WHY PROBABILITY THEORY MATTERS

“Of course you already knew this … right?”

I’m gonna fill you in on a little secret only math pros [and by default certain professional traders who shall remain nameless] know; namely, probability theory & its slutty sister statistics aren’t what you think they are. For the vast majority of you, please take the following info too heart; “forget what you think you know about probability & statistics … what you think you know intuitively about how it works will cause extensive brain damage that will baffle you until you give up and eventually say … 'Who needs this shit anyway'?”

Well, to be brutally honest, you need this shit … and therein lies a big problem for Newbie traders & those that find themselves on the losing end of practically every damn trade they’ve ever made in their life. You can remember it as the “50/50/90” rule, depicted eloquently directly below.

“Kind of sums things up pretty well doesn’t it?”

When I used to live in Las Vegas, before I moved to “Paradise” down here in the Caribbean, I got to know some of the pit bosses who worked table games in the various casinos [“me gamble? … Ummmm, no … educational research only!], and the common thread which explained gambler’s behavior, that ran amongst all of them, were the following 2 factors; 1) “there’s a negative mathematical expectation on every play, so the longer you play the easier it is for us to win, so why would you think ‘luck’ has anything to do with it?, and 2) “you Sheeple that come in here to play really don’t understand how probability works, and how it is most definitely in our favor and not yours!”

When I meet and talk with people about trading & probability, I always like to show ‘em the following pic.

“Are you shittin’ me?”

And with that, the most common response among everyone not math inclined is “that’s impossible!” “Well, no it ain’t cuz it just happened … IT’S CALLED ‘TAIL RISK’, AND THERE ISN’T ANY WAY TO 1) PREDICT IT, 2) AVOID IT, OR 3) BET ON IT BEFORE YOU GO BROKE!" All you can do is PREPARE FOR IT IN ADVANCE. [Note: just so you know, the odds of this happening in roulette are about 1 occurrence every 137 years for the entirety of Las Vegas casinos.]

Now, some retard that just arrived from Mars, and fell off the turnip truck last night upon arriving would say, “hey, I see a pattern here … just bet on ‘19’ and make a fortune!” And of course, that pattern recognition on his behalf would have made him rich beyond his belief in this instance; only problem is hanging around one casino among the 30 or so that dot the landscape in Las Vegas and standing there 24/7 for the good part of 137 years he’ll get about a 3% shot at his pattern of betting. [“Please, don’t tell him this … it will just piss him off … and then Mars attacks!]

The “dirty little secret” of probability theory is that random events have 1) tail risk, and 2) show patterns that deceive humans into action where in fact no such patterns exist!

The general public, and traders in particular, have been educated in “modern portfolio theory” for the better part of 50+ years [and part of this is guys like me can’t exist! … “Go ahead, be brave, & tell that to the Mrs. when she goes to the ATM!”]; and that theory says markets are “random” and cannot be predicted; where the “problem” comes in is how you internalize this into how markets behave based on a binary event; namely, up or down like the flipping of a coin. It goes up a little, and now it’s time for it to go down a little. And in your mind you falsely set up probabilistic scenarios where this plays out; “Ok, time for this shit to go down some, so I’ll sell some” … only it doesn’t, it just keeps going up. And by the time it reaches the top, your emotions are screaming “This fucking shit ain’t ever, AND I MEAN EVAHHHH, going lower again” … as you pile in the long positions at the top. And now you feel like a “chump” and remember the “50/50/90” rule.

The problem, of course, should be plain for you to see. Your expectations on probability as it “plays out” in real time is faulty and just plain wrong; “please tell me how that translates you into a consistent winner for trading?”

The first priority of the volatility algorithm is to keep your ass out of trouble; no “tail risk” is ever going to affect my account balance as losses [when they eventually come] will be small and insignificant to my overall account balance. After that, changes in acceleration [momentum] put us on the short term “right side” of the market where anything and everything can/will happen when it comes to price movement; NO THOUGHT REQUIRED … IN FACT, TOTALLY DISCOURAGED WHEN IT COMES TO GETTING IN THE TRADE. Once the trade is on, and you’re up money … well, now you can start thinking [if you want] because you got a “free trade” on … you’re playing with profits not capital, and the only hard rules are liquidate on large above average spikes since the trade started, or most importantly liquidate at the exhaustion lines. But if the trade is “crawling” higher, you got some ‘wiggle room’ for thought. Just like I had yesterday.

