FALLACIES IN TRADING

“See, there’s your problem right there … you don’t have enough screens!”

“Yes, I know … the DOW30 info & charts didn’t make it up to the website last night … the culprit? Well, it wasn’t for lack of effort on my part, but some kind of problem at Google that wouldn’t allow me to upload anything into the website. Finally, about 11 P.M. last night, whatever the problem was got fixed, and everything finally got working.” However, it takes about 45 minutes to upload the info to box.com, and then create the necessary shared link to the website, and at that time last night even the dog was looking at me like, “hey boss, you need to get some sleep … tomorrow morning you got a big job ahead of you … that’s right … you got that ‘impenetrable bacon box’ to open early tomorrow morning and get me my bacon!” So, third time’s the charm as tonight it will get posted.

I don’t want to spend too much time today on “deep thoughts”, since it’s Friday and we all know what that means. However, I do want to point out that one of the biggest fallacies facing traders is information; specifically too much information. Throughout my very long trading career, I’ve seen the destructive nature of having and trying to control more and more information; it’s as if people are thinking, “God, if I only had just a little more info … yea, I’ll watch this market over here … and this one over here … and I’ll have CNBC, Bloomberg, & Fox Business News on as well … I’ll also get all the Chinese and Japanese markets too … oh yea, can’t forget the Ruble & Chinese Yuan … Russian bonds are rallying, is that bearish for gold? … maybe if I had 16 or 24 screens up in front of me, not only would it look like I know what the fuck I’m doing, but maybe … just maybe … I could be as successful as that –vegas guy!”

To which my response was/is/ always will be, “Yea Ok, you just keep thinkin’ that … as if my ability to make money trading for the last 4 decades and running is directly attributable to having more & more worthless shit around me and in my face. Getting in a position I only … and I MEAN ONLY … watch the algorithm; getting out almost the same, except when spikes don’t carry us to the exhaustion lines … then, if gold happens to be correlating or inverse correlating with either USDJPY or SP500, I may find that info helpful. And while you have all this info coming at you, your brain is working overtime trying to decipher it all so you can literally attempt to wring the last fucking penny out of every trading position. Me? I don’t give a shit about that; all I care about is the concept of ‘buying it at 1, and selling it at 3’; you can take everything else that is flowing by you and plant it in the garden for your tomatoes cuz they need fertilizer … I don’t.

And the real “kicker” is this; as traders lose more and more money, they desperately desire to want/need more information. In other words, failure in trading leads to a very nasty and undesirable negative feedback loop.

“Nahhh, it can’t possibly be your trading method or algorithm is a piece of shit, and if God himself were using it couldn’t make money either … also, couldn’t possibly be you’re using much too much leverage, and every little ‘squiggle’ in price has you literally ‘shitting your pants’ because you don’t have enough equity to play at the level you’re playing at … and finally, what’s the point of having any ‘game plan’ if at the drop of a hat you’re flying solo by the ‘seat of your pants’ cuz some guy from Vampire Squid on CNBC said that gold was a sell 30 seconds ago? No, your answer is TOO HAVE MORE of this shit!”

So, bigshot trader wannabe types; “All those screens and all that useless crap will do wonders to impress the ladies, but it will not make you rich. You want rich? Ok, stroll over into the right hand column and download everything you need to. READ, STUDY. THINK. ACT. PROSPER. It’s all there, with more ‘proof’ and spreadsheet information you can absorb in one sitting. Or, continue what you’re doing and wonder why guys like me call guys like you ‘morons’: definition of a Moron = somebody who does the EXACT same thing over and over again and expects a different result.”

Now, please understand, there are no “born traders”; everybody who comes into this biz is truly a complete fucking trading idiot, who definitely has about a 99.99% probability of being a “moron” when he/she first starts trading. And believe me, I can remember back at times when Bert would look at me like the other day when the dog got into it with Mr. Meany Cat next door and got his panties bunched up with a fast claw to the side of his nose; no need for talk, the look in his eyes said it all. “What the fuck were you thinkin’? … what special level of ‘idiot’ has you in the ‘Hall of Fame’? … do you ever listen to anything I say? … Seriously, how fucking dumb are you?”

