MARKETS DECIDE TO TAKE 3 DAYS OFF AS WELL

“Oh, it’s a “Holiday”? … who knew, who cares? … let’s grill something!”

Not that the trading community ever needs a reason, but nobody “Evahh!” said,

“no, let’s work instead” … fugetaboutit! … and so, in the spirit of “who cares

why”, the world celebrates “Juneteenth” as well cuz it gives them a day off

… why should markets be any different?

Pretty much everything in FX, in terms of price action, either coming in the

Asian session, or a 15 minute stretch just before 5 AM EST … granted it’s a

“Holiday”, but that doesn’t mean there can’t be buy stops to be run and faded

… and that’s exactly what we got in Cable [GBPUSD] … which is interesting,

since tomorrow sees most likely a nationwide rail strike in the U.K. … as the sun

comes up in New York, the TR in Cable = approximately 2.5 - 3.0, which is a little

low, but it is a “Holiday” with Holiday conditions prevailing … not seeing any

reason to get involved in this shit cuz nothing is really moving, it’s just a slow

walk to somewhere, and at some point it’s gonna go “sleepytime” ‘till tonight in

Asia … but days like this do point out, though, the main function of markets

today, and why they let YOU participate in them … “the main purpose of modern

day financial trading, is to allow “big money” [banks] to take away all of the

“small money [YOU], and at the same time make you think it was all a “random

walk” due to unforeseen market forces.” … why do you think they let anybody

with a pulse open an account and trade? … cuz they’re nice guys and want to

see you succeed? … fact is, the way the banks view your money, it isn’t really

yours, it’s theirs, you’re just holding it for a while until they can take it back

… in their view, it’s the rightful order of things!

Quite frankly, I’ve always held this view, stretching all the way back to when I

was ‘Grasshopper” with my mentor “Bert”, although back then it wasn’t the

“banks” per se that ruled the world, it was large commercial & commodity

houses that tried to throw their weight around … Cargill & ADM in grains,

Heinhold in livestock, Plaza [Solomon Bros.] in financials, and J. Aron, Bache,

& a slew of retail houses in metals … many of those are “Sayonara”, but the

banks now have positioned themselves in the middle of every single transaction

in the world on a daily basis … whether futures or CFD’s, it makes no difference

… the big difference between now & yesteryear, is the fact that now banks have

the backing of central banks, and with it UNLIMITED FUNDS TO PUSH MARKETS

THE WAY CENTRAL BANKERS WANT THEM PUSHED … it used to be quite

common in the 1960’s - mid 1990’s to see banks & brokerage houses go under

due to trading losses … with the world in complete chaos & turmoil that’s 100X

greater than anything seen back in those days, and with trading volumes and

positions in the TRILLIONS, how come no banks ever get in “trading trouble”

anymore? … how come, cuz 1) they’re so brilliant? … or 2) cuz they can’t fail

with unlimited money, a cartel atmosphere among all the big banks to help each

other out, and the backing of central bank Apparatchiks who will go on the

airwaves at a moments notice and stop a retail spec trend in its tracks with one

interview? … yea, I’m going with option #2!

And it’s why, when I was on the trading floor making millions, and was basically

a scalper, 1) I could care less what the overall “macro” picture was in terms of

consensus opinion among “the Elite & Learned”, 2) I NEVER GOT INTO

TRADING TROUBLE … EVAHHHHH!, and 3) I made SHIPLOADS of money … was

it a “linear process”? … of course not, cuz there’s nothing linear about trading

… PERIOD!

The conditions for becoming a “trader” today, are far, far more advantageous than

they were back in the day … and I mean “night & day” differences here, not simply

splitting hairs … today, anybody with a pulse can trade, and you can start with any

amount of money … got $100? … welcome to the “trader community”! … the

problems of course are 1) where do I start and where do I get information,

2) what “model” do I use to make money, and 3) what type of trader am I to be?

… Newbies are attracted to the “big kill” type of trades, like crude oil or USDJPY

as of late … I’ve never been in that camp … I want and demand a  CONSISTENT,

money making strategy, and if need be, to make adjustments along the way

… trading is simple, nobody ever said it was easy!

