Quite frankly folks, the entire global trade world is built on the backs of
liquidity providers [LP’s] … here’s the chain … “determine what’s needed > raw
materials > producer > wholesale > retail > YOU!” … why would anybody think
financial derivatives trading is any different? … looked at in the proper
perspective, “arb scalping” is simply a jump backwards to wholesale, where in
FX, Apparatchik central banker scum make the rules of “what’s needed”, the big
mega banks like JPM, Squid, etc. are taking raw materials [orders from big
institutions and companies] and pumping out bids / offers from the top. Other
LP’s jump in and feed off the bigger sharks and “produce” another auxiliary
structure, that ratchets down the chain of importance in terms of dollar size
and the non-availability of the higher levels, and at the bottom of this
“producer “ chain are LP’s that have discovered their niche to the middle and
lower classes of institutions and companies, and after they take their cut,
their platforms spit out “wholesale” … and that’s where we jump in, cuz we
know it can be retailed “el quicko mucho” to retail MT4 LP’s or others, who
then do their best to screw retail spec traders all over the world! … the
difference between crypto and EURUSD and/or USDJPY? … size of the
respective markets, volume & liquidity, which in the case of USDJPY is at
least 100X+ bigger than crypto ever hopes to be in the future … and to some
relative extent, that difference gives USDJPY a stability of time, where on
upticks at the primary market [Coinexx LP in FX] at the least, price is not
going down any longer, other players see the arbitrage and rush in to buy
… and after the orders are gone, the LP at IQCENT ain’’t gonna be giving
away anything and the price goes back to either close to the “basis” near
zero, or goes to a discount on the basis where price is now higher than
Coinexx … sometimes substantially higher!
It is absolutely critical that you understand that the “arb scalps” don’t come in
the m1 that the price goes bat shit crazy [BSC] … they will come in the minute or
few minutes after the earthquake in price … it takes a few minutes in the
succession of decision making after the bomb goes off in price for companies
treasury departments to go to their financial institution, get a price that’s
marketed to an LP, and then put out there at wholesale to us … if it’s cuz of
buy/sell stops, it’s open season … you DON’T do buy “arb scalps” while price
is still falling like a rock in water, cuz you could get bloodied badly … you have
to wait for price to at least stabilize, preferably starting to tick higher at the
primary liquidity source [I use Coinexx cuz I know with 100% certainty their LP
[an HFT, either BlackRock, Citadel, or Virtu] is right on top of the real market
price. If you have your MT4 & IQCENT PLATFORMS right on top of each other
like I showed on Friday’s blog post, you CAN GET AN ORDER OFF IN A
FRACTION OF A SECOND … time matters here, cuz in 1, or 2 AT THE MOST
SECONDS IT’S GONE!
If you trade in the Asian session, you have to be aware of Japanese data that
comes out, as well as Apparatchiks going “rogue” in the media with
“blah blah, yada yada” … outside of the most important reports, though, most
of the trading action day-to-day comes in the U.S. session, and outside of
Lounge Lizard speeches, will come between 8:15 AM EST - 10 AM EST … FED
interest rate decisions, beige book, & minutes of the last meeting will come
usually at 2 PM EST … like I said on Friday, go to forexlive.com every day and
under their “Economic Calendar” heading you’ll see the day’s reports and
releases … under settings adjust to your time zone and choose Japan and/or
Eurozone if so desired … and no matter how unimportant or mundane the lesser
reports are in the U.S., beware the shit that comes out of nowhere on
“bigly & yuge” sigma misses that have the potential to take USDJPY on a ride
“el quicko mucho” … I absolutely refuse to get caught by any report, and I avoid
trades near the time of their U.S. release, no matter how “rinky dink” they may
seem on the surface of things … don’t do “stupid shit” and get caught!
Directly below is the full screenshot of USDJPY from the release of the NFP
numbers … vegas mq4 code set at its highest levels of VIX, which is RM=3
[ORANGE LINE] & RM=4 [RED LINE], the WHITE TEMA LINE PERIOD 7, THE
AQUA SMA LINE PERIOD 7 & HL/2, and the “SortVolume” indicator below the
m1 chart … algorithm signals should be patently obvious, especially with the
volume indicator that splits buy/sell volume, and the support / resistance
areas in real time from the RM readings.
There’s no need, once the NFP chaotic mess is over with to keep RM levels at
3 & 4 … I then shift down to RM=1 & RM=2, WHICH IS WHERE SETTINGS ARE
USUALLY AT BY DEFAULT … action here is about 97% of the time … directly
below, later in the trading day.