And of course, what I shared with Bert like the dog shared with me, was that special look back; “yup, I fucked up … how did that happen I wonder?” And the issue isn’t whether or not you “fucked up”; hell, as adults we do that all the time. No, the issue here is whether or not you’re going to do something about it so it doesn’t happen again. In life, many times your actions take time to manifest the consequences; in trading not so much. So, the “oh shit” moment for habitual losing traders is simply this; adapt or die the way of the dinosaurs. “You can’t cling to fallacies in trading; you don’t have enough capital to weather the storm of consistent losing. Change your behavior so that you can model success, and whatever is necessary to make that happen. For my part, I can only take you so far in that I have the algorithm for profitable trading and the proof to back it up; you have to ‘pick the damn ball up’ and run with it. Reality is the market; what goes on in your head that keeps you losing is delusional.”

Oh fun, oh joy … another NFP Friday and all the bullshit that comes with it; countdown is T – 20 minutes to nuclear trading.

Well, that escalated quickly didn’t it? Trade of the day directly below.

Lower exhaustion lines hit; I went to  buy it and my screen is showing 1296.40 bid on the spike down … I get my fill at 1295.95 … basically one minute later as the price goes up through 1301, when I see 1301 bid I hit liquidate and get filled right at 1301.00 cuz market is on its way to 1301.55 bid as the high and the LP, at that millisecond, is seeing rising bids … but from my viewpoint it’s a great fill … seconds later it starts puking from that 1301.55 high and I couldn’t get a 1301.00 fill in my dreams.

“Ok, I’ll take that ‘hair less than $5 profit after commissions’ and see ya!! Mr. Market, do whatever the fuck you WANT; take it to 1320, I don’t care! I’ll see you again on Monday, cuz if you think I’m giving any part of this back to you, then you’re nuts!

And so, while the guy with 24 trading screens is getting stops hit off on both sides for losses, we calmly ‘buy’ the lower exhaustion lines “hit” and wait a few seconds so we can give it back to ‘em $5 higher … no need for greed here … I walk into an ice cream store when it’s 105° in the shade and get an ice cream cone … walking out seconds later, some guy with his little girl sees the line is a mile long and says to me, “hey, I’ll give you $50 bucks for that cone so I don’t have to wait in line, how about it?” … well, that was easy.

And for you Newbies, just joining us here on the most consistently profitable and proving it every fucking day website on the planet for gold [and soon to be DOW30 stock index], directly below the pure power of the gold volatility algorithm with not 1, not 2, no my friends not even 3, but 4 exhaustion line “hits” as if I was drawing them into the chart myself. And now, I know what you’re thinkin’; “Wow, bet he wishes he hadn’t sold at 1301, huh”? No, I could care less; I’m a trader not an analyst. Directly below, the 4 exhaustion hits in blue.

And, since I know you think your eyes are betraying you, after that last exhaustion hit high of 1307.17, now look at me and say, “hmmm, nice random moves … no way of knowin’ that high up there could be the time to sell if you’re long.” Only, move quickly away from me before you get hit!

And of course, all of these exhaustion moves in gold [equal or greater than 9 minutes] will be catalogued and archived by us in our new chart database [up in the cloud] at the end of each month, so that everyone can see past historical performance either via online viewing or by downloading the file [day, month, or entire database of charts], over in the “Download Links” section of the website.

“I know, I know … you don’t want to believe it … been there done that … walked in your Newbie shoes before you were most likely born … struggled for 3 months refusing to believe and I created the damn thing! … so I know how hard this is for new or losing traders … but hang in there … one day you will wake up and all this will have been ‘your idea’ and you’ll run with it … when that day comes, email me and share your success, cuz I’d love to hear it!”

OMG, the dog is going nuts; the Mrs. is back from the deli with cold meats and cheeses for sandwiches and he knows the sun is shining and I’m ready to “hit the beach”; it’s early still, but I don’t care. A “double whammy” of sensory delights that has him just short of “happy insane”. We’re sooooo outta here, you have no idea … until Monday mi amigos!

[“Wait … what? Why does he get 3 pieces of roast beef AND a piece of cheese, and I only get 1 piece of roast beef?]

Have a great weekend everybody!

-vegas

OPEN A DEMO AND/OR LIVE ACCOUNT AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”

 
 

CRITICAL THINKING IN TRADING

ASKING THE IMPORTANT QUESTION: “How many holes need filling in your trader head?”