Once you “get rid” of your thoughts on probability theory and “how” it should behave according to what has never worked in the past, it becomes much easier to let the visual algorithm take over and just follow it. I know; I walked this road many years ago and it was painful to make a living in the pits while the algo was “hittin’ home runs” practically every day. When I “submitted” to reality [after about 3 months] and cast away my delusions of how markets should trade … well, the rest is history.

I see last night Mr. Market took my message yesterday a little personal, and decided he’d “show me” and put in about a $14 range. “Good, about fucking time you got off your ass and did something. Can you do it again today, or was this a ‘one off’ and it’s back to the same old $8 - $9 range bullshit we been seeing the last 2 months? Well?” The not so good news for today? Well, the Asian chuckleheads traders didn’t sell it last night, and in fact tried to rally it more than a few time above 1277 without success; that probably translates into New York selling pressure at the outset. The question is, will we go for the stops above 1277 today, or later in the week after … maybe … a weak selloff followed by some more buying?

What I’d really like to see is a “flush the toilet” moment today, where the “Johnny come lately” crowd who are long get their sell stops hit off on a waterfall I can buy [hopefully at the exhaustion lines]; not planning on it but would like to see it.

Here at the open [08:00 New York time], a pretty much “bucket of slop”, with small $6 range for the day and the market sitting right on top of the daily calculated white horizontal line; equities weaker because of Apple. Will stock weakness on the back of Apple translate into funds moving into gold and higher prices? Don’t know … we’ll see. Maybe data at 9:45 & 10 will move something, cuz nothing ain’t movin’ now that’s for sure.

An hour into this and I’m wondering what fun it must be as the groomer for the bearded lady at the circus; uh oh, dog is sitting here staring holes into me.

 

“Hey you … yea, you … I couldn’t help but notice this morning you only had a bagel & coffee for breakfast … you gonna open the ‘impenetrable bacon box’ and get me something to eat or what? … dog food? … Whaddaya fuckin’ nuts?... you eat that shit … when do I get bacon? … I gots to know man!”

And all I have to do is look at him and act like maybe … maybe I’m getting’ up, and WOW! do I have his attention; “ever here of Pavlov’s dog mi amigo?”

Ok, here at mid morning, after the 2 reports are out … stocks have rallied smartly off their lows thus depressing gold, and it looks and feels like “chop city” going forward. One algo buy signal right before the reports came out I chose to ignore due to the closeness of the trade to potential market moving news; I trade, I don’t play roulette here, Ok? Potential for disaster is greater than any gain, so I ignore the signal in these types of scenarios … just makes sense to me.

Looks to me like the gold trade today is “over and out” and no trades; equities [read DOW30], that’s a different story. Volatility has picked up, and even with a 1.8 spread and a 2.8 index point “net cost”, this stuff is flying; reminds me of GBPNZD last year when it routinely had 300 – 500 PIP ranges every day; too bad the spread made it a “killer”.

And as you will see when the manual & tutorial for the DOW30 is released in a few weeks [cuz today’s action will be cataloged], the volatility algorithm just captured [here at 14:19 ASSETS FX server time – 10:19 New York & Paradise time] an approximate 65 point up move to the exhaustion line in 19 minutes. And just for the record, that’s a perfect square of price and time @ 45 degrees [diagonal cross]. “Ahhh, the wonders of Gann’s Square of Nine added to my proprietary vector calculus … I love the smell of … yea, you know the rest!”

“And yea, I know you don’t have the DOW30 manual yet and tutorial, and I’m sorry you missed the move … I’m working on it … I’m still finishing the gold tutorial, it’s a shipload of work … you’ll have both soon enough I promise!”

And if the DOW30 can keep up what’s it’s doing, then we in the U.S. have the very best of both worlds; gold in the morning, and if nothing is happening, shifting our focus to the DOW30, where plenty is happening until 4 PM New York time when it closes; that’s a full 8 hours of opportunity, where one or both should be flying.

Ok, money in the bank … “wait … what? … You think I’m smilin’ cuz I made a bunch of money? … no baby, I’m just happy cuz … whaddaya mean ‘bunch of shit’? … well, yea we all did ‘hit it’ a few minutes ago in the DOW30 but … ATM card?... what the hell? … where’s the dog when I need him for support? … he’s smarter than he looks … Ok here, try and think anything ‘low cost’ … bye.” Yea, thanks for coming to my defense fellas … just sit there like bumps on a log while I get frisked and robbed by the Mrs. for another “spa & lunch” day with the gal pals … “You’re buying lunch today.”

