Oh, Jim Cantore of weather channel fame, is not gonna be happy with this … my
dog pees harder on a bush than what we saw from this storm … no wind, no
rain, just some cloudy skies to make you wonder … but, I’ll take it and hope this
is it for this season’s hurricane shitshow circus!
Like I said yesterday, doing market research for Miss Gimpy, who is convinced
locked somewhere inside my head is the “Holy Grail” of trading, no matter how
many times I tell her that’s bullshit … and while she is doing well and making
money when she listens, she still is new enough to markets that she
concentrates too much on the “sizzle of profit” at the expense of properly
calculating risk, and sizing up the very real limitations that every algorithm or
trading model has … you have got to know who you are and what it is you’re
attempting to accomplish in a trade … there is no such thing as catching every
squiggle in scalps and hitting the home run position trade at the same time … it
doesn’t exist! … a lot of questions need to be answered first, and just cuz you
answer them doesn’t mean you’re right! … there can often be very blurred lines
between a scalp and a “day trade” … scalpers tend to be very quick hitters and
care about little else, while it’s been my experience “day traders” want the
ability to scalp but often let profitable trades turn into losers cuz they don’t want
to liquidate, instead relying on intuition or other metrics that too often fail
miserably … then next trade, they’ll go to the scalp and win a few bucks and the
market takes off to the moon, and they’re left wondering WTF they gotta do to
“get it right” … well, the answer is “there is no right”, only outcomes!
Especially in the environment we find ourselves in, where manipulation from
government and their appointed Apparatchiks occurs about every 5 minutes, it
is essential you understand the limitations of your algorithm parameters and
where they most likely are to fail … from where I sit, I can’t buy into position
trading cuz of the constant manipulation, and violent back & forth market moves
that blow stops up every day, then come back to the middle … that doesn’t
mean you can’t “day trade”, but the distinction between that and scalping IMHO,
simply means “day traders” hold onto a position slightly longer than scalpers
… scalpers ask no questions, they simply react … often times “day traders” who
can’t make it work become scalpers, because they see the advantages … the
problem today for scalpers, is finding the right market at the right house, to
insure you’re getting the very best and LOWEST cost to trade available
anywhere, and then understanding how that house makes its money … too
often, at too many houses, the odds are stacked against you for scalping with
ridiculously high bid/offer spreads, even more ridiculous slippage on every fill,
and of course round turn [RT] commissions … and in that environment you
don’t stand a chance of being successful as a scalper.
Right now, their are only 3 markets worth scalping … EURUSD & CRYPTO PAIRS
@ IQCENT, and a place like Coinexx for XAUUSD [SPOT GOLD] where the
bid/offer spread is 10 cents per OZ., and RT commissions are about 2 cents per
OZ … given the current state of affairs in the market, gold would be an OK
choice for scalping, although crypto or EURUSD @ IQCENT is better IMHO.
From a “day trading” standpoint you got plenty of options to choose from, but
given the fact that “Stock Bellies” [SP500, DOW30, NDX100] exist inside the
“88/6/6” trading paradigm [88% of the time they rally, 6% of the time they go
sideways, and 6% of the time they get the living shit beat out of ‘em], it makes
sense to me to concentrate on being LONG, and thereby leave the short side
alone … no other market or group of markets enjoy this paradigm, so why not
take advantage of it!?
So here is my recommendation to Miss Gimpy and others wishing for a
“day trading” model when scalping looks or feels unattractive … 1) use the
stochastics indicator default mode settings in MT4 … 2) use VIDYA CMO
[4,2, CLOSE PRICE … I use PLUM for UP SLOPE, YELLOW for DOWN SLOPE]
& HULL MA COLOR [40 PERIOD … I use STEEL BLUE FOR UP SLOPE, AND
PINK FOR DOWN SLOPE] … 3) use the appropriate vegas mq4 code for
support / resistance with RM=1 & RM=2 up on the MT4 m1 screen.
Directly below, 2 screenshots of SP500 from Friday, 10/20/2023 … The first is
when “Spoos” were in “rally mode”, i.e. the HULL MA COLOR is steel blue
… the second is when the “Spoos” were in “Sell mode”, i.e. when the HULL
MA COLOR is pink.
I use “Spoos” here, but this applies to any market … use HULL steel blue for buy
mode, and use HULL pink for sell mode … use corrective activity to enter
positions … meaning for longs buy the break, and for short positions sell the
rally ... for long positions bypass those trades where the stochastic is above or
very close to 80, and for shorts bypass trades where the stochastic is at or very
near 20 or below … the closer you are to the HULL, usually the better the signal
for profitability, and the farther the signal is away from the HULL, the higher the
probability the move might be a very short one … I would urge caution for day
trades when the HULL starts to go “flat” in terms of slope for longer than about
15 - 20 minutes, usually indicating “chop” is present or soon will be … the
purpose of “day trading” ISN’T TO CAPTURE TOPS AND BOTTOMS, IT’S TO
CAPTURE FOMO & MOMO in any market … and if you have to exit early, then
exit early … don’t get hung up on semantics of “but I’m not a scalper”! … don’t
box yourself into an argument that has no validity!
If a market is moving and has decent session VIX, this model for trading the gap
between “day trading” and scalper will deliver … but if VIX goes South, so will
the results! … “Stock Bellies” usually delver the goods when it comes to NYSE
session VIX, but there are times when interest goes dormant … gold is definitely
heating up, and with “bigly & yuge” changes coming to how bullion dealers can
trade gold starting with January 2024, with new Basel 3 rules, I don’t see gold
shrinking back anytime soon, especially with the FED being “stuck” with their
massive short positions … therefore, gold appears to be a very good
“day trading” market, but I would caution not to be too greedy as stop hunts in
gold, both up & down historically get “butt ugly” far too often … don’t wait to
sell the red spike down!
Of course there are limitations to this, not the least of which is 1) a drop in
session VIX, and 2) the dreaded “chopfest” … watch out for both! … I still prefer
scalping, where the biggest risk for being long is the “one hit m1 wonder”,
where a rally off the low convinces you the down move is over, and it ain’t! … the
bank just sucked you in to get a higher price, and it’s still dropping … in some
way, shape, or form, gold has a propensity to “double bottom” off of down
moves before climbing higher … unless there’s been a major stop hunt to the
downside, and price recovers “el quicko mucho”, I won’t buy a “V” bottom, cuz
the risk of getting trapped is greater than the reward of being right.
Successful scalpers rarely become “day traders”, and the reasons should be
obvious … but, different people have different psychological makeups, and you
simply can’t take square pegs and ram ‘em down round holes! … today’s
excursion into possible “day trading” made possible by Miss Gimpy and her
desire for more information … as traders, all we can do is strive to create &
implement higher probability trades for profit, without commensurate increases
in risk … we ain’t the casino in Las Vegas, we can do better than that!
Onto the fun filled week!… OUTTA HERE … “The future’s so bright I need 2 pairs
of sunglasses 😎😎, and my own Brinks armored truck” 💓!!
… Onward & Upward!!
-vegas
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