I had the best of intentions of linking up the October DOW30 data to the website last night, but for one small problem; when I got back from the beach yesterday, showered, ate dinner and fired up my laptop, what do I see but about 15 emails in my inbox covering every subject imaginable. From the time I turned on the machine to when I finished replying to all of them with a personal response, it was time for my beauty rest [“and you know how important that is, right?”] So, I’ll get the data up and linked tonight.

The main reasons damn near all of what you see [and sadly, for some of you, have paid for] about trading “systems”, trading “methods”, or trading “algorithms” is complete junk are a combination of the following; 1) they are not thought out from a “top down” philosophical or logical line of reasoning to get to dealing with a very specific finite set of priorities in trading, 2) they are put together using “back fitted” historical data under the best of trading conditions [like straight up/down] to give the least “regression mean” to losses while favoring profits, thereby insuring at the first hint of increased intraday volatility you will lose money, 3) no mention or thought is given to the limitations of the method, when it will turn sour, or what to do when it happens; and believe me it will happen, 4) priorities are intentionally set to maximize profit and pay no attention [or very little] to risk tolerance or the size of losses when they occur; you therefore could have 10 winning trades in a row and the 11^th trade shows your account down 20%+, and last but certainly not least 5) who is it exactly that is the author of the code and what are his/her “street creds” in trading that should make me want to investigate my time and do the necessary research to see if it’s “legit”; and by extension of this do I have to send a shipload of money off somewhere to get even the janitor in the building they are supposedly in to talk to me and answer some questions I might have?

Well, unless you find yourself in “Willy Wonka’s Chocolate Factory”, I can pretty much assure you money is going to flow from you to them before anybody will even say “Hi”; and what happens after you send them money? Can you get it back when you find it’s all bullshit based on Soybeans back testing when there was a drought and prices sky rocketed? “Sure, and I can get you Super Bowl tickets on the 50 yard line 5 rows up totally cheap; sound good?”

So, what I have done is pretty much eliminate the money equation; and that should have your brain cells working overtime to critically evaluate and eventually asking the all important question, “well, if there isn’t any money involved, then if his algorithm is bullshit and doesn’t work, why would he go to the trouble of ‘putting it out there’ cuz there isn’t anything for him to gain but people who think he’s full of shit; it doesn’t make sense.” AND MY RESPOSNE: “What took you so long?”

Right now, I have “affiliate” programs with 2 brokerage houses; 1) ASSETS FX [Finland], and 2) LMFX. ASSETS FX is now only for NON U.S. Citizens, and LMFX is open to anybody. Both have the very best conditions for spot gold [traded in 1 Oz. increments] that you will find; I have a suspicion that they both use the same liquidity provider bank because their quotes during the day [bid/offer] are right in line with each other almost to the penny after round turn commissions are factored in at ASSETS FX. Currently ASSETS FX has the better DOW30 CFD by a very slight margin, but for American clients that can’t have accounts there any more, LMFX is about as good as it gets for trading.

At both houses, when you open a live trading account through the website and my link, you become an “affiliate” account of mine; what that means is simple. 1) You get better service if there’s a problem with your account cuz both houses know I will be on their ass like “white on rice” if something isn’t taken care of like it should be; both have felt my wrath before, and both know I carry some weight in the trading community and don’t want the negative publicity criticism from me attracts to them, and 2) as everybody should know, both the brokerage house and the LP make their money off of the spread in any market; while we pay “retail”, they offset our positions in their books “wholesale” and pocket the difference. The most common practice is for them to split the spread 50/50, but it doesn’t have to be this and in some instances there could be other factors at work as well that determine what the final split actually is.

When you trade and the brokerage house gets their “cut”, they kickback to me part of their spread profit for bringing your account to the brokerage house; it isn’t much but it adds up. My affiliate clients do not have any spread that is different than anybody else; whether you are an affiliate or not makes no difference to your “net” cost of trading.  What I’m getting from the brokerage house is simply part of their cut.

Now, the way I look at this is as follows; it’s a net win for everybody involved. The brokerage house gets increased business, the client [you] pays nothing for the algorithm and has no expense whatsoever, and Yours Truly pockets a little coin for his efforts. In essence, the brokerage house is paying your algorithm fees. If everything is bullshit, then I get no clients and if I have clients they will eventually lose money and go away, so I end with nothing for my efforts; why would I want that?

