SUNDAY UPDATE: THE “FORCE VOLATILITY ALGORITHM”

 

“Hang on, it’ll all be done by next weekend!”

Well, the “Force Volatility Algorithm” isn’t gonna be done tonight, even though I 

worked non stop on it through the weekend … with 5 markets to cover and give 

comprehensive, exhaustive, & thorough coverage to each, as well as numerous 

examples for each, there just wasn’t enough time to finish it all … I’m about ⅔ 

of the way through, so it’ll be ready to publish next Sunday night.

I said on Friday, that if the scumbag LP’s “jack” the spreads in crude oil come 

Monday, that I will switch over to XAUUSD [spot gold] … over the weekend I 

spent some time analyzing the various markets, and bottom line is, if Crude 

spreads do in fact get “jacked”, I’ll be switching over to the DAX30 instead of 

gold … it’s simply a better market right now, no doubt about it. Given the 

ranges, and action of late, right now it’s second only to Brent in how it trades, 

and that means plenty of algorithm opportunities … with a normal spread of 

0.7 index points via Turnkey, the $2 RT commission per 100,000 notional, the  

“net cost” to trade is less than 1 index point. To put this into perspective, the 

current 20 day MA of daily ranges is just a few tenths of a point shy of 200 

index points per day … talk about rock & roll, this is it! And without the 

outrageous slippage and “scumbaggery” the scumbag LP’s pull in the DOW30 & 

SP500 when things get the least bit more volatile.

For those unfamiliar with the DAX30, a stock index I have traded for like 

forever [at least 10 - 12 years, all the way back to around 2006, when the index 

was around 5,000], it’s basically the German DOW30 … made up of the largest 

German corporations. The futures trade on EUREX, a Frankfurt, Germany 

based electronic exchange … the full futures contracts trade at 25 * the index, 

and are priced in EURUSD … minimum tick change is 0.5 index points . The 

mini DAX30 futures trade at 5 * the index, priced in EURUSD … minimum 

tick change for the mini is 1.0 index points. On Friday June 15th, front month 

DAX30 futures traded approximately 103,000 contracts; front month mini 

DAX30 futures traded approximately 39,000 contracts. The market is open 

from 06:00 - 20:00 Turnkey server time [GMT], and then it closes for 10 hours 

… so, there isn’t any 24/5 market here, so if you trade it, don’t get caught 

holding a position, cuz at exactly 20:00 [4 P.M. EST.] it closes.

Now, compare this to Turnkey’s CFD, where each 1 Lot = 1 * the index, priced 

in EURUSD, and the spread [minimum price tick] is 0.7 index points. Even with 

the RT commission, it’s less expensive than the EUREX mini, and only a few 

tenths of a point off the futures contract … for the flexibility you get in terms of 

risk tolerance, that’s a great deal.

For the DAX30 index itself, the top 7 companies out of the 30 total represent a 

whopping 55% of the total value of the index. They are , in order of index 

weight, 1) Bayer 9.99%, 2) BASF 9.81%, 3) Siemens 9.09%, 4) SAP 7.57%, 

5) Allianz 7.36%, 6) Daimler 6.65%, and 7) Deutsche Bank 4.67%. 

Directly below, is a historical chart going back almost 60 years [1959], to give 

you an idea how the index has performed over time. And as you can see, lately 

since around 2013 starting with the Greek crisis, the index hasn’t consistently 

moved higher along with its U.S. counterparts. However, the trading action is 

another “kettle of fish” entirely, and it trades very actively with both up and 

down moves all the time … in other words, it’s a trading vehicle, and you don’t 

buy it and hold it or sell it and forget it … you trade it!

 

On Sunday nights going forward, I’m going to be posting a table of all 5 

markets 20 day MA [simple moving average] … this will allow traders the 

ability to easily spot changes in “close-to-close” volatility, and easily keep track 

of which markets are gaining ranges, and which markets are losing ranges, in 

table form. Directly below, the first week of 6/18/2018, these are the current 

values for the upcoming week.

 

So, come tomorrow, we’ll see what the LP’s do in Brent … for sure, I’m not 

sittin’ around waiting for them to be fair, when they’re intent on pulling the  

“7-11 robbery game” on traders … I don’t think anybody denies them the right 

to make some money for being an LP, but paying 4 or 5 cents over the futures 

price is a frickin’ joke, and they know it. Until tomorrow mi amigos … I’m 

outta here.

Have a great rest of Father’s Day weekend everybody!

-vegas

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