“STRANGE ATTRACTORS” & FX

 

“A Chaos Theory representation of a “strange attractor” in 2D”.

In dynamic mathematical systems, for example Chaos Theory, represented 

by non-linear differential equations, there exist a set of numerical values 

towards which a system tends to evolve … and here’s the “Twilight Zone” 

part of it … no matter the infinite number of possible initial variable values 

put into the system, the system finds a way to still come to those values 

… these values are known as “strange attractors”. Is not trading a dynamical 

system?

And as we flip from the fractal world of Chaos Theory to trading, what I 

have often viewed as trading “strange attractors”, especially coming out of 

the Asian session into the European and U.S. sessions, are the days high and 

low, and the relationship that has on trading behavior going forward into the 

day, when you know there’s no way the range is going to hold a small PIP 

number. “As such, no matter what technical condition the market is in, or how 

it got there, the market finds its way to either the old high, old low, or both”! 

Somebody tell me … how is this possible given the supposed “random” nature 

of markets every academic Prof tells us “has to be”?

Well, here’s a little hint: 1) markets aren’t random, 2) we can trade at our 

leisure and don’t have to accept all market values for profit or loss, and 3) 

academic Profs couldn’t trade their way out of a wet paper bag, and have no 

clue how markets operate or function outside their controlled “stat labs”. 

“If they could trade, trust me, they wouldn’t be teaching 8 A.M. classes to 20 

year old “skulls full of mush” at State U.”.

Whereas fluid dynamics & solid state dynamics have no emotion, trading 

markets have human interaction, and thus add another variable to the mix 

that makes and creates volatility … something physics lacks. And it’s this 

variable that gets people to panic as markets move toward the old high or the 

old low, “cuz they know they don’t want to get caught in the scumbag LP bank 

stop parade and get a horrible fill that makes their loss more pronounced 

… they don’t want to liquidate, but they do cuz they know the pain of a larger loss 

… and so, there cumulative liquidations, whether institutional or spec doesn’t 

matter … what matters is that their behavior drives the market in one direction 

… and at the end of that dark rainbow, waiting like a cop behind a billboard on 

the highway for speeders, are the large hedge funds and scumbag LP banks 

waiting to take the other side of your stop … these are the trading “strange 

attractors”, and where behavior starts to change and influence price is the 50% 

retracement area of the earlier moves out of Asia”.

And despite all your efforts … despite all of your common technical indicators 

that may suggest oversold or overbought, the market continues its drumbeat 

up/down and leaves you either in the dust or with large losses … and it is the 

 “setup”, which I have been screaming in your collective faces forever, that is 

the proper way to see and react to markets … everything else is condensed 

bullshit.

I will admit, it is very hard to train yourself to liquidate on the spike up if long, 

or liquidate on the spike down if short … your emotions and indicators tell you 

there is more “low hanging” fruit on the tree, and that more money is an easy 

few minutes away … but a funny thing happens on the way to the Porsche 

dealership to pick up your shiny red new car … and that’s called the reversal, 

and it’s painful  when experienced. Remember, “OY” is an element best 

avoided.

Turning to today’s market … good grief, what a bucket of slop this is from 

Europe open to close [8:00 - 16:00 server time] … classic “Flying Wedge of 

Death” [FWD] inside an approximate 35 - 40 PIP range at the extremes, with 

most of the time spent inside 20 PIPS or so between 1.24750 - 1.24950. How 

many bad trips on the yo-yo does it take to ruin a day?

“Is there some kind of law that they passed that I missed? … 9th day in a row 

Asia opens and goes higher into the European open in EURUSD… I mean 

seriously, can you Chuckleheads give the buy side a break for a while and 

discover selling”? … Where does the money come from that they consistently 

lose?

OK, 10 hours into this clusterfark, and it feels like I’m in a bad dream … how 

do I get out of this thing? Considering yesterday saw about a 200 PIP range 

with a double reversal, today sees a 62 PIP range? “Wut”? … I want no part of 

the rest of this New York afternoon; whatever they want to do, they can do it 

without me … good grief what a pitiful trading day of action. And here in the 

last hour, after 16 hours into the day, EURUSD basically goes from near the 

low to near the high straight … another yo-yo swing in the FWD.

Only one trade today … PAMM up a few bucks, but nothing more, so a 

negligible profit, but a profit nonetheless.

And you can add me to the list of people that are confused by yesterday’s 

trading action; let’s see, higher inflation, lower real wages & productivity, 

higher 10 YR. rates, a higher stock market & lower dollar. “Huh”? And that 

probably is more the reason today literally sucks … there are a lot of 

confused traders out there, and after yesterday’s gigantic moves, traders are 

totally unsure where to place trades next. In any event, though, exiting 

today’s action up anything is a complete victory … I’ll take it and exit stage 

left … I’m outta here … we’ll see what tomorrow brings 

 … Onward & Upward!!

PAMM spreadsheet directly below. 

Once again today, upon clearing everything out and closing the trading app, 

I end up with a EURUSD 0.07 lot trade; I have no idea why this is happening, 

and I’ll have a talk tomorrow with IT support at Turnkey. I have treated it 

as a “Trade Adjustment” in the PAMM Spreadsheet … it was $0.17 in our 

favor, but the important point is, why is it happening. Last time it was a 0.05 

lot in GBPUSD, today a 0.07 lot in EURUSD. In any event, I’ll get it figured 

out tomorrow.

 

 Have a great day everybody!

-vegas

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