You & Mrs. Market; Can We Just All Get Along?
Not content with getting hit in the back of the head with a frying pan once, many of you aspiring traders came back for more on NFP Friday. How many lumps in the head can your account take before it is unconscious?
With yesterdays tone set, the insanity of the monthly BLS [Bureau of Lies & Statistics] report on Non-Farm Payrolls continues to make once-a-month-Friday markets more like a craps table than someplace to do business. The entire investment community knows this report is a complete fabrication and scam, and means absolutely nothing; yet they pretend the number is sooooooooo important that Western Civilization hangs in the balance. The fact is that “politicalization” has infected every branch of government; there is no truth, only spin; and as every single government apparatchik knows, nothing can be reported that makes President Chalky Goebbels look bad.
So, How Does This Work Out 9 Times In 10?
What we get after the spike action from Thursday and today is an intraday market that is basically adrift; nobody really wanting to do anything and a quite a few accounts that literally can’t because they got whacked pretty good.
The temptation is strong to jump in and participate. Imagine a gigantic pit where 400+ people are on top of each other, screaming, spitting, cursing; the electricity in the air is something I can only tell you about but can’t explain because the intensity is unexplainable; only those who have felt it and seen it know what I really mean.
Yet, I stand there in the amidst of this seemingly bored out of my mind; wondering which early train I’m going to catch to get out of there.
I’m not in there to make friends, impress 20 year-old clerks, pretend I’m a big shot, get my picture taken by the press, impress the folks in the gallery by jumping up and down, or do anything else that takes away from my only objective; make money. Some days you just have to man up and realize the algo can’t help you on that day and leave.
We have seen 2 days in as row where this has been the case, and sitting with my staff for some of this action would be worth an admission ticket in some university psychology departments. I can see and feel the angst among them, and it takes me back to my early days of trading, where missing anything drew a frown upon my face.
Here is the most ironic thing about trading; those that focus on winning suffer the biggest losses and those that focus on losing almost never do. Even after 30+ years of trading, the market has no idea who I am, and if I do something stupid [like ignore the algorithm] it will punish me as if I am a newbie tripling up on a losing trade. How do you think that’s going to work out?
The one thing you newer traders have to understand and have tattooed on the inside of your eyelids, is that discipline matters. If you don’t have it and can’t keep it, then it’s only a matter of time before the “pudding business” awaits your return.
I don’t have office buildings filled with math Ph.D’s and algorithm code that has 20 million lines. We can never compete with Vampire Squid and JPM; either in terms of market access or unlimited amounts of free Fed money. They got it and we don’t.
My algorithm doesn’t compete with them; it seeks to take advantage of their peculiar market situation when they shove the market one way or the other and create the volatility needed to do 2 very important things; 1) fleece the muppets, and 2) enrich themselves.
Unfortunately for us this week, pretty much most of the range in price for the week happened in 3 five  minute candlesticks. Not much to do except be thankful the algorithm stresses NOT getting whacked as a priority. Believe me, there are plenty of accounts who wished they had taken a vacation this week instead of showing up to hand out money.
Have a great day everyone.