HEIGHTENED VOLATILITY & TRADE LIQUIDATIONS

“Newbies, when you trade, where are you?”

The whole point of having a reliable algorithm is to get away from the pic above; having said that, we’re all human and suspending brain activity while trading is next to impossible. And what you soon discover, in times of market  [pick ‘em] turbulence and sky high volatility, is that it’s more of an “art” than it is a science in choosing the right RM for your trading on the M1; but, and this is a very big butt, it’s a problem I want because it means trading opportunities galore.

And while gold has seen a rise in volatility, it isn’t anywhere near the maniac conditions in the U.S. stock indices; both the SP500 & the DOW30 are “off the wall” right now in terms of heightened intraday volatility. And so the big event of the week [U.S. elections] has unleashed the volatility animal and now we are faced in attempting to choose the right RM level for our trading; we don’t want to miss a liquidation, but we don’t want to liquidate and see the stuff rocket another few percentage points either. So, what are our choices here?

As I said yesterday, the first part is having “situational awareness” to events [political or economic] that control a big part of heightened volatility “above & beyond” where it usually is in any market; however, markets cannot remain in RM=3 or RM=4+ very long because the energy needed to keep them there, i.e. the buying and/or selling frenzy that keeps hitting the exhaustion lines at these levels, can’t be sustained. Market history tells us this loud and clear.

Ok, so you realize the RM needs to be higher because you see the events unfolding; to go from the usual RM=1 to RM=4 requires events that are major to the markets in terms of price readjusting itself to the “new” information; right now, there are only a few things that can do this; major economy political elections/resignations/coups/, things of this type, NFP reports, and Central Bank interest rate decisions [most notably the FED]. Other than that, it would take a “one off” [entirely possible given today’s geopolitical environment] to make me move my RM from 1 to 4 before anything happened in the market.

Tuesday night going into Wednesday, especially as market expectations were changing from Trump losing to Trump winning [thank you Florida & Ohio!!], and you could see what was happening, a change to RM=4 was mandatory in gold and DOW30.

Through Wednesday, I stayed in RM=4 [both markets]; Wednesday night I switched to RM=2 [both markets] for Thursday trading, and today I’m going back to RM=1, again in both markets as things have settled down somewhat. Now, that doesn’t mean I’m right, and certainly SHTF can strike at any time; if it does, I’m going to be leaving money on the table by getting out too early, but it’s a problem I would love to have each and every day! “Awwww, looky here Maw, I sold at the RM=1 exhaustion line in the DOW30 and took a 60 point profit, when I could have waited another 2 minutes and sold it at RM=2 90 points higher; come here an gimme a hug cuz I’m so sad!” [Wait … what?] Exactly.

Now, there will be times when volatility is “above average” for above average markets [like now] and you will be in a position and the market will go through the RM=1 level like a lumberjack’s chainsaw goes through a stick of butter; in other words it gaps right through the lines on its way higher and you find yourself sitting there saying to yourself, “Holy profits-O-Plenty Batman, what the fuck just happened?” You got one of 2 choices to make, neither of which is a totally “right or wrong” answer; 1) you can let it ride some [as long as it stays above the red exhaustion line and keeps climbing] which in the past as long time readers know I termed the “Ferrari Gear Shift”, or 2) you can take the extra profit right now this second. Depending on the market and circumstances of the trade, I usually adopt the first choice, but also have used the second when I just want out [like when I completely go way past my profit goal for the day and am content with what I have captured in profit].

As you may have guessed by now, the “dirty little secret” in successful trading is proper entry, followed secondarily by liquidation. Unless you get in a trade at the right time and under the right circumstances, you’re going to discover [usually sooner rather than later] that getting out to make money is a bitch; the market just doesn’t want to go to any level to see you even make $0.01! The algorithm has as it’s 3 priorities, in order of importance for you to be successful and make a career of trading, 1) keep your ass out of trouble, 2) proper trade entry [right as momentum is shifting], and then 3) proper trade liquidation, with the full understanding that when you are up money in a trade you have some latitude in deciding when you get out. Even if you are the world’s worst trader [and boy have I seen some beauties in this category], you still stand to make a fortune from trading while you completely fuck up discretionary liquidations!