Easy come, easy go; all you married guys out there know exactly where I’m comin’ from … after lunch some Vitamin C therapy at the beach … until tomorrow … I’m sooooooo 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!”

 
 

 

YOUR “HOLY SHIT” MOMENT

That moment when … EVEN YOU … realized you could be a Senator!

I want to expand some from where I left off yesterday and reiterate that it is the concept of “the exhaustion lines” as I have defined them in the trading manual that give power to everything else; i.e., the rules and strategy of the volatility algorithm. Taking into account the different “personalities” of different markets, and by default adjusting some of the rule parameters for individual markets, theoretically the volatility algorithm should work perfectly in other above average volatile markets as well. When I’m done releasing the tutorial document on gold, I will start on the tutorial for the DOW30, the other “low net trading cost volatile market” where the evidence is as clear as it is in gold of highly successful trading during U.S. market hours.

Of course, anytime I release new information on the website I get a blizzard of emails; let me just say to those wanting more info on Gann’s “Square of Nine” and how to get it on your PC; 1) view online or download, from my shared files account at box.com [which is totally free, no sign up; just click to view or download from the links] the “components” document in PDF that goes into detail [In other words, RTFM (read the fucking manual)], or 2) for those that find that obstacle too much of a chore, follow the link directly below:

http://www.bonniehill.net/pages.aux/gann/sq9.html

This link to Gann’s ‘Square of Nine” is a great tool I use often in my research; everything you need and want to levels you most likely will never get to, are available at the click of your mouse. Data I use in the manuals, and charts with commentary are derived from this link to the “Square of Nine”. [Note: if you are at all having trouble downloading or viewing my shared files by following the links I have in the “Download Links” section of the website, at box.com and getting some kind of error message that “file not found”, I need you to email me and let me know. Sometimes the links get corrupted at box.com and I will change them when necessary if they become corrupted and unworkable. Thanks.]

I can’t emphasize enough how important the concept of “acceleration” is to trading; math & physics people know well this concept, but for traders it is one that doesn’t get much attention [which is great, cuz I don’t want it to be “mainstream” and in some assclown’s book the Mrs. sees when we’re in a bookstore and she says, “Oh look honey … his ideas are just like yours!”].

Next time you see gold moving quickly up or down, think of the fuel [i.e. the intensity of the volume buy orders (up) or volume sell orders (down)] that is necessary to drive the market. That “fuel” will eventually [usually sooner rather than later] get used up and that my friends means an end to the up/down acceleration! And who is on the other side of that acceleration 99%+ of the time? That’s right, dealers & bullion banks, who are only too happy to now “bid it up” after a drop or “offer it down” after a rally. And while other popular technical indicators are always “lagging” because they need data to “confirm” a short term top or bottom, the volatility algorithm’s exhaustion lines are there in REAL TIME to get you out [or long] at the exact moment acceleration ends.

Search the world over fellow traders; scour the bookstores and financial pages until Jesus comes back; you won’t find any other technical indicator that EVEN COMES CLOSE to the algorithm’s exhaustion lines for predicting short term tops and bottoms with an accuracy & profitability [that I show via charts (hundreds) and prove via Excel spreadsheet] I prove in the tutorial PDF document you will have in your hands in short order. It’s that powerful and should lead every one of you to your own personal “Oh shit!!” moment. YOU WANT PROOF? I GIVE YOU PROOF!

Turning to the gold trade today, I see the chuckleheads traders in Asia bid it up last night about $6; some things never change. So, right out of the gate you should know if you’re a regular reader, that’s a negative for prices in New York [at least early].

Ok, that didn’t take long for a buy signal; in @ about 1268.60. Chart directly below of this first [and maybe last] trade.

As you can see, market is above the daily calculated white horizontal line; that means “buy” on plum line slope change from negative to positive WHEN the plum line is below the yellow line. Stop here is below 1267.50. As the market starts going up, I have a choice to make; 1) do I look for any spike up to liquidate, or 2) do I hang with the trade and keep raising my stop level as it moves higher? Well, since the ranges are pathetic, and the Dollar amounts rather small, I chose on this trade to “hang with it” some and see what happens if/when it can make a new high for the day; are there buy stops above the current high that would give us a spike to get out, or the “bullion wall” of sell orders from dealers and bullion banks?