Turning to gold today … ahhhh, the Chuckleheads traders in Asia just couldn’t help themselves could they? … had to rally it by about $8 back up to yesterday’s high so the dealers & bullion banks could stuff it down their throats … “seriously, do you traders over there ever look at your P/L and wonder WTF is going on? Cuz from where I’m sittin’, I’m amazed any of you have any money left from the ‘pounding’ you take practically every night I’m asleep. And, oh boy, the open today is going to do exactly what I wrote about yesterday; sell stop heaven for the commercials!”

From earlier in the day, a lower exhaustion move in late Asia that had the algorithm make for a very nice buy signal; the selloff and subsequent trade directly below.

Half an hour into this today, and all I see is some light short covering from the big drop overnight in late Asia and European sessions.  But what has me worried is that Asia went sharply lower; and you all know what that eventually means for New York [Hint: up from the lows].The daily calculated white horizontal line is $4-$5 above the market from where it stands right now, meaning we need a waterfall of some kind [hopefully a lower exhaustion move] to get long; we should get another selloff here once some shorts cover, but with an already $21 range, I’m wondering what’s left to the downside to get that to happen? Again, remember Asia and what happened and what I have always said.

And as I write, we just got an upper exhaustion move @ RM=1; this should be the “last gasp” of final short covering. The chart directly below.

EXIT QUESTION: How good was the algorithm in “nailing” this high? “Still wanna talk to me about ‘randomness’?”

Oh wait … you want more “randomness”? How about the second move to the upper exhaustion lines? Oh, and what a surprise … it touches the exhaustion lines and then … what? … anybody got an educated guess out there? Directly below the second up exhaustion move of the day.

“Hey Mr. Market, how ‘bout showin’ a little love out here for us traders waitin’ for an exhaustion line hit LOWER! Gooooooood, it’s like I’m asking for the F-ing world here or what?” [Patient Bear is patiently sitting and waiting … show patience & discipline grasshoppers!]

So, 2 and a half hours into this clusterfuck and gold is reverse correlating almost to the tick with the SP500 and DOW30; both indices have been down 9 days in a row, and with the ever idiotic “most important evahhhhhh!” NFP report tomorrow morning from the Bureau of Unicorns & Fairy Tales, I’m just a tad surprised we didn’t see an early short covering rally in both which would have sent gold lower [maybe] into the lower exhaustion lines for us to buy.

We could still get stocks to rally late in the day, but I doubt seriously gold is going to “tapioca” itself into the lower exhaustion lines; just not enough players that late in the day to want to trade to give it that “oomph” that we need for exhaustion. And, trader thoughts will start to converge on the NFP report and markets morph into “position squaring” which is almost always a bucket of slop up and down with no clear trend to speak of and/or take advantage. It looks to me like a wasted day in gold.

Newbies may want to know so I will address this point; when the price is below the daily calculated white horizontal line, the only way we get long is through a waterfall drop in price. We don’t get long on a plum line slope change when plum is under yellow; why not? Simple answer: the probabilities aren’t high enough to justify a trade with above average profit expectations. But remember this; the primary goal of the algorithm is to keep your trader ass out of trouble. After it does this, then you can go for profits in a long trade with probabilistic scenarios that are definitely in your favor; in other words, I trade when I’m the casino, not the customer.

Sometimes, like today, the market goes counter to all of this, and the lower probabilities prevail; it happens, so what? Opportunity is infinite, capital is finite!

Oh, but looky here; the market has crossed the white horizontal line on the upside, and then subsequently backed off, and when the plum slope line changed, we got the day’s first buy signal. Again, like yesterday, I’m not thrilled about getting long up here, but when the algorithm says “buy”, I click the damn button. Below, the day’s first [probably only] trade.

I have no intention of getting “stuck” up here, so once I’m up over a buck in this thing, my fingers become very quick looking for the “close position” button; if it wants to continue to climb minute-after-minute without pause, be my guest. But once the previous M1 closed, and the current M1 on this chart went immediately red, I liquidated; I’ll take the approximate $1.50 and rejoice, because an hour or so ago I didn’t think we would be up here for a trade, and it was looking and feeling like a nothing day. At least it keeps the dog in bacon. [To the Mrs., this is a “rounding error”.]