What it all boils down to when SHTF is shifting your RM levels, and then when things settle down some go to RM=2 for a few hours to a day, and then go back to RM=1 on day 3, all the while understanding you can employ the “Ferrari Gear Shift” or simply book the extra profit immediately; either way you’re a winner. And that is how I handle these types of scenarios.

We’ve just been through a climatic week in terms of market moves; now that you have had the great fortune to see it “up close & personal” and seen the shifting sands of volatility move beneath your very feet at a speed that can be unbelievable to most of you, my opinion is that my posts now on the subject have far greater meaning to you than if I had done them during an October “sleepy time” in the markets when they had no significance. Welcome to “continuing education” –vegas style!

Turning to gold today … any guess who attempted to take it higher last night? … “Alex, I’ll take ‘Stupid Shit in Gold Trading’ for a $1000 please? … what is the Asian Chuckleheads! … God this game is easy.”

Right as we start, gold is sitting right on top of the daily calculated white horizontal line, and I’d be really careful of the trade today; we already have a $14+ range today, and for a Friday of late that would be a very good range to see for the day; I realize the ranges have been $30+ these last couple of days, but given the price level of gold, that cannot last; it simply can’t, and to actually look for it will utterly disappoint you.

Near the open here in New York, I’m seeing a very slight upward bias in price; hard to tell if it’s position squaring ahead of the weekend or specifically short covering from the highs in Asia earlier today; I don’t think it’s outright buying from retail specs. One thing worth noting here, though; the DOW30 & the SP500 “should” [and that doesn’t mean “will”] have some sort of “profit taking” [CNBC talk here] coming up real soon, and that should spell gold strength. The question is will it generate a buy signal from the algorithm with the market above the white line? We’ll see.

Ok, first trade of the day directly below.

Because we were above the white line, I gave the trade a little extra room, and liquidated on a breach of the first M1 low after the spike rally up; in hindsight it would have been better to treat this trade as if it were below the white line, buy hey … in the scheme of things not too much missed profit. Still made about $0.80 on the trade versus maybe a $1.25 if I had done it that way.

Trade #2 happens pretty quickly; but again, after just having missed the top in trade #1 and being reminded not to get to greedy on these long trades, when this second trade starts stalling I’m getting the feeling it doesn’t have much room on the upside, so I liquidated right here for about another $0.70 profit.

Well, that escalated quickly! Trade #3 directly below.

Ok, this is what I wanted to see; captured about $2.50 on this trade, so with the 2 earlier trades I’m now at about $4.

However, the trade is looking and feeling very sloppy; if gold were going higher, these 3 signals [taken together] should have produced a stronger rally than 3-4 minutes and a bigger move in price. What this tells me is that there are sellers above the market waiting for any rally to sell, and what I want to see to get me in another trade is a waterfall to the lower exhaustion lines; nothing else.

Well, again, that escalated quickly! But, before I post the chart for trade #4, remember what I said yesterday about “situational awareness”; you have to know there are/were stops below 1250 [basically Wednesday morning’s low from the panic down], and where would the position playing retail spec community have their sell stops parked like a pack of lemmings? [I’ve written before about knowing where stops are “packed”.] Why of course, right below that. And so, if you bought at 1250, you got a surprise didn’t you; it’s because you weren’t aware like I asked you to be yesterday. “This isn’t rocket science unless you want to make it that way; have ‘situational awareness’ and follow the algorithm, and trading life is simple.” The 4^th and final gold trade of the day for me directly below.

Getting in, I waited for them to clean out the position players from Wednesday’s low; when the M1 ended at or near the low, and the next M1 went green, it was pretty much a given the pressure was over for the time being. And on the subsequent rally, when that M1 turned red I was gone [where the orange arrow is]. Ok, adios gold, you’re a psychotic mess today. But, the gold algo “nails” it again today, and that’s all that matters!! [And that last trade captured about $3, making the total easily over $6 for the day.]