As the market makes its second leg up, I keep raising my stop level. After it hits a new high by 3 cents, what’s next? Well … nothing; if there are buy stops up here I don’t see ‘em getting hit off. Add to this we are now back in the low 1270”s again and the question pops up, “can you sustain this Mr. Market and go higher still?” My gut reaction to that is probably not; I want to see evidence that the daily ranges can be expanded back to normal [$15 -$20 +], and the pathetic $7 - $11 [tops] ranges done away with and forgotten like a bad dream. So far, I don’t see this happening, and until I see “proof” things [meaning volatility] are returning to above average “normal” conditions, I got a pretty fast trigger finger when it comes to trading & liquidations, especially if the first trade of the day is anywhere near acceptable profit wise. Because lately, after the first trade, it’s been nothing short of “chop city”.

So, when I see a new high by 3 cents and nothing after it in terms of additional buying, “red flags” are going up the flag pole quickly with a very big, fat warning that tells me there is a very high probability this move is over. So, I’m looking for the very first M1 that goes “red” to hit the liquidate button and close the position; this trade captured about $2.40 after commissions.

And although this move up didn’t hit the exhaustion lines, tying in what I said earlier about the tutorial that is coming your way, the spike up is in and of itself a mini exhaustion that the algorithm isn’t formally measuring, but is in fact occurring; it’s just that this move is too small for the algorithm to measure accurately. So, instead of ‘measuring it formally’, we can measure it visually by looking for above average spikes since the trade started and use that as our yardstick. Once I do that, I only have to continue looking at my screen for the next ‘red’ M1 candlestick to know when to liquidate. Since the market hasn’t officially turned yet, my liquidation fill should be Ok to decent with little or no slippage.

And so, the “rule” to liquidate on above average sized spikes [next M1 that is red] that do not “hit” the exhaustion lines, is in fact based on acceleration; however, the fact remains the algorithm can’t measure every single spike during the day and come to any conclusions. When the math is internalized and made visual for everybody [including myself] to see in real time on the MT4 … well, how easy is it to follow and make money now? [Hint for Cankles voters: Easy Peezee.] And it isn’t just this rule, the exhaustion lines are the foundation for all the others as well.

So, here we are half an hour later, and the chart below tells the tale of the tape.

Use the spikes up to sell, realizing not every spike is going to take you to the exhaustion lines; but also realize that every spike is to some extent an “exhaustion”; most during the day aren’t worth measuring because they are too small and not significant to the short term trend. But when we get ourselves into a long position, the momentum of the trade, by DEFINITION OF THE MATH, is on our side and we need to be cognizant of spikes up that mean the end of the upward movement, and just as importantly we have to liquidate in favorable conditions and not on the way down.

Dogs have a way of knowing how to “pay you back” don’t they? We get to the beach yesterday, and while I’m setting up the umbrella and lounge chair, along with his towel and bowel of water in the shade, off he goes to the first good looking babe walking on the beach with what looks like a bag of Doritos chips in her hand. I see this and I’m thinkin’, “she might as well be handing out $100 bills in a ghetto”.

And with that first chip, he’s now got a new BFF [until the chips are gone of course]. She walks over to me and says, “Can I pick him up … is he OK with that?”

And with that, I get the look from him below.

“Hey Boss, look what I found … Can we take her home?”

And I see this and I’m lookin’ back at him and speaking telepathically:

“Ummmm, yea … remember that other human female life form we got at the house? … yea, the one you run too when Mr. Cat kicks your ass – remember her? … I’m just sayin’ it won’t go over well … so fugetaboutit.”

And with that she runs out of Doritos chips … and that’s the end of that love affair. No golf today, the dog is already running around looking for his leash and nurfball cuz he knows trading is finished. The turquoise waters beckon; I’m sooooooo 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!”

 

DOES “PROOF” EVER MATTER?

Did you do this? “What … do what … whaddaya talkin’ about?”

It’s simply amazing to me just how fucking “brain dead” the average American has become; “oh, you want proof? How about the career criminal running for President? At least Trump isn’t a criminal; Cankles, on the other hand, has been involved in so many scandals & crimes you need an Excel spreadsheet to keep track of them all. Oh wait … that’s right, Trump said bad words 11 years ago on the Howard Stern radio show about some fat pig girl, and she got her feelings hurt … now that’s a crime!"