For decades in the modern era, trading was BOTH SIMPLE & EASY! … THAT’S

CUZ THE PARADIGM WHICH MARKETS OPERATED UNDER NEVER CHANGED!

… the technological revolution that brought us electronic trading at the turn of

the century brought big changes, but the real killer in terms of paradigm shifts

was the 2008 financial crisis … that ushered in the era of “big government” in

markets, in particular a world where interest rates were ZERO everywhere … then

in the spring of 2012, after the big runup in gold to new all time highs in

September 2011, we got introduced to the “Rally Protection Team” [RPT], where

the FED put an end to the bull market in gold for the next 3 years … in FX, it was

the EURCHF debacle in January 2015 that saw central banks deciding to become

active manipulators in currency markets … a short time later in February 2016,

the FED steps in to save “big oil”, and at the same time blow out their balance

sheet with QE to create the world’s biggest financial bubbles in history in the

stock market … well, you know the rest … point is, nobody sent out emails to

traders warning us of these impending, “paradigm shifting” events, we got to

experience them in real time! … nothing for decades, and then paradigm shifts

at the speed of light! … and suddenly without warning, absolutely nothing in the

world of financial trading made any sense whatsoever … bad news became

good news cuz it meant MOAR! QE … how many traders got wiped out in various

markets cuz of these shifts? … shiploads! … and quite frankly, as much as I

tried to adjust various algorithm models, I couldn’t keep in step with the

scumbag bank LP’s that kept jacking markets all over the place in epic, furious

fashion, which most of the time made ZERO sense … gold being a perfect

example, and the idiotic, parabolic moves higher in “Stock Bellies” being

another … given the high spread, and wicked slippage gold is noted for, there

isn’t any way the m1 can get you to the promised land … no way, cuz it’s too

slow.

And so what did they [central banks] do to FX in this period? … 1) volatility

[VIX] suppression, and 2) a ton more double & triple reversal days than ever

seen before … trend followers good luck!, cuz there ain’t no trend, only

up/down when we say so! … more than one FX analyst sought psychiatric help!

Of course there has to be at least ONE limitation for the trading algorithm,

version 2.0, so what is it, and are there more than one? … first, I can’t know what

I don’t know, and nobody’s algorithm, no matter who they are or how big they are,

or how sophisticated they are, can ever be 100% certain of the second part of the

question … as to the first part, nobody can ever know with 100% certainty THAT

ANY TRADE, no matter how good a setup, is going to be guaranteed to be

profitable … everything in this world is a probability wave function, and markets

are not exempt! … having said that, though, if you believe like I do that markets

are nothing more than human psychology in action, and that patterns repeat over

and over again, ad infinitum nauseum, cuz humans never, ever change over time

when it comes to “fear & greed”, then in the “collective” patterns of trading will

repeat … ups & downs will look and feel the same, and setup the same with minor

differences … and in that context, the way the version 2.0 algorithm fails is

through a very specific circumstance where 1) there is in the market a small

“Flying Wedge of Death” [FWD], that goes from one side of the small range to

the other, often times in small steps, and then goes just far enough to turn the

HEMA directional indicator bullish [lime green] with a positive slope, followed

by a small correction lower, and then a TEMA OVER HULL crossover that

immediately fails and heads lower thus forcing you out … if short, the market

goes just far enough to turn the HEMA directional indicator bearish [red] with a

negative slope, followed by a small correction higher, and then a TEMA UNDER

HULL crossover that immediately fails and heads higher thus forcing you out.

And while this will occasionally happen cuz it has to, over the course of hours &

hours, this pattern is NOT going to repeat endlessly unless 1) VIX is too low as

measured by the TR, or 2) the market is in some kind of holding pattern due to a

specific news event [like NFP, inflation numbers, or central bank interest rate

decision] OR Holiday period … and if it’s either of these, you simply leave it alone

until it passes … quite frankly, unless these 2 conditions are present, you aren’t

gonna see an extremely small FWD do this to you … and if it’s a bigger FWD?