[And what you are seeing now in gold in the 1230’s, and going into the 1220’s is utter, complete capitulation by the position playing longs from Wednesday; the specter of higher interest rates from a booming economy under Trump the reason behind the gloom & doom before the weekend ( a December rate hike a “lock” in my opinion); and the commercial sellers know they got the “bull by the balls” and are squeezing hard as we head towards the close; it’s going to be hard as hell to rally this stuff today anything more than a couple of bucks unless we see stocks crater.] In any event, no matter where we go from here the rest of the day, they’re going to do it without me; trades locked up, money in the bank, life is good. [And man are they beating the hell out of this stuff! “This selloff won’t stop until the Asians sell it lower; when that happens is the only way New York will rally; remember, you heard it here first.”] And from purely an algorithm standpoint, we got 4 exhaustion hits lower followed by rallies, that when they stalled you should be out! If not, why not? And after the first one, you should have known to raise the RM level to RM=2 given the volatility. Again, what have I been talking about these last days in terms of “situational awareness” and how to spot volatility changes?

Before I finish today’s post I want to bring up 2 things that may have significance for you in terms of trading these markets and your choices going forward; 1) because LMFX has gotten a new LP in the SP500 [0.40 index point spread, $2 round turn commission, ±$10 per index point per 1 lot CFD, $200 margin per 1 lot as I write, and a net trading cost of 0.41 index points], this market is now on a “par” with the DOW30 in terms of “tradability”; therefore, I’ll be releasing the algorithm for this market probably next weekend, and 2) LMFX has the most volatile and widely traded U.S. equities available for trade as CFD’s; most notably Google and Amazon, both $700+ per share stocks that have wide ranges during the trading day; I’ll be making these 2 stocks part of the “mix” of our markets that I have algorithms for because they are A) part of the DOW30, and B) trading opportunities abound in buying/selling them, and 3) the margin for trading them is 10% the price per share which is far less than trading these stocks with full 100% cash at any mainstream brokerage house in the U.S., or anywhere else for that matter. And, of course, since you are trading at an “offshore” brokerage house, there are no legal requirements for LMFX to report anything to anybody as to your activity or whether you made or lost money. I’ll have more on these 2 markets, especially the shares, next week sometime as I finish their respective algorithms.

This will “round out the list” of markets I’ll be covering and/or making comments in the posts going forward; this will give us gold, 3 stock indices, crude oil, and 2 high flying popular stocks; if it isn’t happening in any of these markets, it’s not happening anywhere else either. And again, those of you looking for an FX market [currencies], it’s not happening anytime soon because of the disparate nature this asset class has devolved into over the last year to year and a half; it’s simply untradeable and unless you have the will to become a meth addict and stay up and glued to your screen 24/5, you will miss the action somewhere for the day, be disappointed and dejected, and then see no follow through anywhere for days as it “chops” around and retail specs get stop hunted without mercy. Overall trade volumes have collapsed in the major pairs, thus making liquidity and slippage a real issue as major players have left the trading scene leaving banks versus retail traders; “Gee, lemme think for a minute who will win this game?”

Time for the weekend, and quite frankly I’m ready for it; got a lot of work to do yet with the DOW30 algorithm manual, so I can get it up on the website by Sunday night. The dog and I are sooooo outta here … until Monday.

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!”

 
 

“SITUATIONAL AWARENESS”: WHEN SHTF

“Good advice for trading too!”

“Honey, I’m just looking at the ‘big picture’, Ok?” And boy-oh-boy did we get some “big pictures starting Tuesday night as the election returns came rolling in; “everybody ready for some RM=4 trading?” For you newer traders out there, those that have been following markets for less than 3 years, whether you have made money this week or not isn’t the material question for today; the important question is “what have you learned about ‘situational awareness’, your ability to recognize it, properly assess it, adapt to it, and then potentially profit from it?”  My guess is “not much”.

That isn’t meant to be a “knock” on any of you; in fact, for many of you, you have been fortunate enough to witness in the last 5 months two “earth shattering” political events that have absolutely rocked the trading world; first “Brexit” in late June, and now the U.S. elections for President. Two out of five within 5 months; normally you wouldn’t see but one every 5-10 years. So, for you Newbies, count your blessings you get to see and learn from this first and foremost; opportunity always exists in trading, but if you’re not around because you got caught doing “stupid shit” and no longer have a trading account to trade, then all the opportunity in the world doesn’t matter much.

People die all the time from car accidents on the highway that easily could have been avoided; hikers die all the time from exposure when hiking in the mountains in summertime, and people also drown out on the lake or at the ocean every summer; so, what most likely happened that primarily caused these tragic events? Lack of situational awareness.

