“When it comes to trading, it’s NEVER this simple!”
Let me start with an observation … in the history of trading markets, either
financial or agricultural that span centuries and or millennia, there has never been
a time where market participants are MOAR! behind the proverbial “8-ball” than
now … the cause of course are the scumbag LP banks, who have neatly
positioned themselves as “middlemen” in every single trading transaction
spanning every market there is to trade … and with that comes the bullshit of
1) fat spreads, 2) mystery ticks & spikes from hell that give them a distinct
advantage, and 3) slippage on fills that would make Vito Corleone blush with
envy if he were alive today … protecting this racket of course, are the POLS,
Apparatchiks, regulators, exchange big shots, and brokerage house execs who
get cash in a garbage bag in the garage or Bitcoin in an e-wallet to look the other
way … why do you think the ONLY RULE OF FX IS THAT THERE ARE NO RULES?
The problems we face as traders are compounded by these scumbags, but the
reality is they aren’t going away anytime soon, so the only viable solution is to
1) find markets they exert less influence & control over, 2) trade markets that only
exhibit consistently stable IVIX day to day no matter the news or bull/bear market
status, and 3) trade only those markets that are reasonably priced [bid/offer
spread] to keep costs low and therefore puts more money into your pocket
… trust me, this isn’t an easy task, simply cuz if the banks get wind of too much
VIX, they’ll raise the spread along with slippage so you can’t scalp effectively
… the best example of this is spot gold, where all resemblance to reality has
been trashed cuz the banks don’t/won’t allow you to pick them off on scalps
… try scalping gold and you’ll soon discover you’re the one who’s getting
scalped … helped right along with outrageous spreads & slippage from hell
… question them on this, and you’ll get the “duh, market conditions, duh!”
response, which is their SOP [standard operating procedure] for any and all
customer complaints on pricing … “did you get fucked? … sure you did,
everybody knows it … you know it, and they know it" … nothing will ever change,
and most likely part of what they stole from you will end up in the pocket of
some POL or other miscreant via the scumbag bank’s illegal prop trading
accounts in offshore tax havens that front run every order … the scumbag bank
itself can’t be party to this and it can’t show up on their books … but the illegal
prop trading accounts are a completely different story, and that cash spreads
the wealth.
At present, metals continue to be the biggest scam running, and if you like
handing money over to thieves for no reason, this is the place to go … stock
indices CFD’s can be OK, if your order is small enough … raise the volume level
even the slightest off the minimum floor, and the slippage becomes a pure
nightmare … nowhere is this more apparent than in the NDX100, DOW30, &
DAX30, where slippage WILL BE IF YOU TRADE THEM, outrageous &
scandalous.
The problems in traditional FX, as we face them now, are ones that involve
volatility, and especially intraday volatility [IVIX] … one day your favorite trading
pair has a 40 PIP range for the day, the next it’s 130 PIPS, and the day after that
it’s 50 … try and scalp it and you miss most of the 130 PIP day, while waiting for
the bigger move and you miss the scalps from the lower range days … add to
this the fact that the IVIX is all over the map, going from “stinky dog poo” to
“great” and back again … add it all up, and there isn’t one of you in a million that
are going to respond to this in the right way … and quite appropriately, that’s just
the way the scumbag LP banks want to keep it! … remember, in the eyes of the
banks, your money is really their money, you’re just holding onto it for a while
before they get it.
A few things need to be said before I continue … 1) we aren’t ever going to be
able to be on a “par” with the banks in terms of their computer networks, speed
of said networks, 2) their access to worldwide real time data about trader orders
& positions, as well as where the stops are at, WE WILL NEVER HAVE, and 3) the
amount of money they have at their disposal, along with central bank backing,
can’t be challenged by any private party that’s trading today … in other words,
the banks ARE THE MARKET.
One of the biggest reasons I’ve always traded from one side of the market [long]
versus the other side [short], is that dollar FX pairs get “run” equally hard by the
banks against spec positioning … quite frankly, especially in the dollar pairs,
both longs and shorts get equally bruised with “stop runs”, mystery ticks, and
spikes from hell … even with Friday’s range of about 200 PIPS in GBPUSD, where
it got “monkey hammered” into oblivion, being short was no “picnic” cuz of the
vicious spikes higher to blister shorts into bailing out of their positions … and
then faster than “WTF was that”? comes out of your lips, here comes the red
spike down in microseconds that makes you realize at once you’ve been had
… of course, you already know what happens if you don’t get out, when it “V”
bottoms and takes off for 50 PIPS straight up the fucking wall without a nary of a
down M1, or one that’s meaningless, and then you sit there and wonder how the
hell to navigate this nightmare … am I right or am I right!?
This is what banks do in today’s manipulated environment, either front running
institutional orders for their own benefit, OR reading spec order flow and knowing
at once with their hundreds of millions of dollars of computer banks & HFT
algorithms, that an imbalance has just occurred from the short side and specs are
too short, the “offers” have thinned out, and now here comes the 10 - 15 PIP rally
in Cable in seconds, that if you push the buy button once it starts up, your fill is
gonna make you see purple … cuz what you just sold to them in the last 1 - 3
minutes, you now get to buy back from them and lose money … “thanks Chump,
come again”! … and given the limitations of most trading platforms [hello MT4 &
MT5], latency issues [how long did it take the scumbag bank to fill your order?],
and then slippage to boot, how do you defeat these assholes?