… I’m scalping, so if the ranges and action is larger, there will be moves that will

present opportunities for profit … a good scalper “has no memory”! … tattoo

this last point under your eyelids so you don’t forget it! … the only other

problems come from market logistics, such as spread & slippage, and whether

you should be scalping a market or not, they are not related to market moves

per se.

What makes FX ideal for this kind of trading, is the simple fact that it is by far the

largest market in the world, seeing total notional volumes approaching

$7 TRILLION DOLLARS PER DAY … you wanna be a “big trader”, a “big hitter”?

… step into the FX majors, where you don’t stand a chance of even coming close

to being a flea on an elephant’s ass! … last time I looked, the AVERAGE TRADE

SIZE in the spot interbank FX market for USDJPY was about $35 - $50 million

dollars notional, depending on the activity of the day … THAT’S $3,500 - $5,000

PER PIP Skippy! … “c’mon in, the water’s warm & friendly!” … and it’s why you

have to have the LOWEST COST TO TRADE of the pair you’re trading … as you

get bigger, the amount of money you will be throwing away will be mind blowing!

All of which brings us to this “Holiday” and today’s trading … USDJPY spread

back in line, so that’s good news, but for how long? … Cable doing its best

impression of a market that’s sleepwalking to the close … here just before

“Stonks” usually open, the current TR in Cable = approximately 2.5 - 3.0, just

like hours earlier … given the trading action lately, this seems dead to me, even

though it isn’t, but a TR at times of about 2.5 isn’t cause for cheers either … yes,

there have been profitable buy signals, as well as profitable sell signals, but with

this low of TR, and it being affected by this “Holiday”, there isn’t anything here in

terms of movement that says “TRADE!”, and as we approach the London Fix, I

wouldn’t at all be surprised to see some “scumbaggery & fuckery” from the usual

suspects cuz volumes are extremely light & flows just as bad … sometimes,

Europe pays no attention to U.S. “Holidays”, and trades normally, and other

“Holidays” it goes “sleepytime” … this one definitely leans towards “sleepytime”.

And as I write, it’s almost as if Cable sees what I’m writing, cuz with about 2 hours

to the London Fix, here we go to the downside with some vigor, after spending

multiple hours drifting higher hitting buy stops … and suddenly to nobody’s

surprise, the low of the day comes into play … see my shocked face … quite

frankly, I didn’t expect the “scumbaggery & fuckery” to start until the last hour up

to the London Fix, but no matter, cuz somebody’s got “ants in their pants” [I’m

guessing those that sold the spec buy stops earlier], and are now pressing lower

looking for liquidations to cover … in other words, a microcosm of a normal day!

… cuz it’s a “Holiday”, I doubt the “reversal circus” comes into play, but you

never know anymore. 

Here at the London Fix, time to say “adios” to today’s shortened clusterfark … in

the scheme of things, not much of anything to cheer about in terms of price

action … still, it was active enough with a TR = 2.5 - 3.0 most of the day to get

profitable signals, both long and short … in dollar pairs, I still lean towards trading

from one side or the other, but I understand and appreciate there are valid

arguments to be made from both sides … you really have to see trading

conditions deteriorate below TR = 1.5 for Cable to be left alone, and we didn’t see

anything like that today … still, given trading action lately, this day stunk and it’s

why I made no trades for the PAMM … just not enough consistent meat on this

bone for my blood … hopefully, tomorrow sees a return to the new “normal”, and

action picks up … I can’t see any reason why it shouldn’t, so it;s onto tomorrow

and out of this “Holiday” B.S. … as readers might remember, my niece is here with

a broken leg she got foolin’ around the pool over Memorial Day Weekend with her

gal pals from college, down here for some “fun in the Caribbean sun” … well,

there’s ALWAYS  a silver lining in every cloud, and since she’s spending the

summer here, along with rehab, she’s gonna be here for a while … and natch,

I’ve turned her into a “trader” … the trials, “ups & downs” of a Newbie trader

coming in future blog posts … should be entertaining & educational for many

of you! … and with that, time to fire up the barbie and get ready for some steaks

& seafood grilling this afternoon … onto tomorrow!

… outta here … “The future’s so bright I need 2 pairs of sunglasses 😎😎, and my

own Brinks armored truck” 💓!! … Onward & Upward!!

-vegas