Throw in the dubious, panic stricken Dem operatives looking for dirt anywhere and everywhere they can find it, to change the “narrative” for the sycophants in the MSM, and it’s amazing what a little cash and some “pro bono” work from legal feminist shills like Gloria Allred can do in finding “some” women who now claim Trump “groped” them … what … 10 – 40 years ago? … and are now, weeks from an election just seeing “the light” and want to go public. Where were you when it happened? Where were you in the primaries? Why now? Oh wait … sorry … I’m not supposed to ask inconvenient questions like this. And … make sure you never forget this feminist truism … “women never lie about this stuff, so you MUST believe them!” [Unless of course you’re Cankles, and a Democrat, and are protecting and enabling your serial rapist husband, all the while destroying the lives of other woman … then … “I didn’t see anything, did you?”]

“Oh boy, there I am again pointing out inconvenient facts or inconvenient questions I’m not supposed to think about … what’s wrong with me?” So, there’s the “proof” … why would you still vote for this Cunt?

BECAUSE “PROOF”, IN AND OF ITSELF, WILL NOT BE ABLE TO OVERRIDE A MORE IMPORTANT AGENDA; IN THE CASE OF PROGRESSIVES LIKE CANKLES, THAT AGENDA IS THE UTTER DESTRUCTION OF MAINSTREAM TRADITIONAL AMERICA, AND TO HER SUPPORTERS, THAT AGENDA IS MORE IMPORTANT THAN THE FACT SHE IS A DETESTABLE, ARROGANT, ELITIST PIECE OF SHIT THAT BELONGS IN SOME PRISON.

Which brings me to trading. [Remember kids … Life Imitates Trading; Trading Imitates Life.]

Over these last weeks, I’ve been working on a “tutorial” document that I will release very soon, and will have in the “Download Links” section of the website over in the right hand column, entitled “Volatility Algorithm Exhaustion Lines Tutorial”. This is a document I have spent an enormous amount of free time on, and basically what it does is offer “Proof” that the volatility algorithm is highly profitable, and by default, anybody can use it to base a trading career on and thus leave the “Pudding Business” and “escape to success”. I realize these are “tall words”, but I back up my claim with market history and cold hard probability theory.

QUESTION: “If you could own any business in the world, what would it be?”

MY ANSWER: “A gambling casino because the math doesn’t lie and you are guaranteed profits. Probability theory shows it is impossible [over the long run] for a casino to lose money from its gambling operations; the mathematical expectations are always positive.”

Trading offers no “hard” mathematical expectations [positive or negative], so the only thing that comes close to analysis is “market history”; from that, if the sample size is sufficient [meaning of course, has the market been around for a while], I can make my case for “proof” through probability [and by default statistics] theory.

What I have essentially done in this “tutorial” is back away from the trading manual and look at the algorithm “through the eyes” of the exhaustion lines; backwards, if you will from the manual, which presents the algorithm in a straightforward manner with the signals and then discusses the exhaustion lines which are used for liquidation [both sets] and trade initiation [lower exhaustion lines only]. Here, in the tutorial, the exhaustion lines [aqua & red] are the focus, and signals and rules of the algorithm flow backwards.

What you will discover, of course, is that everything I write about in the manual is 100% correct; the difference now is that I show “proof” [charts & probabilities] that everything works in harmony starting with the premise that the exhaustion lines are our “foundation” for success, our “bedrock”, to build profits and make trading a solid career.

ONCE YOU READ & SEE THE TUTORIAL DOCUMENT, IF YOU DON’T HAVE “GOOSEBUMPS” ON YOUR ARMS AND LEGS; IF THE HAIR ON YOUR NECK ISN’T STANDING AT ATTENTION, THEN YOU OBVIOUSLY DON’T CARE ABOUT TRADING, MAKING MONEY, & LEAVING THE “PUDDING BUSINESS” ANYTIME SOON. I’m telling you right now, the information is powerful and should cause you to lose some sleep thinking of the ramifications for your trading life … and no, I’m not being overly dramatic, like I got something to sell you … like all –vegas documents, this is freely distributed [view online or download] to serious traders and my vested interest is to see you all make money and “escape to success”.

[In all seriousness, you can thank my mentor Bert for this; the multitude of hours spent on creating this tutorial is payback to him for everything he did for me as a dumb ass 20’s something “skull full of mush” decades ago and the untold thousands of hours he spent doing stuff like this with me when he most definitely didn’t have to; you are the beneficiary of my work dedicated to his memory and his true love of trading. I share his passion and dedication to trading, and most of all of everything he taught me, I have come to realize over the years just how important it is to pass along the knowledge to others [like you], who find themselves at the same place I was many years ago. So, for those of you wondering why I do shit like this when I don’t have to, now you know … make a few million Dollars (at least) trading … see what you think then … you will have a whole new understanding of where I’m coming from and where I want to go.]