And, as I have always maintained, “life imitates trading; trading imitates life”, this transition into trading is also totally applicable. Going into Tuesday night, as a trader waiting for events to unfold, or simply waiting for Wednesday to start, you had to be aware of the enormous trading risks associated with the U.S. elections; if you weren’t, then this should be a “wake up call” to you to start paying attention to events happening around you that can potentially destroy your trading account. And while you should always be on “DEFCON 1” even when trading is relatively normal at RM=1, when you know events are in place to shake things up, you really have to sit back and ask yourself how you are going to 1) process the event in relation to trading, and 2) do I in fact trade any of it?

Remember, the algorithm has 4 risk models; RM=1 covers about 85% of market action, and RM=2 covers about 10% of market action; the additional 5% is left to mostly “tail risk” at RM=4 or greater. When you get to RM=4 [or greater, which I don’t measure], you are witnessing market action that is not only “bat shit crazy”, you are also witnessing market action that cannot be maintained for any length of time or the market breaks and will be destroyed! The energy needed in price moves at this extreme level simply will burn itself out in short order because there are only so many institutional players that are panicking at one time before other institutions come in and restore order [and here in the last few years, the FED’s “Plunge Protection Team” that waits for you to panic and then when you’re done and you’ve sold the lows, comes in and bids prices higher in short order to punish you for your selling.]

So, coming into Tuesday night you had to know that RM=1 was not going to hold anything going forward into Wednesday; that in fact SHTF was to going to happen one way or the other, and that the safest mode to be in would be RM=4. how long it would last at this level is anybody’s guess, but at least initially this is the mode you had to be in when results started hitting the newswires.

Anytime we find ourselves going into this type of trading scenario, whether it’s political [Brexit, elections], or economic [NFP, interest rate decisions by the FED or other major central banks], you also have to have a sense of where the “mainstream expectations” are for the event; in and of themselves, nobody gives a shit what the actual results are or the actual numbers of an NFP report; what matters is where the results fall on the “expectations bell curve” of the “expected” result by the market. If there’s a wide discrepancy between what was ‘expected’ versus what actually happened, you now got a huge ‘dislocation’ with the ‘big money crowd’ and you can expect fireworks!

There are 3 aspects of panic you have to be cognizant of when trading; 1) which side of the market is the actual panic on, and more importantly is it correlating with other asset classes at the same time, or is it in isolation, 2) among the ‘big money’ set, the adage “he who panics first, gets the chance to panic again in the future” is very much in play, and 3) large hedge funds get caught and the “quants” [the Ph.D. math, algorithm numbers guys in the back room who tell the manager this “can’t be happening” probability wise] feel the squeeze when “gamma”  [the change in the delta (price change)] goes exponential quickly, and the very rapid rise or fall in market price has TO BE MET WITH MORE BUYING [MARKET PANICKING UP] OR SELLING [MARKET PANICKING DOWN] by them to avoid a total wipe out of their fund, thus adding fuel to the already hot fire and becoming their own worst enemy when getting out.

And so, you sit there and watch as prices “waterfall” farther and faster than you have ever seen anything in your life drop; like the SP500 and DOW30 late Tuesday night and into Wednesday; then near the NYSE open, here comes the “Plunge Protection Team” and the DOW30 rockets 250 points straight up in about 13 minutes, and then keeps going after that. In other words, given the context of what is actually happening and having some sense of situational awareness, it all starts to make some sense; not every squiggle on the M1 to be sure, but overall yes it does make sense. If you just got off the “Pudding Business” turnip truck and wandered in as a total Newbie, then yea, you’re going to thinking along the lines of, “what the fuck is this craziness … Whoa, did you just see that move … how do you trade this shit and have any of it make sense?”

Even though the “risk models” are explained in the manual, I want to make sure everybody that has the algorithm up on their screen knows how to change the level [1-4] of the RM’s. Place your mouse on any colored line of the algorithm on the M1 and wait a second; you’ll see a box pop up; on that line double click your mouse; the algorithm parameters box pops up >> go to “inputs” section of this box >> on the first line it says “risk model” >> go over to where the number is and double click your mouse on the number and delete it and put in a value of 1 – 4 >>> go down and double click “OK”; on your M1 chart you now have the new RM level. Bottom line is that you can easily switch back and forth in about 3 seconds when needed.

