OLD HABITS DIE HARD

                                            Innocence Is Bliss

I got one question for all of you readers who live on the Pacific Rim in Asia. I’m talking to those who live from Japan to Australia.

Why oh why do you have to religiously buy gold every single night taking XAU higher and therefore allowing the Central Bank gold cartel [JPM & HSBC to name just two] the opportunity to sell it [and fade you in the process] in Europe and the U.S.?

Do you guys ever sell?

Hey, here’s an idea: stay up late some night and buy it during European and U.S. trading hours and get it cheaper.

The algorithm continues to struggle under the types of conditions we have seen in the last month. We have either had days where no volume or much activity has taken place, and therefore the data basically “collapses on itself” and it doesn’t take but a buck move to generate a signal, or we have ‘postal volatility” and every stop you put in is going to get “hunted” no matter where you put it.

Until the market resumes under more normal conditions, you have to pick your spots and use the algorithm as a guide. Make your trades count. This may mean you miss some trades, or even not trading for the day. So what? Would you rather have your account down significantly? I didn’t think so.

Today, most of Europe and Asia was a dead affair. In the U.S. session we basically had about an $11 range [1716 – 1705], but we had 21 5M candlesticks $3 or over in range to 1:30 PM, and look where the market is; it’s nowhere, stuck around 1712.

Rumor has it that some Asian hedge fund [via JPM] sold 30 metric tonnes of gold on Wednesday. Next time guys give it to somebody who can sell the gold and get good prices. Why would you use JPM?

The last time the gold market had a big selling debacle [September 2011], it took the market about 21 business days before it recovered. Expect a test of the lows from Wednesday, and maybe even “another shoe to drop” in the upcoming week. This is what I’m looking for, and why today’s prices weren’t good enough to get me long; even for just a trade. I’m pretty sure we get a test of 1700 again and maybe even 1685. After that, 1654 is pivotal. We’ll see what happens.

Have a good weekend everyone.

-vegas

BAD HABITS DIE HARD

                                          Trading Simplified

You will find very few other endeavors in life that can be as simplified as trading. The ‘catch”, though, is that while other things may take many weeks, months, or even years to manifest themselves, trading cuts to the chase rather quickly.

When I talk with people about trading, usually it takes very little time to bring out the frustrations they experience.

“I buy it goes down; I sell it goes up. I always make the wrong call when I enter a trade. I stay current on the issues; I read voraciously about the market and study charts for many hours. I don’t mind losing, but does it have to happen within 10 minutes? Blah, blah, etc., etc.”

When you focus on the wrong element of trading, what do you expect? Why should you be rewarded for putting your energies in the wrong place? If markets could be “figured out”, long before you arrived on the scene many others equally brilliant as you would have all the money in the world by now and there would be none for you or me.

All of these reflect a determination to understand a market. For many reasons, you can never fully understand a market or how it moves. I don’t necessarily want or need to understand a market; what I need is to PROFIT by a market. And there is only one way to CONSISTENTLY do that.

Over the years, many people have approached me regarding trading, and almost without fail the first thing they want to know is how to understand a market. I know right then and there it’s going to be a long discussion because there are going to be things they aren’t gonna want to hear.

Everybody, including my mother, thinks there is a secret formula for untold riches. There is, but definitely not like you think; it’s not an equation but a formulaic process.

We tend as humans to get very frustrated at events [trading or otherwise] that fall outside our sphere of understanding because we can’t make the connections between cause and effect. Nowhere is this more evident than in trading.

Long term trading profitability is not derived by event certainties; trading profitability is derived from probability distributions that are skewed in your favor. Until you come to grips with this, trading is likely to be a very long series of “Whack-A-Mole” decisions that are very much skewed in the wrong direction.

Have a great day everyone.

-vegas

P.S. Today’s Action & Wrap Up at http://vegaspamm.blogspot.com