The tutorial file I would like to get done and linked by the end of this coming weekend, but we’ll see; if not, most definitely within 2 weeks. At the top of the website it says: READ. THINK. STUDY. ACT. PROSPER. If you take the information I am going to present to you and you do that, you WILL MAKE A FORTUNE TRADING! One other thing before I turn my attention to today’s trade; initially, all the charts & info in the tutorial pertains to gold; after the document is released, I will spend the time and get the DOW30 appropriate charts, and all the info can be used in that market as well.

Turning to gold this morning … “hey, how about a proctologist’s exam today? Whaddaya say Doc?” I’m thinkin’ today’s got a lot in common with Friday … low volume … low daily range … market drifting .. but who knows, it’s early yet. Then, we got an early buy signal; directly below the first trade of the day.

“Oh looky here Ma, clean livin’ is sure payin’ off.” Liquidated on the exhaustion line “hit”. “Thank you trading Gods, $6 per Oz. looks damn good from where I’m sittin’!”

[“Ummm, why no honey, nothing happened … why do you think that? … well yea, I made a little here … why do you need to see the screen? … ATM card, why do you need that? … wait, what?... what just happened here?"]

And since I just spent the first part of today’s blog on exhaustion lines, below is a sample analysis of today’s action I give in the tutorial. The algorithm is premised on Gann’s work plus my own proprietary theories on momentum [vector calculus; force & direction]; together you got the visual model right in front of you. The numbers behind all that “work” is what the chart commentary below is all about. Note how close the algorithm model captures the profit the mathematical work of Gann’s Square of Nine calculates it to be in theory. “If you can’t be happy with a result like this as a trader in real time, then I can’t help you, and I would venture to say you are asking for ‘perfection’ from a market that only gives probabilities. In other words, stop being delusional.”

ATTENTION NEWBIES: If you find all of this confusing, and don’t understand, download the components file and read it; I give a very detailed explanation of the Square of Nine, and how you can get the link for your PC to create your own and do further research if you want to.

Looking at the market here, with that explosion higher, we now got about a $10 range; can the market expand on this? I’m not betting on it, given recent weeks; we’ll see, but I want “Mr. Market” to show me the range can be expanded before I start trading at the upper ends of what has become small daily ranges these last 2 months.

Once again, the lure of free lunch from playing golf with chumps other trading professionals [“You hear that? He just called me a ‘trading professional!”] is moving me out the door to the links. I don’t want to eat free lunches, they make me. Uh oh, the dog ain’t liken’ like this.

“Wait … what? Ok, let me get this straight .. yur gonna go hit a white ball around the grass and I don’t get to come?... WTF? … Ok, I see how it is … this is abandonment, pure and simple … you comin’ back for me? … You damn well better … I got a beach to pee on Mr.! … time for a nap.”

Well, that went well. Anywho, I’m sooooo outta here; dog takes a nap, the Mrs. has some cash, I’m headed for the golf course [free lunch a slam dunk], what else could a guy want? 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!”

 
 

JUST BECAUSE

“What are you willing to do to defend your faith?”

Well, my post yesterday unleashed a shit-storm of emails to my inbox; when I got back from the beach and eventually turned my laptop on, I had quite a few comments. Basically, they fell into 2 camps; 1) I should have some kind of live feed on you tube or some other app, so that traders could log in and see me trading and ask questions about trades, etc., and 2) yea, it’s easy for you cuz you got it easy while I’m out here struggling.

I can answer both camps with one response.

“Ultimate success in trading boils down to one key factor; ‘can you in fact have faith and follow your method or algorithm’? I’ve stated repeatedly, it is one of the hardest things you will ever have to come to grips with because it is impossible to ‘stop thinking’ while you are trading; but in essence it is what you have to do, especially on trade entry. Success each day isn’t measured by money; it is measured by how well you followed the algorithm.

When we separate ourselves from individual trades, and step back away from the marketplace and analyze what it is our priorities are in trading and how best to meet them, only then can you/me/somebody else develop a comprehensive plan called an ‘algorithm’ that must be followed if you want what you say you want.

