Thursday, January 19, 2012


                           It’s Exciting, But Maybe Not Like This

Well, you knew in your heart this had to happen. I mean, with all the money sloshing around, Skeptic Cat & Skeptic Dog around every corner, and people genuinely needing somebody to make them a millionaire.

I’m referring of course to my decision in creating “The Vegas Fund” PAMM. For those of you who don’t know, PAMM is an acronym for Percentage Allocation Management Module. It is software that allows money managers to manage an unlimited amount of client funds from one master account and trading screen.

The biggest advantage for clients is that the brokerage house stands between the client and the money manager, and the client is always 100% in full control of his/her money. There can simply be NO Bernie Madoff scenario.

Full details will be provided in a special post this weekend that includes the Fund’s website URL, but the biggest thing people probably want to know is what the fees are going to be. There will be a 30% Incentive fee and NO other fees. Minimum investment is USD $ 500 with additional deposits available in increments of USD $1. There are no time restrictions; clients can deposit/withdraw their funds at any time with no penalty.

For those of you, who wish to follow my trading results from HotForex, please go to the link at the right side of the website. If you go to the HotForex PAMM webpage, to view all of the HotForex PAMM's, if you can’t find us, simply enter “The Vegas Fund” into the search field and our results will come up for you.

While I would love for you to make yourself a millionaire trader, I realize for a lot of you life [job, time, trading hours, etc.] gets in the way. The other big reason I’m doing this is to prove once again, just like I have done in the past, that the algorithm is the vehicle for making money trading for a living.

The format of this website will change somewhat in that the “Today’s Action & Wrap Up” section will move to the PAMM website on Monday, January 23, 2012. This website will devote its full time to teaching you valuable things you need to know to become a full time professional trader. I will endeavor to continue the kind of posts you have come to expect.

The PAMM website will devote itself to the Fund and will allow me to expand my coverage of the market for you. There will be links to the HotForex website where the official results of trading and other trading type statistics are available. I will also give a detailed explanation of the day’s trading as well as trading results.

The biggest news item regarding trading since the New Year Holiday is shrinking intra day volatility in the European & US trading sessions.

I have talked about volatility in the past, and if you can’t recognize the change, you aren’t in “tune” with the market. Lower volatility means you have to shrink your expectations, as the market isn’t willing to give you the kind of action and daily range you want.

It should be obvious, that trading with the algorithm is wholly consistent with lowering your expectations until action changes. So, while it would be nice to make $10 / oz. every day, it isn’t going to happen with lowered volatility. You denying this won’t make trading any better and will eventually hurt your account.

When volatility is normal [1½ % - 2% of price] or above normal, it is logical to make $5 / oz. per day. Given the current price of gold [about 1655/ oz.] that would translate into an approximate daily range of $25 / oz. range for gold.

When volatility is below normal [less than 1½% of price], it is wholly consistent within the rules of the algorithm to follow the signals but also realize that since the range isn’t going to be “normal”, when you have the opportunity to make $1.50 / oz. per day or more, you take the money and run.

As I have consistently stated on posts, and in emails to algorithm clients, getting in a position is the single MOST IMPORTANT element of profitable trading. You MUST use the algorithm to determine entry. Having said that, liquidating a profitable position is different: yes, you still use the algorithm signals to liquidate when appropriate, but the liquidation signals are not a 100% certainty like the entry signals are.

When you find yourself in a “free trade” in a below normal volatility environment, it is acceptable and reasonable to liquidate on spikes or tumbles. What you are really saying to the market is, “Hey, show me I’m wrong. C’mon, prove to me you can expand the range and volatility, because I don’t think you can!”

Today’s Action & Wrap Up

Today and tomorrow I will start to give exact prices from the PAMM trading account. Starting Monday, January 23, 2012, this section will move to the PAMM website.

We came into today’s trading in buy mode. Since New Year, it has been the norm for the Asian session to rally; today is no exception. Our first buy signal came at the 12:15 AM candlestick [Chicago time]. I bought at 12:29 AM at 1664.83 with a stop placed at 1661.40. The market started a feeble rally that topped out at 1665.73 [bid] before turning around and heading lower. I liquidated the position at 1664.80 at 12:59 AM [Chicago time] for a loss of - $ 0.04 / oz.

Our second buy signal came at the 2:35 AM candlestick [Chicago time]. I got long at 2:37 AM [Chicago time] at 1664.74 with a stop placed at 1661.00. The market remained steady before bolting to new highs on a price spike [the key word here is spike]. I liquidated the long position at 1669.02 at 2:59 AM [Chicago time] for a gain of $ 4.28 / oz. Given the fact that the first trade was a slight loser, gain for the day is $ 4.24 / oz.

Not enough for a Ka-ching, but enough to treat my family for a night out at dinner [please don’t tell them I said this].

Now, from what I said earlier, it should be obvious to you what I did. Remember, I am using the algorithm as a benchmark. I have come very close to making my goal if market volatility were normal [or above]. Since it isn’t normal, I’m happy with what I have made and call it a day.

“Hey Mr. Market, show me you got some fireworks. If you can’t, I’m going home and am not willing to give my money back to you!”

Now, after making money, you know what to do, and it isn’t hang around so Mr. Market can get in your head and take your profits back. For some of you, what may be the hardest part of trading is living a life after you make money.

With today’s trading results, we are currently #67 out of 220 PAMM funds.

Have a wonderful day everyone!


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