The answer lies in giving up the FX dollar pairs and moving your trading to the
non dollar crosses … specifically, 1) NO YEN CROSSES, 2) crosses between
majors ONLY, 3) crosses that have consistent bid/offer spreads a little over 1 PIP
AND LOWER, 4) crosses that have consistently good IVIX INDEX levels come
“hell or high water”, meaning bull/bear/ & dead market conditions, AND 5) offer
both excellent long & short trading opportunities EQUALLY!
I would also add, cuz it’s to your benefit, finding a cross or two that’s “off the
RADAR screen” for bank “scumbaggery” … what you’ll notice if you watch &
compare carefully, is that many times the cross of a Cable or EUR pair WON’T
react to that mystery spike that just happened, meaning the bid/offer in the
cross didn’t affect the order flow.
In the proprietary trading algorithm I’ve created & developed, using real time
indicators, even with occasional heightened volatility during the trading day,
meaning IVIX INDEX levels go higher in dollar pairs like EUR & GBP, the
algorithm’s signals ARE BETTER IN SPECIFIC CROSSES EVEN WITH LOWER
RANGES AND EQUAL OR LOWER IVIX INDEX LEVELS … and quite frankly, this
has surprised me cuz I wasn’t expecting this at all … I hinted on Friday’s blog
about EURGBP, but that’s only half the story … there is in fact ONE OTHER
CROSS that is better than EURGBP in every metric I follow, and that is GBPCHF
… and in fact, it’s the cross I’m moving my trading to cuz I can’t find anything
consistently better in every metric … no matter how you want to slice & dice the
stats, this cross pair comes out on top almost every single day no matter the
market conditions.
Going forward on the Sunday update blogs, the following IVIX INDEX daily chart,
broken into 4 hour components for analysis, will be the solo de facto PRIME
CHART … directly below, GBPCHF with Monday, July 6, 2020 as the start date.
click on ANY chart to enlarge
First, what to make of the IVIX INDEX and what it means … the IVIX INDEX is a
measure of “rate of change” between successive M1’s on your candlestick chart
… in other words, how fast is the market moving relative to the previous minute
… obviously, the higher the IVIX INDEX, the faster the “rate of change” and more
opportunities for trades and profit … the inverse is also true, where the lower the
IVIX INDEX, the less chance the market is going to move and profit opportunities
are limited by a very slow or dead market … if a reading is “50” one day, and “55”
the next, you can interpret this change as a 10% increase in IVIX for that 4 hour
session … readings below 50 means leave the market alone, and below 40 really
means the market is “D.E.A.D.” … readings between 50 - 55 means the market is
in that “grey area” where IVIX is scraping the bottom of the proverbial barrel, and
just giving the necessary volatility for opportunity & profit … readings between
56 - 60 means OK volatility and decent opportunity for profit … readings between
61 - 90 [the higher the better], means outstanding conditions in terms of volatility
… readings of 91 - 100 means the market is getting “out of control” and could
possibly lead to chaotic trading conditions and thus getting shit fills via the
scumbag bank slippage machine … readings over 101+, and you’ve wandered
into “The Twilight Zone” of heightened volatility, and under most circumstances it
would be wise to not trade.
The chart above is broken into four sessions, each 4 hours in length, to highlight
the different times of the day and what it represents … 1) 7 - 11 server time
[green line]… this is Midnight EST - 4 AM EST … this covers the last half of the
Asian session, which gets most of the price movement & volume, as well as early
pre session Europe into their first hour of trading in central Europe … 2) 11 -15
server time [red/burgundy line] … this is 4 AM EST - 8 AM EST … this covers the
heart of the European session morning, as well as the early pre U.S. session as
bank prop desks come online around 6:30 AM EST - 7:00 AM EST … this is the
second highest IVIX INDEX part of the day … 3) 15 - 19 server time [blue line]
… this is 8 AM EST - NOON EST … this covers the morning U.S. session as well
as the entire afternoon European session to their close … THIS IS THE MOST
ACTIVE IVIX INDEX session of the trading day … 4) 19 -23 server time [aqua line]
… Europe is closed for the day, and this represents the U.S. afternoon PM
session to the NYSE close at 4 PM EST … this along with Asia, represents the
worst times of the day to trade, with consistently LOW IVIX INDEX LEVELS
GUARANTEED TO LEAD TO LOSSES … you will note some spikes higher on
some single days, and those usually occur due to FED interest rate decisions
and/or release of FED minutes, both coming at 2 PM EST on those Wednesdays
… as a result, IVIX increases due to the FED.
As you can clearly see, the 4 - 8 hour period [red/burgundy and/or blue lines] is
where the action is, and IVIX INDEX levels are consistently above 55 - 60 on the
vast majority of days, with readings in the 60’s & 70’s quite commonplace
… contrast this with the dollar pairs, and it isn’t even close comparing the
CONSISTENCY of the index levels … directly below, the daily candlestick charts
of GBPCHF FROM MAY 2018 - PRESENT, with commentary.
And, in case you’re wondering, the vast majority of the time, daily ranges will be
from the 70’s - 120”s in terms of PIPS over the years … the daily charts above
cover about 26 months, or about 520 days of trading, and in that time only about
46 days, OR approximately 9% of trading days are caught in some kind of lull,
and most of that over the years is in the Summer … this year no exception
… however, this also means that over 90% of the time this cross is moving
somewhere! … can’t say that about the dollar pairs with any conviction.
So, it’s on to GBPCHF! … I’ll have more during the week … until tomorrow
… Onward & Upward!!
-vegas
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