The problem, of course, is that we are humans and we ‘think’, and it is not at all natural for us to place our livelihood in the hands of an algorithm that is probabilistic in nature; ‘we want to control, we want to decide, we want the power! Sorry, your wishes/wants/desires are not the way the successful trading universe works. Humans erect ‘hurdles’ to deal with conscious and sub-conscious decisions facing them, and I’m here to tell you that both camps that sent me emails [and thank you readers for sending them, I appreciate your comments] have in fact already in their minds eye erected ‘hurdles’ to deal with potential losses from trading via the algorithm; in essence, failure will be my fault either because I didn’t do enough videos, cover enough trades, or it’s my fault you’re not patient enough to build your account properly and you went out and used 100X leverage and did ‘stupid shit’ and now everything is my fault cuz I’m an asshole and I got it ‘easy’!

I have always said ‘life imitates trading; trading imitates life’. So, how far are you willing to go to defend your faith; faith in country, faith in your marriage &family, faith in your job, faith in your Christianity, and finally faith in yourself? You think it’s easy to somehow make the transition from the ‘Pudding Business’, where the illusion of ‘security’ wraps its fuzzy arms around you, to the trading business, where life is as unvarnished, open and brutal as it gets? And suddenly, it hits you; life has boiled down to probabilistic events that you can’t possibly control, and now all of my life’s obligations are dependent upon computer code that tells me what to do. Can you do it; is your faith strong enough?

Back in the day, when trading pits ruled the world long before SkyNet took over, and I was a ‘Certified’ Master of the Universe trader, I would walk each day into the SP500 futures pit and know that every one of those other 200 – 300 traders wanted my scalp. I was hated, detested, despised, & feared; all the necessary emotions you want in other traders when you are in a trading pit [love? ‘fugetaboutit’]. Often, I would get other traders to tell me that ‘yup today, I’m gonna follow you; you buy, I’m buyin’, you sell I’m sellin’, I’m sick and tired of being sick and tired from losing money in this shithole, and by God I’m gonna do something about it today, so long story short I’m followin’ you!’

End of the day I’m up money, they are down money; I would talk to them and the ‘hurdles’ erected by these traders could fill an abnormal psychology curriculum at any university for a decade. Bottom line; their desire to want to ‘know & control’ events was stronger than their faith in following me and by default my algorithm. Their desperation for the need to make money meant that all of their ‘so called brain power’ had to be devoted to figuring out where this shit was headed; ‘yea, that’s the ticket’. Only it never is. And so, here come the excuses, pouring out like water from a fire hydrant, rationalizing their failure so they don’t have to own up to it.

I’ve told people for what seems like forever, it took me 3 months to come to grips with what I originally created with my floor trading algorithm; and during that 3 months I did everything humanely possible ‘thinking’ about what it was doing while trading was going on around me, and then attempting to analyze, on the fly, whether at the moment it was a good idea or not to make the trade. I needed to make money, and like everybody else in this world I had bills to pay, and I tried EVERYTHING to try and rationalize any trade based on my brains & gut instincts. Go ahead, ask me how that turned out?

I eventually realized, after 3 brutal months, it was my inability to have ‘faith’ in what I created; that it was ‘smarter’ than me. Having gone through approximately 90 days of eking out a living, while watching and agonizing over the fact the algorithm basically ‘nailed it’ every frickin’ day, I came to the conclusion it was ‘illogical’ not to follow it; if you can’t beat ‘em, join ‘em, and the rest is history.

So, to all the people who suggested I do something live on the web; no, because all it will do is give you a false sense of security. Watching me trade live isn’t going to do anything for you when you are sitting there by yourself; you got the visual algorithm right there in front of you. You got eyes, right? You can read, right? Now, can you follow directions? Besides, what if I’m trading the DOW30 or crude oil today and you are strictly gold; what do you do then?

You have to 1) place your ass in the manual, 2) get a demo account, 3) put the algorithm on the demo, 4) trade the demo with the understanding the time spent is well worth it, and then 5) make all of your mistakes and total fuck ups with play money, and despite this watch the account balance grow so you can convince yourself following the algorithm is the proper path to ‘escape to success’.

YOUR SUCCESS IN TRADING IS NOT BUILT UPON YOUR OTHER SUCCESSES IN LIFE; SUCCESS IN TRADING IS BUILT UPON TRADING FAILURE AFTER FAILURE. IT IS THROUGH CONTINUED FAILURE IN YOUR OWN ABILITIES TO ‘OUTSMART’ THE MARKET THAT YOU COME TO SEE AND ACCEPT THE ALGORITHM AS THE ONLY WAY POSSIBLE FOR CONSISTENT MONEY MAKING SUCCESS. YOUR FAITH IN FOLLOWING IT IS YOUR ONLY CHOICE. Accept the premise, don’t accept the premise; your choice doesn’t affect my life down here in the Caribbean, it only affects you and maybe your family.

