“Slippage & mystery ticks … need I say more!?”
Any time you trade a non dollar cross, only 5 things matter … namely, 1) what’s
the usual, consistent bid/offer spread, 2) what kind of slippage can I expect if I
trade it, 3) what is the level of volume & liquidity, 4) what are the daily ranges like
over time [VIX], and 5) is there sufficient IVIX [intraday volatility] for trade signals
and profit … and this last point is exceedingly important cuz it means you can
recover from any losing trade(s) the market may give you … it doesn't do you any
favors if it “runs” and then goes straight sideways for hours on end.
Directly below, a current list of FX crosses at Turnkey & COINEXX that have
consistent, bid/offer spreads at or below 1.5 PIPS under normal trading
conditions … sure, if things get “bat shit crazy” like in March this can be “upped”
a little to reflect the dramatic increase in VIX & IVIX … as I have noted before on
the blog “trading costs” matter, and if you run trading like a business, nobody in
their right mind would allow either their fixed or variable costs to rise
dramatically without reason … consider the following … you trade 5 times a day
and pay an extra ½ PIP on a “1 lot” … doesn’t sound like much and who cares,
right? … well, that’s 5*5*240 = $6,000! … “you’re handing the scumbag bank LP
& the brokerage house a check for $6,000 per year FOR NOTHING, so whatever
you make for the year, you’ve just thrown $6k out the window of your car on your
way to lunch or dinner … if it’s a full 1 PIP, it’s $12,000 … hey, if you don’t want it,
I promise if you send it to me [Bitcoin wallet address in the header] I’ll blow it on
“stupid shit” in your name … how’s that sound”?
Two “snapshots” here of VIX, one including the March idiocy [60 Day MA], and
the more important 20 Day Range MA I do every week in the Sunday blog update
… as you can see, there are clear winners and there are those pairs I label as
losers … and while on paper it looks like trading GBPJPY is the clear winner,
there are 2 problems here … 1) slippage is horrendous, and 2) you pay
approximately 1 PIP more for each trade, meaning you’re handing the bank &
brokerage house an extra $6K - $12K every year … over a career of trading is it
worth handing them potentially over $500K? … IMHO I don’t think it is … out of
all on the list, EURJPY & AUDJPY are the 2 best for LOWEST COST TO TRADE
& VIX … what about IVIX? … well, that depends on recent news flow and how
AUD responds to China news … overall though, I’d say IVIX is more
CONSISTENTLY BETTER in EURJPY … BOTTOM LINE in all of this, is view
trading crosses like they’re “widgets”, or “soiled underwear” futures as I call
‘em, and trade accordingly.
None of this means you can’t trade CHFJPY [or another] if you want to, but
realize you’re in trading to make money … at least that’s what everybody says
… so if that indeed is the case, why PAY MORE to trade, get less VIX & IVIX, and
have less flexibility in profit opportunities? … it makes no logical sense … trade
the market that gives you the BEST opportunity for profit, BEST risk control, the
LEAST SLIPPAGE, and excellent IVIX, and you put money into your pocket
everyday instead of throwing it out the window … FACTS DON’T LIE, and that
clearly points to EURJPY.
Today isn’t a normal trading day … we got Spicoli and the rest of the morons in
the faculty lounge with their interest rate decision at 2 PM EST, and already in
Europe it’s a “nothing burger” … quite frankly the Asian session was Zip, Zero,
Nada & Zilch as well, so up to 2 PM EST it’s nothing but position squaring and
“chop” … the real interest today isn’t whether or not they raise/lower interest
rates … they ain’t gonna do shit … what matters today is whether the FED goes
for full throttle insanity & “Japanification 2.0” and goes YCC
[Yield Curve Control], especially on 2 YR maturities and under in Treasury debt,
or whether they don’t … if they do, FX explodes higher although the last couple
of days has seen flows anticipating this, so the upside may be limited [buy the
rumor sell the fact] … if they don’t the dollar explodes higher and pairs get the
“Thelma & Louise” treatment rather quickly … and of course, we got the Spicoli
presser, where knowing this idiot anything can happen … all after 2 PM EST at
the end of the day, which means plenty of “end of day” volatility in New York,
and the key question becomes what then happens in the Asian session … melt
up or melt down? … we’ll find out soon enough.