Once this trade is over, I can feel things slowing down; the M1 candlesticks are getting smaller in range, and prices are more “disjointed” from one bid/offer quote to the next one; “folks, we’ve just moved into the ‘position squaring’ for tomorrow’s NFP stupidity part of our show today. Please have fun in getting whatever position you want to get 15 cents outside the bid/offer before it goes against you 60 cents in a heartbeat.” Thanks, but no thanks … I’m done today … Mr. Market, do whatever the hell you want.

It’s cloudy and rainy here today [wait … what?], and so the dog and I will be watching “Too Cute” on Animal Planet that comes on about 3-ish … he keeps looking out the window and sees it drizzling rain, then at me as if to say, “hey boss, WTF is this shit I’m lookin’ at outside? No beach? Aw man … life just ain’t fair!” But, when I grab that T-bone steak bone I got last night from the steakhouse, and give it to him while we’re watching puppies frolicking around on TV, he’ll be in heaven. Until tomorrow … I’m outta here.

Have a great day everybody!

-vegas

OPEN A DEMO AND/OR LIVE ACCOUNT AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”

 

THE FIRST PIECES OF THE PUZZLE

“Hmmm, maybe I should just follow the algorithm instead of thinkin’ all the time… what has thinking got me so far?"

Last night, as I’m sure some of you have noticed, I added 2 files to the “Download Links” section of the website [right hand column for you “gifted” Cankles voters]; 1) “Gold Algorithm Exhaustion Charts June Thru Oct 2016”, and 2) “Gold Exhaustion Spreadsheet June – Oct 2016”. All of the exhaustion moves [9 minutes or longer in time] in gold, no matter the time of day are in this file; charts are catalogued by month. You can view any chart online, download any chart, month of charts, or the entire file of 174 exhaustion moves. Charts are labeled in shorthand to make it easy to find what you are looking for to download or view. For example, here is a chart in the AUGUST 2016 sub directory;

DOWN RM=1 1740 START 8_26_16

This was the down move in price that hit the exhaustion lines @ RM=1; the move started from a short term top @ 1740 LMFX server time; the move occurred on August 26, 2016.

The second item is the spreadsheet; here you get the numbers of all of the moves for handy reference, and any exhaustion move RM=2 or above is highlighted in red so you can easily spot bigger moves without hunting too hard.

For many of you, these 2 files are the first “pieces of the puzzle”, if you will, for you to see the power, simplicity, and visual nature of the volatility algorithm and just how easy it is to follow in visual form as the trading day goes by without any need to “do math”. All of the math has been “internalized” and works behind the scenes in the computer code, because when you get right down to it, we’re all like Jethro [below]when it comes to “cipherin’ & trading” at the same time.

“In the end, we’re all like this.”

In the coming days I’ll have the tutorial finished in gold and get it up in the “Download Links”; I intentionally released the charts & spreadsheet before the tutorial because I wanted you to see the absolute power behind the trades with your own eyes. More than likely, tonight I’ll have the October 2016 spreadsheet & charts for the DOW30 linked up as well; it’s every bit as good as gold, but remember it uses a different dynamic and has different rules than gold. DO NOT take the rules for gold and assume they will work for the DOW30; they will not and you will lose money.

Having said that, though, here are the 3 exhaustion moves in the DOW30 yesterday afternoon.

Now, I ask you; can you find for me any other technical indicator that models exhaustion behavior any better than the volatility algorithm?

Again, I release this before the manual & tutorial are finished and posted so you will look at the data and see for yourself the power of the volatility algorithm, before you just hunt for the rules so you can start trading. Remember the following:

READ. THINK. STUDY. ACT. PROSPER.

If you do this, and start on a demo platform with play money for a while to get familiar with the algorithm and the signals, and can actually see your account balance grow, then when you have convinced yourself it most definitely works, then you can come to the conclusion of my most recent protégé Christina; “Fuck yea it works! Gimme some of this money shit right now!!”

