I had planned on releasing the version 2 algorithm today … but, I’ve changed my
mind and it’s gonna get released next Sunday … here are the reasons … 1) more
examples, 2) greater flexibility in terms of your style of trading, meaning whether
you’re a short term trader or a position trader, the algorithm has you covered, and
3) I want a week of performance before I release it.
I want the pdf manual to be as short and concise as possible, therefore I’m gonna
use the blog to explain theoretical concepts, limitations, and other various things
like premise assumptions … and so today, I’ll start with some critical assumptions
short term traders [scalpers / swing traders / day traders, whatever floats your
boat] need to be aware of, right from the “get go” … 1) find and trade the
LOWEST COST instrument on the MT4 [spread + commissions if any] with the
HIGHEST 20 DAY RANGE MA & VOLATILITY [VIX] … granted, in some cases it
might be a complete tossup between some markets, but unless you do this,
you’re throwing money away in buckets! … you absolutely have to have a
“Trading Ratio” [TR] of 2.5+ in FX, 3.0 in gold, and 3.5+ in their CFD’S … if not,
leave it alone and trade something else … 2) don’t get caught up in the semantics
of trading … yes, there are differences between scalpers and swing traders / day
traders, but often times the lines are very blurry … e.g. a scalper can have a trade
on and it goes straight in his/her profit direction for 15 - 20 minutes … if by
definition that person views themselves as a scalper, why should a profit be cut
short just because time has surpassed maybe 5 or 7 minutes? … and why should
a swing trader / day trader, who looks for positions over multiple minutes to a few
hours, not cut a trade short if it starts to go wrong within a few minutes? … and
3) short term traders will get the best results sticking to the m1 time period on
the MT4.
I’ve done some heavy statistical analysis over the weekend, and quite frankly to
my somewhat surprise, USD dollar pairs in FX are better for short term traders
than non dollar crosses, and in most cases far superior to other markets CFD’s
… in some cases quite a bit better, especially when those CFD’s slow down and
lose VIX … to Coinexx’s credit, their respective bid/offer spreads in dollar pairs
for the majors are all under 1 PIP … EURUSD & USDJPY lead the way with normal
spread of about 0.2 - 0.3 PIPS … USDCAD, USDCHF, AUDUSD, & NZDUSD are all
a tenth or two higher than that, and rounding out the field GBPUSD right around
0.7 - 1.0 … RT commissions add about 0.2 PIPS.
We were fortunate on Friday to get a peak at a market with one of the lowest costs,
that had a very small range for the day … EURUSD only had a 58 PIP range for the
entire day … yet, running the v2 algorithm in EURUSD, and if you defined yourself
and trading style as a “scalper”, the algo performed flawlessly, even in rotten low
range conditions … quite frankly, outside of pre Holiday trading, getting ranges
that low is rare.
Taking a look at gold and crude oil, it makes sense to trade them more from the
perspective of day trading, rather than scalping, unless the ranges and VIX are
appropriately higher … while gold has been normal, crude oil has suffered
through the Holidays just concluded and into January … their respective higher
spreads and potential for greater slippage are factors you have to consider … I’m
not saying you can’t scalp them, just that if you do recognize there are other
markets better suited for what you’re doing … right now, that would be USDJPY
… of course, wherever you choose to trade, you’re gonna have to spend some
time with a real money account to find out how they handle bigger volumes and
what slippage is really like … you ain’t gonna find that out from a demo account
… so far for the PAMM, I don’t like Coinexx’s CFD’s in “Stock Bellies” [SP500,
DOW30, NDX100] … SPREADS generally are too high, but the real problem is
slippage … ditto in crude oil, where it seems I’m always fighting against the
spread and the stupid ass games their LP or group of LP’s are always playing on
a continual basis … if you trade emini futures or the “micro” futures in gold,
“Spoos” or crude oil, the algorithm would be ideal for those futures markets.
I have always maintained that short term traders who identify as scalpers,
meaning in my lexicon, those who take a position and generally are out of it
within 1 - 10 minutes, and then repeat the process throughout their trading
session, should CHOOSE A SIDE TO TRADE FROM AND STICK WITH THAT SIDE
… I still stick to that, although I can understand & appreciate the argument for
both sides, long & short … from my perspective, there are no advantages from
both sides and plenty of disadvantages … pick a side and go with it!
Directly below, the 20 Day Range MA’s for selected markets.
Please notice I’ve added USDCAD to our list of markets starting with 2023 … it’s
simply a North American market which has its normal trading hours coinciding
with New York EST … generally speaking Asia & Europe are relatively quiet, so it’s
a good alternative for those wanting to scalp an FX pair but don’t want the
volatility of USDJPY, and/or don’t want to get up early for the European pairs.
Onto the week at hand! … OUTTA HERE … “The future’s so bright I need 2 pairs
of sunglasses 😎😎, and my own Brinks armored truck” 💓!!
… Onward & Upward!!
-vegas
No comments:
Post a Comment