I could easily post about a dozen beautiful charts of the higher exhaustion moves from Tuesday night into Wednesday [gold & DOW30 and there were some great moves]; don’t worry, they’ll be in the grouping for November when they get posted to the exhaustion archive I’ve set up for your viewing, at the end of the month.

Instead, in my opinion, I think it is much more valuable to all of you to focus your “mindset” on what I have laid out today in spotting these “one off” events, preparing for them when you know they are coming, and then look for the key aspects of what “consensus” says versus “what really happens” and having your screens ready should panic set in and take over the market.

In both instances, Brexit and the election, “consensus” got turned upside down on its ass; the stock market was expecting a Clinton victory and that it would be positive for stocks [gold I think was neutral on this aspect], thus insuring that ‘big money’ was long and would have loved to see the market go higher; when it became obvious that Trump was surging and Florida and Ohio turned in his favor, SHTF and the panic to the downside was on. Gold, on an historical basis, mostly being negatively correlated with stocks, took the cue and “blew the hell out of gold shorts” taking the market up, in what can only be described as a total “melt up” past RM=4 for a good 3 hours.

Ok, now that the event has come and gone, and you get to see the panic “up close and personal”, you still have to have “situational awareness” because you now have to determine when to go back to “regular programming” and take the RM level back to RM=1; my general rule is to wait at least a few hours and see if trading norms are coming back and if there is anybody else left to panic or it’s pretty much done with and gone. Since a lot of this happened in the “wee hours” of Wednesday morning, long before New York trading was to start in gold, I pretty much left it alone when the market started backing off the highs up in the 1330’s and started going down. Besides, it’s like 2 A.M. and I need some sleep, so if I miss further action so be it … it’s a long day and this was just the first few hours.

Once stocks “melted up” near the NYSE, I switched my focus to the DOW30 for the rest of the day [and lowered the RM from 4 to 2 after the melt up], figuring gold would only go down or “chop” with stocks strong; so again, having some sense of “situational awareness” allowed me to make the seamless switch to a better market and not stay and get chopped around in gold. And now you know why I have algorithms in secondary and tertiary markets [DOW30 and crude oil, respectively]; I’m not a “one trick pony”.

Turning to today’s gold trade … of course the Chuckleheads traders in Asia bid the price up into the 1290’s … and we now see it at … anybody? … Bueller? … Bueller? … the mid to high 1270’s, proving once again there is no rally these idiots won’t buy, that can’t be “undone” when they are finished by the bullion banks and dealers later in the day … some days I just shake my head at their collective level of stupidity when it comes to trading. So, you kow what this means, right?

First thing I notice this morning as we approach the New York open at 08:00 is that we just had an RM=1 down exhaustion move in the DOW30, which then subsequently bounced higher, and during this time the action in gold is … crickets. So, unless I’m badly mistaken [“nahhhh, that never happens right boy? … shake your head up & down if you want a Beggin’ Strip … ahhh, so you DO agree with me!”] an inverse correlation with gold enjoyed yesterday is G.O.N.E., so I’m not looking for it the rest of the day. [And of course it shows up when the DOW30 sky rockets on the open! Oh well.]

I got gold on RM=2, given the total panic we say yesterday and the fact there should be some “aftershocks” [aka heightened volatility] in price either today or tomorrow [Friday] from those who need to adjust their positions going forward; in short, it’s just to be safe from sudden quick moves that are a total fake out. First trade off the day directly below.

A little over $1.50 profit on the up move; liquidated with market sell order when I saw 1266.00 bid hit my screen, and got filled right at 1266.00 [high was 1266.15 and that’s why LP gave me this price. You know the drill, sell on the way up!] Quite frankly, I don’t care if it rallies further from here, which I think is likely at some point given the fact equities are on an insane rally which can’t be maintained and at some point stalls and back tracks some which given the correlation of gold lately means some rally from the low point of today. Also, with this move the market has almost a $30 range for the day and statistically this has a very, very small probability to go even further.