Everybody in life has talents that make them special; I’ve talked about Christina in the past, and she is one smart cookie. Not in the usual sense of “book smart” or “Ivy League” smart, or “hey, I got 3 college degrees so I’m smart!” She is “street smart” and once she digested the algorithm and the “lights went on upstairs”, her instincts and ability to follow the algorithm for profit are every bit as good as mine; some days, she even got slightly better fills than I did.

But here’s the thing; on paper, and if you judged her by some dumb ass resume, you wouldn’t hire her to mow your lawn. So, I don’t wanna hear from anybody, that some how some way, their circumstances in life are such that they have convinced themselves that they just don’t have what it takes to do this. My response to that is simple: “Bullshit.”

I will never forget the first day I showed her the MT4 with all the “gizmos” up and running, and she looked at me and said, “Are you fucking kidding me? This is Chinese; how the fuck am I gonna know all this shit!! Seriously man, are you sure you know what the fuck you’re doing?” Months later she’s a pro.

I put all of this information on the website for release, not to impress or try and make you think I’m some kind of “math whiz trader genius” type [“It’s time to vote boy … a Beggin’s Strip for a ‘yes he is a genius’; I just knew you would come around and see it my way!”]. I put this data “out there” so you can convince yourself it works and back up that claim with data. Some of you can trade without knowing what’s behind the algorithm, but I know most of you better than you know yourself; and that kind of guy/gal needs data and needs proof before they commit money to trading.

In essence, then, you now have 3 pieces [out of 4] to the volatility algorithm puzzle for gold; the only thing missing is the tutorial which will be up for download in a few days. Take the time to go over some of the charts and data and then ask yourself if you think all of this is somehow “just random” in nature and we’re all just “lucky as hell” to be on a winning streak, OR the algorithm absolutely “nails” exhaustion moves and gives us very high probability trades for entry? After 5 months; bull runs, bear runs, “chop city” days & weeks,  and 174 moves [more months to follow as they come and go and will be added to the database for analysis and viewing], the data and evidence from the charts is overwhelming. And I’m asking myself, “Where can an ordinary guy/gal go, who wants what I wanted many years ago, to get stuff like this and get on the right track to success, without laying out a fortune to those whose only purpose is to invade their wallet?”

Of course, the Mrs. thinks I’m the dumbest ass in the world for opening the vault to the public and not asking for a “pound of flesh”; but she is not a trader, she does not know what it is like to start in this business all alone and having no idea where or who to turn to. She could care less about trading; has no interest in it except to tell me, “show me the money bigshot!” And from that, all interest is lost.

Trust me, I’ve walked in all of you “Newbies” shoes, and up and until you get up that “learning curve”, this is as brutal a business as there is in the universe. And the cold brutal truth of the matter is, I do this because of my mentor Bert; his legacy and memory I honor because he didn’t have to do for me what he did, which was spend almost 3 years and thousands of hours teaching me the trading business and got absolutely nothing for it, or wanted from it, except for me to succeed. All of you are beneficiaries of his kindness and love of trading.

Turning to gold today … well, that escalated quickly into the 1290’s didn’t it … round up the usual suspects in Asia … bingo! … here we are in the 1290’s! … hmmm, new high for the day right at the open; not good, as with Asia rallying last night this looks like a “sucker” rally to pull traders in. I’m really not liking this kind of action, and of course today at 2 PM we get the FED decision on interest rates; nobody looking for a hike here, right before the election, but if they did gold will get absolutely “monkey hammered” lower given the recent runup. Make sure you are flat going into this; we trade, we don’t gamble.

More than likely gold will have some “profit taking” [in the immortal words of a talking head at CNBC] at the same time the DOW30 rallies; we’ll see, but it’s time to be “patient beat” 45 minutes into this so far.

Ok, a little SP500 strength was enough to get gold down a little and the first buy signal; the trade directly below.

If I wasn’t excited about being long in the 1280’s, how do you think I’m feeling about the mid 1290’s? Right, and it means on a move up I got a very fast trigger finger. At first, I thought it was going to be a loser trade, but it only went about 30-50 cents against me, not enough to hit my sell stop. On the way up, I’m mentally adjusting my sell stop, and when we got above 1298 my stop went to a bid on my screen of 1298.05; I see that, and I’m liquidating. Being near the top of the move and before it started to go lower, my liquidation fill was only a penny off at 1288.04; very acceptable.