Besides, I am not at all interested in being beholden to a group of people on the web who will take advantage of me by wanting my time 24/7/365, and eventually demand anything and everything for free; ‘I want live streaming of trades, I want commentary, I want charts, I want email support, I want Skype support, I want a library of help documents and PDF’s, I want an 800 number for help, and I want it 24/7/365 for no cost’. In other words, it spirals out of control from a trading public whose demands upon my time and efforts absolutely know no bounds; and if I start it and don’t give them what they want, I’m the asshole. And if you think that isn’t ‘hands down’ the most likely scenario, then I got some swampland in Florida I can sell you cheap for development.

To the other camp of people who sent me mail; well, I literally started with nothing. I scrimped, saved, begged, borrowed and eventually got in the game; it is far easier now to start than when I did, and if you can’t raise a few hundred bucks to start, then now would be a good time to start the planning necessary to get your ass ready for what you say you want. You can sit there and bitch and moan about the cards life has given you, or you can do something about it. I’m offering you a new deck; can you pull yourself out of whatever mess you are in and do the things necessary to change? You are master of your own fate, you decide; I’m here to help with the algorithm and email support to answer any/all questions you got while YOU make your own life better through trading. It’s simply all you can ask and expect from me; the rest is up too you.”

Turning to gold today; “ok, it’s Friday … you already act like a bucket of shit with a nothing range overnight … now that trading has started in New York, my somewhat facetious question is, is anybody awake? … is there a subway strike going on or some big Gay Pride parade planned? … [oh shit, another micro-aggression on my part] …  I’m giving you one chance with a very short leash cuz what I’m looking at on my screen looks like a market that is almost dead today, and chop isn’t something I want any part of … clock is ticking, do something damn it!”

Ok, screw it; possible only trade today given the action directly below.

 

And after being in this dead animal for about 13 minutes, I can sense and feel this is going nowhere; I use this small spike up to ensure my sell liquidation is a decent one [and it is]. It isn’t much of a profit [about half a buck after commissions], but I’m simply not willing to subject myself to this kind of dead action, and I’m willing to deal with the consequences of not profiting if this stuff explodes higher suddenly. Given the meager range, the fact that it’s a Friday, it wouldn’t surprise me to see a new high and a new low during the day, and at the close right near where we are at now. “Umm yea, no thanks!”

But, you know what? I could be totally wrong, but after yesterday’s very nice $5 per Oz. profit, I really don’t savor the thought of getting chopped up on a Friday going into my weekend or getting caught in some kind of one minute wonder spike down in price that sees about 20 minutes of price action wiped out in 30 seconds by dealers that are stop hunting. And quite frankly, given the sloppy trade of late, “Mr. Market please prove to me you can put in any kind of decent range, and especially a rally that means anything.”  And until that happens, why should I think today is any different than the last 31 of 34 trading days that have been pure shit for rallies and that could make today … possibly … get this stuff above the upper 1260’s again? Cuz from where I’m sittin’, I got a better chance of getting mobbed at the beach later today by a group of 20 something model women than seeing price in the 1270’s happening. [“What are my chances? I ask; market Gods speak through the clouds and thunder “one in a billion”. I smile, look up to the sun and say, “so your sayin’ I got a chance … YES!!”] [Ok, I stole it from ‘Dumb & Dumber’; if the shoe fits wear it, right?] So, that’s where my head is at. And if I’m wrong, it’s lost opportunity, not lost capital, and I’ll deal with it.

So, while following the algorithm on trade entry and initiation is an absolute “must”, as long as you are willing to deal “with the consequences” of lost additional profit when liquidating, then given the circumstances you are well within algorithm guidelines. In other words, getting’ in is a whole hell of a lot more important than how you get out, given no exhaustion line “hit” which is mandatory liquidation.

Now, after a couple of hours and looking back with hindsight, if you stayed long from the first trade until the plum crossed under the yellow line [because there were no large spikes or exhaustion hits] about an hour and 26 minutes later, there isn’t much difference in my getting out and your price; less than a buck an Oz. in your favor. Yea, I can deal with that outcome.

Quite frankly, gold today has lost my interest after these first 2 hours. I’m much happier thinking about a little golf and being possibly getting mobbed at the beach. And so it is; I’m 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!”