I would show my DOW30 trades today, but you don’t have the manual yet; that comes this weekend when I’ll get it finished and posted up on the website. Things are fluid and crazy right now, and I expect them to stay like this for a good long while; maybe not as nuts as yesterday and today, but higher than what you saw in September & October. Trump’s win, has added “uncertainty” to the markets mix [gold & equities] and that means volatility because nobody knows what he’s really going to do. With Clinton it would have been easily “status quo” and use the White House for her own enrichment and the public’s expense. There’s a new Sheriff in town; things are going to be different for a long time, and that spells great opportunity for us as traders.

It’s been a long day; time for some vitamin C therapy on the beach.Dog and I are sooooooo ready; we’re 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!”

EVIL IS DEFEATED

“Congratulations President Trump!!!!!!!”

“TRUMP IS MY PRESIDENT!!”

This is a glorious day where I care NOT one wit about trading; this is a day I truly thank God for level headed people that are still in the U.S. that refused to elect an evil, sociopathic, elitist, criminal for President. “Hillary Clinton, get that orange pantsuit measured cuz you’re gonna need it!”

And to all the liberals, snowflakes, and general progressive retards that inhabit and infest the U.S., please flee to Canada ASAP so we can get the country headed in the right direction faster than if you were here. The big winners last night [in no particular order]; the American people, the “little guy”, police officers& veterans, nationalism, American Exceptionalsim. The biggest losers; Obama, Oama's legacy, Obamacare, the MSM, elitists, the mainstream Republican Party, Ted Cruz, the Bush family, party hacks and shills, Hollywood, and of course Cher & Babs who are moving to Australia [“good fucking riddance”].

It’s a glorious, wonderful day; the sun is brighter, the water looks more turquoise, the sand is whiter, and America is spared the evils of the Clinton’s. Normal programming returns tomorrow; right now I’m too busy rubbing this shit in the face of every Dem & Clinton sycophant I can find, along with feminist Libtards down here, who by voting for Jill Stein in certain states, nailed down a Trump victory; congrats dumb asses!

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!”

 

PIGEONS UNITE!

“It’s better to be the pigeon.”

So I’m sitting out on the back open air deck of a seafood restaurant last night and I notice a couple of pigeons waiting patiently for somebody … anybody … to drop some food or for the waiter to not notice that piece of bread on the floor … “hey you … yea you! … can you please pick up the dishes and get the hell outta here so me and my date can dine on that fine morsel of bread you’re standin’ by? … Honey, only the best for you baby!”

And it dawns on me at that instant that they are a perfect metaphor for a near perfect trading algorithm; those 2 pigeons had no idea “that table” they were eyeing would have food on or near it for them to eat when they flew in. They didn’t fly around following some couple, after months or years of research determining through spreadsheets and charts that “Yup, after careful analysis, I’ve determined this is ‘the guy’ to hang my hat on and follow around because he is careless with the food he eats and it will be ‘easy pickins’ for me to grab some much needed nourishment.”

But in reality, though, what the pigeon intuitively knows isn’t that “this guy” is the “mark”; what the pigeon knows is that “the restaurant” is the mark … “why am I goin’ there? Cuz there’s always food there you idiot! Why fly around working, looking for food when dumb ass humans just lay it around for us?”

And so, connecting the dots, you should be able to see what the 2 pigeons really knew how to do, and that’s spot opportunity. For the longest time, even when I was still studying and learning the biz from Bert and then moving to the trading floor, in essence I was the pigeon flying around doing useless research [application wise, not knowledge wise] instead of isolating and spotting optimal opportunity!

When writing the tutorial and in yesterday’s blog post, and today as well, I want to make certain you understand the subtle power of what it took … and that key step … where I “gave it up” … where I no longer said, “hey, I want to predict large spikes!” … and I might as well have been saying, “hey, I want to flap my arms and fly too!” … where like the pigeon I finally said to myself, “I JUST WANT OPPORTUNITY!” By defining all M1 candlesticks as “spikes”, means I can sweep the entire data set looking for the opportunistic conditions that always precede upper exhaustion hits and put myself in position to capture them.

