Hey, Let’s Look At The Charts
A very boring Friday with enough confusion so everyone can
lose some money. Nothing like the “Flying Wedge of Death” in just about all
markets to let you know nothing is a sure thing when it comes to trading.
Squeeze the shorts and hit a new high for the day, then plummet to a new low
and jettison the day trader longs. Rinse and repeat.
For those of you not familiar with the FWD [Flying Wedge of
Death], directly below is today’s chart from EURUSD.
Welcome To The Squeeze
No matter where you are at in this trade, you really can’t
feel comfortable. Odds are, your stop is in there some place and will get hit;
and that is the whole point from those that have the money power and can shove
the market.
Really, I could have picked any market today and it would
resemble this bucket of slop. Have I mentioned before just how much I hate
Friday trading? Except for the mini-scalpers, this type of action is probably
the most frustrating; and with good reason because you never know until it is
over if the FWD is going to be a FWD or if it’s going to keep going.
If it keeps going [which is the most probable
scenario] and you don’t get out, you face some unacceptable losses; if you get
out, congratulations you bought the top or sold the bottom; if you flip your
position around, you get the double-edged sword of being wrong on both sides of
the market. Only the mini-scalpers win.
As most of you know, I have been trading since the dawn of
the modern trading era. I would give you the exact year, but it would age me
unmercifully. To give you an idea how long that was ago, people mostly still
used a black rotary phone to make phone calls. [Don’t ask what a black rotary
phone is.]
When I first cut my trading teeth on the trading floor,
older floor veterans would talk in hushed tones of this dreaded formation; it
was one of the very first things you prepare to avoid in order to be
successful.
I don’t know what this means, but in the last 4 months I
have seen the dreaded FWD more times than the prior 15 years combined. Now, in
some markets, like Centrally Planned gold , it makes sense since the major
objective of central planning is to kill the spec trader at every opportunity.
Let me just add they are doing a great job of destroying the gold market.
I can remember times in the past [usually a few weeks to a
few months] where we had action like this; most professional traders responded
by cutting leverage and/or reducing position size and moving to the mini-scalp
strategy to pay the bills until market action improved. Problem is that you
miss nice moves like yesterday’s big reversal down move, and end up sitting
there looking like an idiot.
When does the FWD end? When it does; how’s that for
scientific analysis?
Welcome to trading; if you’re not humble about this process,
you soon will be.
Have a good weekend everyone.
-vegas