From the MT4, there’s no way you can know where the “arb scalps” are located,
and what the “basis” is … for that you need IQCENT, and specifically access to
their tick charts that show bid/offer … unfortunately, IQCENT HISTORY on their
tick chart only goes for a very short time, usually less than half an hour … some
industrious computer programmer, who is familiar with MT4 and Trading View API,
and who could copy the bid/offer from both Coinexx and IQCENT as it comes into
their computer system, calculate the basis as defined, and then chart that into a
15s, 30s, or m1 chart [candlestick or bar], and then keep the history, would have a
truly valuable piece of statistical work … in a perfect world, that would be great,
but in truth I don’t really need it as I’m watching both markets simultaneously,
with MT4 [reduced page size overlay] on the IQCENT tick chart platform … speed
of my eyes moving, at most 2 inches, is the only delay!
AND, it’s the same setup in crypto, only there it’s whatever crypto pair you’re
trading @ PHEMEX replacing the MT4 … PICK YOUR MARKET IN CRYPTO,
AND/OR CHOOSE EITHER USDJPY OR EURUSD … I’m gonna need to do more
research to see if USDCNH can be “arb traded”, as I haven’t spent the necessary
time researching it [yet] … these are the only markets at IQCENT that qualify for
“arb scalping” … every other market has too high of a spread … remember, you
have to get the IQCENT OFFER in USDJPY [which is usually 0.4 PIPS HIGHER
THAN THE BID], BELOW THE BID AT COINEXX BY AT LEAST 0.4 PIPS … and in
normal trading markets, where action is flowing back & forth, we’re looking for
PREMIUMS IN THE BASIS OF 3 - 5+ PIPS WHEN WHITE TEMA IS ABOVE AQUA
SMA … and in market environments when SHTF, we’re looking for at least 10+
PIPS OF PREMIUM IN THE BASIS, WITH SOME GOING 20 - 30 PIPS OF PREMIUM
depending on the importance & severity of the released econ report OR
viciousness of the buy/sell stops … AND I STRESS AGAIN … you don’t buy
premium when USDJPY IS FALLING LIKE A ROCK IN WATER! … you will
eventually get burned badly … you wait for price to stabilize and for price to
start rallying at Coinexx [primary market LP], THEN IF THE PREMIUM IS THERE
[and it will be!], THAT’S WHEN YOU MAKE THE TRADE … seconds & fractions
of a second matter here, so there’s no time to “diddle fuck around” and
wonder if you should make the trade when price is UNDER 20 - 30+ PIPS AT
COINEXX in a stable or rising market [for now] … it will only take seconds for it
to start rising, and once it does, it can go anywhere! … on Friday, with that
trade “The Mrs.” & Miss Gimpy got filled on but I got stiffed, they liquidated
9 seconds later with a slight negative basis … about 10 seconds after that it
went out to -25 basis, before collapsing again back near 0 … did they care?
… NOPE! … and if I was in it as well, I wouldn’t care either … “welcome, this
is “ARB SCALPING!”
With all of the news flow that goes in & out of USDJPY, there are going to be a lot
more SHTF “arb scalps” than in crypto … as well, USDJPY is the 2nd largest
market in the world … when you get premiums like we see when SHTF, I’ll take
the bet cuz I think it’s highly, highly unlikely it goes down 20+ PIPS in the next
5 - 10 seconds, and if doesn’t I’m gonna win … BUT, if you buy the PREMIUM
during the waterfall [if it’s there] in price, nobody has any idea what happens
next … another 20 PIPS down or how about another 100+ PIPS? … but after it
stabilizes or starts rallying just a few PIPS at Coinexx [primary LP]? … well now,
that’s another story entirely! … and the same rules apply to crypto pairs … given
the dynamics of news flow / volume / liquidity /depth of the market, I prefer
USDJPY [or EURUSD if it can get volatile enough] OVER ANY CRYPTO PAIR
… but if you prefer crypto, than by all means have at it! … if USDJPY goes
“sleepytime”, which it does on occasion, I’ll instantly move over to crypto.
Directly below, this week’s 20 Day Range MA & MEDIAN for selected markets.
I have decided NOT to produce an Adobe pdf for “Arb Scalping” … the primary
reason is the near impossible capture of data on the IQCENT tick chart … history
only lasts less than about 20 minutes, it’s a pain in the ass scrolling back on
trading view, AND the tick charts are not to scale, so whatever you’re looking at
from 10 minutes ago, you got no idea WTF it is or what the prices were … “oh,
see my shocked face! … I don’t think for a second it’s an anomaly … it’s done on
purpose, and from where I sit, that tells me everything I need to know about why
they do it like this.”
Onto the 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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