How is that any different than the 2 pigeons sitting there waiting for somebody to leave so they can swoop in and take some bread crumbs or wayward French fries that the dopey kid at the next table dropped on the floor? They had no idea it would be “that table”, “those people”, and that “dopey kid” that would feed them at 9 P.M. Ok, when I capture an exhaustion move on any given day, before the day starts I have no idea “what time” or “what price” either. In both instances, we have given up the prediction “game” and isolated on the opportunity; in our case, not every spike goes to exhaustion and that is the reason one of the liquidation rules is to sell on an above average spike up since the trade started. That algorithm trading rule is a direct result of defining all M1’s as exhaustions and taking advantage of moves that fall under the scope of measurement with the exhaustion lines. As a result, we have no idea when a trade starts whether it will go up a little or a lot … not a clue … but what we do know are 2 key criteria; 1) the market moves a lot so it’s not as if a nice move up is something out of the ordinary, it happens every day and often, and 2) the M1 trading signals have “spotted” a shift in momentum and are now placing us in that necessary “opportunistic condition” to profit; we don’t need prediction, we have a market that moves and momentum on our side. Time to then wait and see what happens; and what happens nearly every day is that markets surprise and shock with the speed and scope most everyone didn’t see coming. We don’t need to see it coming, we just need to have the algorithm spot the opportunity, and the rest is taken care of thanks to the volatility of the market.

Subtle, yet so very important a distinction you need to understand because it is the reason the algorithm is so damn powerful and looks many times like you drew the market up yourself on a chart for profit purposes. And to prove my point, here’s the DOW30 yesterday afternoon with a great trade directly below [with commentary].

See the plum line slope change [while under the yellow line]? How close is it to the bottom of the move when the exhaustion move started and nobody had a clue? That distance is what we give up in impossible “prediction” to go to an “opportunistic condition” of a shift in momentum; and where does the market put in a top? Of course, right at the exhaustion line!

Turning to today’s trade … I’m not really expecting any market moves of significance this morning or doing any trading; the fireworks will come later in the afternoon when “big money” gets the inside skinny on the election and starts taking positions that will undoubtedly move the markets. If it’s a Trump landslide [despite the fraud] gold should start spiking, and the long positions put on in the DOW30 yesterday get taken off and the market slides [maybe big, who knows]. If Cankles wins, markets are the least of your worries going forward.

Here at the open, I’m giving it an hour or so to see what happens … if nothing, I’ll come back later this afternoon and most likely concentrate on the DOW30. So, not much to do today per the election results.

An hour and half in and it’s crickets … 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!”

 

TUTORIAL IS FINISHED & POSTED!

Crowds everywhere celebrate the release of the “Tutorial”!!

And you thought I only lounge around in my gym shorts all weekend and get nothing done … not so … I lounge around in my gym shorts all day every day and pretty much avoid getting anything done! … but, I was a busy little beaver this weekend getting the tutorial finished and linked up to the website last night. [For you Obama voters who need a little help this early in morning (it’s 11 A.M.), the tutorial file is available for viewing online or download over in the “Download Links” section of the website in the right hand column (no, your other right hand).]

I want to highlight 2 key criteria from the tutorial; 1) the algorithm was created and “flows backward” from the exhaustion lines to the rules & trading signals on the M1, and 2) the largest stumbling block I had to overcome in developing the algorithm was giving up my “hope” that I could somehow predict exhaustion moves, and moved away from that to realize what is more important is to simply put yourself in a position to capture “all exhaustion moves” by defining every M1 as “an exhaustion move”, thereby allowing us to identify the “precedents” in the market that must happen first before you see any upper exhaustion move. In other words, it’s all about “OPPORTUNITY” , and the fact that since we can’t predict with any accuracy, it’s more important to “be there” when the conditions [aka trade signals] are right and simply wait for it to happen and capture it.

You don’t have to be able to “predict”, you just have to be smart enough to put yourself in a long position via the trading signals that in every instance give a buy signal before an upper exhaustion move occurs; by doing this simple task, by default you will capture any exhaustion move and thereby defeat the necessity of playing [and losing] the prediction game! It sounds simple enough on its face, but believe me, it took me a very long time to see this “trading truth” and give up wanting to be able to “predict” and call myself a trading genius; “I’d rather be stupid and rich, thank you.”

