WHEN WILL THE MUPPETS LEARN?

                            We’re Vampire Squid & Here to Help

All the exuberance of Tuesday’s advance just got a whole lot of cold water thrown on it. Even a Vampire Squid [Goldman Sachs] buy recommendation to their customer clients muppets couldn’t save gold today.

“Hey, it’s only money – and yours at that!”

Until late morning stops were set off, it was looking like a pretty dull affair. Stock market weakness, along with declining crude prices, and a rising dollar proved too much too handle for gold.

I’m wondering how many muppets bought gold while the prop desk at Vampire Squid was selling?

Below is an example of what I was talking about yesterday. The black dot is where the bid started climbing from about 1674.09. Over the next few seconds gold climbed all the way up to about 1675.09, a gain of about a dollar. If you long, from let’s say 1674.00, things for a second look promising; and if you’re trying to get out you have to push the liquidate button on the way up.

But let’s say you hesitate – wait a second – wait for it to roll over. Sorry, you lose. In the next second [red dot] the bid is 1673.83. What was a gain is now a loss Welcome to nibble, nibble, nibble, BOOM!

If you are not early, either getting in or getting out, you will pay the price with the dealer.

This is the major reason I have cut my leverage the last couple of months from where it was most of 2011. What looks great one second looks like death the next, and if you have a very highly leveraged trade you’re gonna hit the panic button and end up feeding the dealer.

I’m no muppet, and I don’t trade to feed the dealer or the house; I trade to make money. In these types of conditions it will be near impossible to get the price you want when you want it; you have to be early and be willing to take the money and run.

If you choose to wait, most likely price will get away from you and whatever risk management priorities you once had are now out the window. How do you recover from this?

Have a good day everyone.

-vegas

DEALER GAMES: FRIDAY EDITION

                         And… Take All The Dealers Money Away

It’s enough to make me wanna be a crash test dummy.

These last weeks I’ve put up with internet outages [even the electricity went out once], small ranges, hyperbolic speed-of-light moves, slippage that would make the Pope want to kill, mystery shut off of the trading platform as gold hits a new high or low [so you can’t get out at the extreme], etc., etc. [I could go on but there isn’t enough server space at Google to handle the size of the list.]

But today, today, TODAY, TODAY I suffer the ultimate insult from the brokerage house of being told to deal with a liquidity provider that is making a 0.90 – 1.50 spread in gold [when it should be close to 0.30].

“Sir, please be advised that we don’t control the spread as that is done by our liquidity provider banks. Sorry for any inconvenience.”

“Say what?”

So, I’m supposed to buy it on the way up with a $1.50 spread? Did I take a stupid pill? You guys are serious?

So, after about 12 hours of chat, emails, and various idiotic customer service reps the bottom line is that there isn’t anything that can be done. Really? Well, I know what can be done; and it doesn’t involve using you to trade.

Ohhhhhhhhh, low and behold the liquidity provider has been replaced and as of about 10:45 A.M. I now have a $0.25 - $0.35 gold spread. Super, what you gonna do about today? It’s shot thanks to you clowns.

Another day down the drain to factors beyond my control and the powers that be think they deserve a pat on the back. How about a kick in the ….

So everything I’m looking at right now is red. My computer is red, the sky is red, and even the dog looks red. The eggs I had for breakfast looked mysteriously red. And I bet if I put my fist through a wall it would be red. But since I already have one bad wrist from a Super Bowl slip on my rear end, I think I’ll pass [but it is tempting].

There were times on the trading floor when I would go through periods of out-trades [disagreements over price] with other traders and it would just drive me nuts. The only solution: hit somebody in the mouth in front of 400 other traders and tell them [in mother approved language of course] this crap ain’t gonna be tolerated [it was worth the $1,000 fine and pompous lectures].

For all of you traders out there that think this kind of stuff only happens to you, think again. To the criminal dealer cartel I’m just another muppet. But, when they think you can cost them money, mysteriously something gets done.

I know a lot of you don’t have a venue like I do here. This post is dedicated to all of you who feel that some days the deck is definitely stacked against you. Salute!

Uh oh, I’m starting to see pink now – maybe things are getting better.

Have a good weekend everyone. I know for sure I need one.

-vegas