Second trade on an algo buy signal directly below.

Sold this spike up very near the top after it backed off when the SP500 rallied off the low open spike down; like the first trade, I got a hair trigger here.

A little bit higher than a buck profit on this second trade bringing my total to just over $2 for both trades.

A few moments later another buy signal; third time’s the charm, right? Below trade #3.

Now this is what I’m lookin’ for; I’m out on the above average spike higher since the trade began on the first M1 that goes red. Ok, with these 3 trades, I now have about $4.50 in captured profits, and with the stops at 1300 taken out, I’m not looking to get back in this stuff today no matter where it goes. I can honestly tell you, I don’t want to be long up here; we’ve come too far too fast and I’m seriously worried about getting caught in a waterfall with a stop underneath.

A break is coming to buy that will be a damn good trade entry; I just don’t know from where, but I’m fairly certain it will be a lower exhaustion hit when we see it. Could come later today with the Fed, or could come tomorrow … but the action up here is “sloppy higher” … sooner rather than later the dealers & bullion banks are going to go for the “Johnny come lately” longs who have sell stops underneath this most recent climb … until we see that, I’m not going to go back into this stuff, and I don’t care where it goes.

And, we also just had 2 upper RM=1 exhaustion “hits” in the DOW30, which is the reason gold turned around and headed lower; THE DOW30 CHART DIRECTLY BELOW.

Can I get you out at the top from being long any better than this? Still think trading is “random”? Imagine me in a pit with 300 other traders, and I’m the only guy selling this top in size; think anybody notices? You’re damn right they do. “What’s your secret man, I gots to know!!”

Ok, I just closed the laptop for trading; it’s 10:30 AM here in Paradise, and the sun is shining and the beach awaits; the Mrs. is doing what the Mrs. does best which is spend money, the dog is going nuts cuz he sees the laptop get closed and is running around looking for his leash and beach toys. Me? I’m happy as hell I rang the register and now get to do what most of you only wish you could do at 10:30 AM; that’s right, go to the beach for some Vitamin C therapy, take in some sun & waves, watch the dog have fun chasing anybody with food, and realizing this is a great way to live! We’re soooooooo outta here … until tomorrow.

Have a great day everybody!

-vegas

OPEN A DEMO AND/OR LIVE ACCOUNT AT THE LMFX LINK IN THE “DOWNLOAD LINKS” SECTION OF THE WEBSITE TITLED “OPEN TRADING ACCOUNT – DO IT NOW!”

 

IDEAS ARE CAPITAL

“Honey, tell me again why you didn’t buy it here.”

Now that October is over, in the next few days I’ll be posting for download the 5 months from June 2016 – October 2016 gold exhaustion moves; every exhaustion move gold made [RM=1 -4], no matter the time of day, is captured with commentary on the M1 candlestick chart. [Note: exhaustion moves of less than 9 minutes are not in the data; I explain in the tutorial why this is the case, but the short version is that statistically, they could be viewed as a random sequence, so they are left out. It’s not that they are insignificant for trading purposes; quite the contrary, but from a probabilistic point of view one could make a valid case that exhaustion moves less than 9 minutes are random and just total luck. In order to knock down that argument those moves are simply left out of the data.]

In total, there were 174 exhaustion moves [9 minutes or greater in length] from RM=1 to RM=4 representing $1,573.94 PER Oz. Of these 174 exhaustion moves, from the very top/bottom to the end at the exhaustion lines, 91.4% [159/174] were EXACTLY EQUAL IN TIME [MINUTES] to cell numbers on either the Cardinal Cross or Diagonal Cross of Gann’s ‘Square of Nine’; the other 8.6% [15/174] were ± 1 minute from being exactly on the Cardinal Cross or Diagonal Cross. In total, there were 104 up exhaustion moves and 70 down exhaustion moves; RM=1 represented 84.5% of all moves [147/174], RM=2 represented 9.8% of all moves [17/174], there were no RM=3 moves, and RM=4 represented 5.7% of all moves [10/174].

Now, here’s the really important question to ask of the data; “what is the cumulative error rate in exact price for all the exhaustion moves that is away from the Cardinal Cross or Diagonal Cross? In other words, after 174 moves, what’s the total price missed by?”