You’ll notice also from the “Download Links” that the title of the tutorial has the DOW30 in it; that’s because I finally realized when writing that all 4 of the markets we have volatility algorithms for have the same theoretical constructs as gold; it’s simply the different “personalities” of each market that are the reasons they have different trading rules & signal parameters. The philosophy & logic of the algorithm’s main premise, the actual math behind it all, and Gann’s ‘Square of Nine’ all are the common threads that are present in each market’s volatility algorithm; so why have a separate tutorial for each when there is so much redundant material in all of them. So, if you trade crude oil for example, simply “swap out” gold and think crude oil when reading; same for the other markets as well.

Now that I have the tutorial finished, in a few days I’ll have the DOW30 done as well and posted up for viewing and/or download. As always, I support what I write, and if you have any questions/comments about the tutorial, I’d love to hear ‘em from you.

And before I forget, you people unfortunately stuck in the mainland U.S. are now back on “regular” time, as Daylight Savings Time is over; great news for me, because down here in Paradise none of the Caribbean islands ever need to make time compensations during the year for sunlight, so New York is now 1 hour behind me. That means, of course, I get to start my day 1 hour later, and it also means the start time for gold on the MT4 has changed with ASSETS FX server time changing to 13:00 from 12:00, and LMFX staying the same at 15:00 server time.

“Ahhh, what a great time of year for those of you in the mainland U.S. … this is the time of year I start to watch the weather channel at night so I can get some giggles thinking about “wind chills” over about 80% of the country. Enjoy the 4:45 P.M. sunsets!”

Turning to gold today … now you know why we never take positions home over the weekend … you just have no idea what’s going to “pop” when you are playing at the beach for a couple of days. Exit Question: “How many FBI, DOJ, or other asshats in government knew about this before markets closed on Friday and positioned themselves accordingly for the Sunday open for some, quick, easy bucks through their offshore accounts somewhere?” I’d love to know. [“And believe me, they ALL have offshore accounts.”]

Here near the open, gold feels soft, even with the bloodbath lower opening from last night … today’s trade is either going to be “balls to the wall” volatility or “dead in the water” I wish I’d stayed in bed. I don’t see a lot of middle ground here going into tomorrow’s election. We’ll know soon enough … an hour into this and I think I’ll clip my nails … some equities strength early after the NYSE open sending the DOW30 right up to the RM=1 exhaustion line … chart of this directly below, and once again the exhaustion lines prove magical!

As would be expected, correlated weakness in gold, but so far nothing to buy… I’d be surprised if the bullion banks & dealers didn’t do some retail spec sell stop hunting down here … first trade of the day directly below.

What you need to recognize here and remember are 3 criteria of prime importance; 1) the price is below the daily calculated white horizontal line, and this move can be described as a “waterfall” that didn’t hit the exhaustion lines, 2) having said that, and getting long once the next M1 goes green [which it did right away], the whole point of this trade is to catch the move back up in a very short time frame and then liquidate it back to the dealer LP at a higher price because we are below the white line. These types of trades must have the obligatory “short leash” on them because probability wise what we are playing is the “pop”, and 3) you can’t care [when you liquidate] what happens to price; maybe it goes higher, but from where I’m sittin’ it looks like it is stalling and can’t make any more headway and therefore needs to be liquidated. The trade made a few pennies per Oz. but that isn’t the point … concentrate on the trade and the algorithm rules, not the money!

And, an hour later here we are hitting marginal new lows, while the SP500 is taking weekend shorts to the woodshed. Equities were way oversold anyway coming into this week, and this Cankles bullshit where she isn’t guilty of a crime by head FBI professional asshat and part time rodeo clown Comey, just gave them the excuse last night to light the fuse for short covering. And today, those position players in equities on the short side saw their “risk exposure” blow up in their face as “gamma” went exponential and the risk-parity funds were forced to adjust. Any wonder why the guys managing $5 billion+ in hedge funds are taking early retirement and/or shutting the doors to their now defunct funds?

We now have about a $16 range for the day, and unless some other “news shoe” drops, I don’t see anything besides “chop city” dominating the market until tomorrow when big money will start shoving markets around as election results come in and somebody is forced to puke. Until then I don’t see the point of trading this stuff anymore today. Could be wrong … if I am I deal with the consequences of missing opportunity … that’s all.

Beach beckons … I’m 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!”