ILLUSIONS IN TRADING

                                              Trader Prayers

I didn’t say, “Illusions In Markets.” Trading is the space between your ears. It exists as a function of you and nobody else and is entirely personal. Markets are what they are whether you choose to participate in them or not. They exist separate from you and won’t even acknowledge your participation.

Oh, I know you do it. As Thomas Pynchon said in the opening line of his famous novel “Gravity’s Rainbow”, “A screaming comes across the sky.”

“Oh pullleeeeze God, just this once, let this trade be a winner-winner-chicken-dinner.”

“Aye vegas, it’s a pleasure to finally see you here at Mass”, says Father O’Byrne.

“Ohhhhh, I been at Mass Father!”

“I haven’t seen you, my son.”

“Well Father, you obviously haven’t been in the gold pit lately!!”

                          A Loss At Some Point Is A Certainty

                          The Pain of Loss Depends Entirely On You

Is there anything else in the world that at 2 A.M. convinces you gold is in the biggest bull market of all time, and then at 1 P.M., the same day, you are totally convinced gold has entered a multi-year bear market?

                             Dilbert Q. Public Wants A New High

Why the illusion?

We are human and seek meaning in events that can have multiple quantum outcomes at different times. In the end it’s going to be a probabilistic “1” or it’s going to be a “0”. In the meantime, as you wait, the possibilities SEEM infinite.

You are blinded by the ILLUSION OF PRICES. What do they mean, where did they come from, and most importantly, ONLY FOR YOU, where are they going?

We are constantly bombarded with internet, TV, radio, and print media that can’t wait to tell you WHY what just happened. After time, you become desensitized to its message and confused as to its effect.

                                See A Market, Not Just A Trade

The ancient philosopher Plato told of a man, who at birth, was chained in a cave and it was forbidden for anyone, under penalty of death, to show themselves to this man. As he grew and became a man, all he ever saw were shadows on the wall of his cave as people passed by.

In his mind he formed all kinds of relationships and meaning to “light on rock”. His entire life and philosophical outlook hinged on the interplay of shadows. He could not understand why he was different, not of shadow but of flesh. Imagine his confusion!

One day the King relented and ordered his release. Stripped of illusion he finally saw humanity.

                                         Clarity Of Purpose

Professional traders think in terms of VOLATILITY.

Is your trading algorithm specifically programmed for volatility, or is hope the bullet in your gun? Volatility doesn’t depend on prices; its focus is on the day’s range. I know that if gold market volatility is normal or above average, that there are very few scenarios that will cause losses in “The Vegas BFSG Algorithm” for the trading day.

                                    Hey, It Makes Sense To Me

So, I start the day differently than you; I could care less where gold is or what price level we are at. I care about what the range for the day is going to be. Because I know with a very high degree of confidence that if the volatility is there the algorithm will produce the profits.

I am under no illusion as to price or what the high or low of the day is going to be. I simply don’t care.

Logically, I love my chances. How about you? Are you ready to be set free from your cave?

Today’s Action & Wrap Up

We came into today’s session having watched Asia rally gold without much, if any, break in price. A $20 range in Asia and the day has barely started. The algo was still in “buy mode” when our day started at Midnight [Chicago time]. Once again, like yesterday, the algorithm caught a case of the “DIP’s” at 12:45 AM – 1:00 AM [Chicago time], staying right at the proverbial “line in the sand” between a buy signal and waiting. I’m talking literally a couple of pennies in price making the difference.

Now, even though I personally caught the trade up to the highs with a long position, I know some who didn’t because there wasn’t a distinct clear signal to buy. Therefore, for purposes of reporting the algorithm’s performance I’m going to assume we didn’t take this profitable trade.

At 8:00 AM [Chicago time] the algo went into “neutral’. We are now waiting for a signal. With only a few hours to go until our cutoff point for initiating new positions, the prudent course is to wait until tomorrow and let the dust settle for today.

                                If I Am Patient, Food Will Come

Remember, the algorithm’s first priority is to keep you out of trouble. Opportunity cost is not a real loss. Capital is precious. Tomorrow is another day. Go live some life.

So, no trades on the day as we patiently wait. Net gain for the day of $ 0.00 / oz.

Have a good day everyone.

-vegas