THE TOTAL ERROR RATE = -$0.18

THAT’S RIGHT, after 174 moves the algorithm came up on the short side by 18 cents.

I will show in the tutorial why mathematically this is then almost impossible to be considered “random”; in other words, not only are cycles present, but the math behind the algorithm that you see on your screen models exhaustion behavior extremely well, thus giving us the very best liquidation and entry points [for down moves] you can ask for.

This might be a good time for that “Oh Shit” moment you’ve been dreaming about; oh, and one more thing. The data for the DOW30 looks every bit as good as the gold data; the cumulative error rate for the DOW30 [price] for the month of October was +2 DOW30 Index points with the total exhaustion point moves [in Index points] = 2,651!!

“Go ahead, tell me again how it’s random bullshit?”

Turning to gold today … well, somebody lit a fire under the price in Europe didn’t they? With the daily calculated white horizontal line way below the market here at the open, we should get a decent buy signal on the first bit of market sell off; question is, after that can it continue upward and give us some nice profits?

Well, that didn’t take long did it? Got the first buy signal a few minutes after the open after a failed attempt at a new high; got in a little early on the slope change because I saw the “engulfing pattern” at the bottom, and as we got closer to the end of the M1, I knew that in a few seconds when the new M1 would start that we would see a slope change in the plum line. However, I’m not at all excited about being long up here in the mid to upper 1280’s, so my “trigger finger” to liquidate is going to be rather fast; first sign of resistance on the M1 that goes red towards the last half of the M1 is going to see me liquidate. After commissions it yields about $1.25; skimpy, but better than nothing or a loss.The trade is directly below.

I’m reasonably sure will get some more downside to get me back in; moments later we get buy signal #2. And again, like the first trade, once we start moving up, I’m not only raising my “mental stop”, I’m also acutely aware of potential resistance lurking up here [read commercials bullion wall” of sell orders] to halt the rally; we need to liquidate before it turns around to ensure good liquidation fills, otherwise you know the drill. This trade captured about $1.50. Trade #2 directly below.

Ok, so I’m sittin’ here just a tad below my daily goal of $3; it’s going to take a decent sized sell off to get me back in, and quite frankly for a measly quarter, I’m not all that interested in giving anything back. Quite likely there will be more “buy signals” up here, but again I ask the question as we climb the price mountain again, “where’s it gonna go? Can we get above 1290 and stay there? That 'slaughter' in price on October 4^th has more than a few retail spec position players shaken; I don’t see them coming back in the market unless we get over 1300 and stay there; so that leaves the bullion banks & dealers, and once they cull the order books and see the bids 'drying up', I guarantee you they will “monkey hammer” the price once again." I’m not sayin’ it will be today, but I just don’t see prices steadily moving higher from here without some very quick sell offs, that if your long near the top, you’re going to get some algo signals that aren’t very friendly towards your position. One minute it looks good, the next not so much. Thanks, but no thanks.

The data I first presented in today’s blog should have all of you readers in giddy shock. I’m not trying to be overly dramatic here, but after having seen a massive rally in June, “chop” in July and August, a killer move lower in September, and then basically “chop” in October, gold has “shown its hand” in basically all market conditions. And through it all, the volatility algorithm pretty much “nailed” the short term trading tops & bottoms with an accuracy that should have the hair on your neck standing up; if it isn’t (and it’s just as good in the DOW30), then as a professional trader all I can say is 3 things; 1) “either you don’t give a shit about trading and making money”, 2) “you see no need to trade and improve your financial life because you are comfortable where you’re at”, or 3) “you don’t believe the data.”

To the first 2, I can’t help you, but as to the third, you got 174 gold charts at your disposal [here in a couple of days] cataloging every single exhaustion move 9 minutes in length or greater over 5 months in every type of market conditions; look at as many as you would like and pay close attention to where buy signals occur in relation to the bottom of the move; it should amaze you, and if it doesn’t it’s your problem not mine.

Ok, off to the beach with my BFF; his nurfball, bag of Beggin’ Strips, a nice big beach towel, fresh cold water in the cooler [with other assorted beverages for humans], and of course the beach umbrella for some shade. All in all, it should be a great afternoon … both of us are sooooo outta here … until tomorrow.

Have a great day everybody!

-vegas

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