We’re about 1 ½ hours from the NYSE open, and already Europe has quieted
considerably … ranges tight, but so far today both EUR & JPY going slightly
higher in tandem, but there is ZERO flow to any trade direction … after 14+ hours
of trading today, EURJPY only has an approximate 55 PIP range, and only about
a 20 PIP range over the last 3 - 4 hours since Europe came onto the scene … so,
not a lot here as New York comes into play.
Here about half an hour to the full European close at Noon EST, and it’s been an
interesting day … time to pull the trading plug on this day, at least until 2 PM EST,
cuz the next 2 ½ hours is highly likely to be treacherous … after stocks opened
it’s been nothing but what I perceive as somebody, or group of somebody’s,
taking dollar weakness gains from the last 2 weeks off the table … IMHO, Cable,
AUD, & CAD are extremely vulnerable to a FED surprise that sees the dollar
reassert itself … EUR as well but not as much, and I don’t think the Yen is
vulnerable at all … if dollar weakness holds, today sees Cable being UP 10 days
in a row … when’s the last time that happened? … and while I’m trading EURJPY,
and it’s a tangential premise, it will hold nonetheless if general dollar weakness
sets in, EURJPY will get whacked, at least initially … but make no mistake, FX in
general is overstretched at the moment anticipating YCC from the FED and
MOAR! Dollar weakness as a result of Spicoli’s attitude of more QE and soft
economic conditions … and it very much looks to me on this clusterfark of a
trading day, thank you FED, that somebody big is exiting the party before the
fireworks start in earnest at 2 PM EST. … we’ll see.
The entire European day sees one algorithm buy signal in EURJPY, but given the
circumstances of the day it’s not a surprise to me at all … even the Asian session
was quiet … the real action comes at 2 PM EST, and the implications for stocks &
FX couldn’t be greater, simply cuz so many markets are stretched beyond belief
… I’ll come back at 2 PM, cuz European banks will have their trading desks at the
ready, and they’ll be working late cuz it’s “FED day” … however, the FED has a
real problem on their hands, one they created out of thin air to benefit their BFF
elitist buds, but one that needs to be dealt with or else the next bubble popping
will make March 2020 look like mild “profit taking” [thank you Bob Pisani,
CNBC perma-bull hack].
To be sure, FX is ahead of itself in their bullishness against the dollar, and when
any trade has as much company as the present one has, look the fuck out on the
downside, cuz it’s apt to get a might ugly on the sell stops underneath … I’ve
seen this rodeo before, so I know how it responds … we’ll see what happens
later.
OK, QE infinity and BUY ALL THE BUBBLES! … no worries, the CNTRL-P machine
is running to the tune of $1 TRILLION per year, and what can possibly go wrong?
… EXIT QUESTION: “what month & year does a loaf of bread cost $100”? … let’s
see what the dope has to say at the presser .. so far, even with the rallies seen
against the dollar across the FX spectrum the last couple of weeks, it’s being
perceived as dollar negative and the rallies continue ... for now … remember,
stupidity in markets can last a very long time!
Ok, Spicoli is behaving and so far not putting his foot in his mouth, and it’s too late
in the day to make trades … nothing to see here ‘till Asia.
Pre stupidity on display, meaning pre FOMC, only 1 algorithm buy signal today in
EURJPY … TURNKEY PAMM / MAM literally “UNCH-ED”.
I was in this trade for over 10+ minutes, and couldn’t even get out of the frickin’
spread … buy fuel? … what buy fuel? … and so took the hint that this is a day to
write off and leave alone and scratched the trade … and leave alone unless we got
some decent moves that put a range in approaching the 20 Day Range MA … and
rightly so, we didn’t get shit the rest of the day, as there were no more algorithm
signals to trade … of course, simply cuz the banks need an excuse to screw
people, volatility shows up at 2 PM EST as expected and the spreads blow out,
so can’t trade news even if you wanted to … so onto Asia and a new day.
… until tomorrow mi amigos … Onward & Upward!!
Have a great day everybody!
-vegas
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