price action hits “DEFCON 1”, it becomes a 

crapshoot with reward/risk totally skewed towards losing money. And “oh joy”, 

NFP in 3 days, so we get another one.

Newer traders, especially, must understand that financial markets will never 

allow you to “have your cake and eat it to”; for every advantage you think you 

have, you had to “give up” something to get it. Down days in bull markets, and 

up days in bear markets can be dealt with effectively by the algorithms if done 

right, and today proves that, cuz what I said earlier isn’t any different than 

what I have been writing about for a very long time … which is, it’s all about 

the “setup”. We’ll see what tomorrow brings … I’m outta here … until 

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”!