MAKING GREAT SAUSAGE TAKES TIME

                                     Of Course I’m Organized

I’m almost done with one of the biggest projects I have undertaken in some time. I realized a few weeks ago that simply trading binary options, and ignoring spot Forex trading, might make you a one-trick pony.

The binary options algorithm is finished, and I am expanding the file to include the latest upgrade for Forex trading, The “-vegas Big Bang Algorithm”. In addition, there are other sections of the file that touch on important trading issues.

In sum, the entire file is going to be called “-vegas For Life”.

I care not your trading experience, or level of trading sophistication. Complete newbies can be up and running quickly. Those of you that have been trading will pick it up a little quicker, but what you will learn will change your life.

August is quickly approaching, where most of Europe and the U.S. will be on vacation. Trading volatility will most likely go down a notch, especially the last 2 weeks of the month into Labor Day weekend in the U.S.

This gives you a perfect time frame to research “-vegas For Life”. One of the most valuable aspects of the MT4 trading platform is the ability to go back in time via multiple time frames and see for yourself the power of both the binary options algo and the Forex algo respectively. If you don’t have the MT4 trading platform, I show you how to get the demo for free practice trading.

                                      The Ultimate Authority

Hey, don’t take my word for it. See for yourself. When the file becomes available, download it, read it, study it, critically think about it, get it up and running, and then implement it. When you feel comfortable trading real funds, then go for it.

Whether you want to become a professional trader or not, I’M GONNA MAKE YOU ONE. The only question will be when you make the switch.

                                Patient Bear Gets All The Honey

So, be patient while I get this behemoth finished: you will be amply rewarded. Look for the download between now and the first few days of August.

Have a good day everyone.

-vegas

MARKET DETECTIVES

                                 Welcome To Gold Trading Dick

We are, when you get right down to it, detectives looking for answers.

Markets present “fingerprints” when they trade and almost always leave valuable clues. Can you pick up on them is the question?

Every market is like a 13 year-old teenage girl; they’re gonna be as different as night is to day. So, what are we looking for in gold?

First up is how they go up and down during the day. Do they relentlessly climb/drop over time or is it more like spikes/drops that happen suddenly leaving you breathless?

During periods of low intra day volatility, you are much more likely to get spikes/drops that come out of nowhere, getting you to change your mind about market direction. Nothing gets you more bullish than a $5 - $7 price spike in 5 minutes: from there is where you lose money. Market drifts and then starts going lower taking out your stop.

I know these things because I live rent free in your head.

Second thing we ask is what do the “retracements” look like and what is their depth in price? When gold breaks back from a run up, what does a relatively normal retracement pattern look like?

And most importantly, what is the time pattern for the retracements?

Time patterns for gold are usually 8, 13, or 21 minutes in duration. After that, you are most likely to have lost the momentum of the move and it is finished [not always of course, but usually].

Price corrections are usually $3 - $5 in depth before the move up or down continues. Anything deeper than that and you usually have a problem maintaining the move.

                               If There Is food Around, He’ll Eat

When does patient bear eat? When he is patient.

Understanding time and depth of market will have you sitting at the proverbial picnic table feasting with patient bear.

Remember, Dick Tracy always gets his man.

Have a good day everyone!

-vegas

SACRIFICE

                                           Trading Demands

There comes a time in everyone’s life when, no matter the task, you have to sacrifice something to get something in return. Trading isn’t any different.

Trading makes demands upon us all and as most [if not all] of you have found out, it ain’t the “easy” money it’s made out to be. As one old-timer told me when I hit the trading floor for the first time many moons ago, “It’s the hardest easiest money you will ever make.”

If you plan to “make it” trading, you have to know the who, what, where, and when of the game. And make no mistake, it’s a game. The same competitive factors that drove players when they were younger in sports now shows its face each and every day the market opens.

You are drawn by the “glitz” of money, but you hang around and make it a career through determination, perseverance, and sacrifice.

                                          He Who Eats Wins

Sacrifice demands our time, mental energy, and faith.

Faith?

“I stood here and watched you lose over $1 million in about 3 hours. You wouldn’t listen, you just kept buying like an idiot; couldn’t you see every institution on earth wanted a piece of you? What the *?%* is wrong with you?”

“I dunno”

Where’s your plan man? Why did you quadruple up and then puke at the bottom?” This is real money you lost man, what were you thinkin’?”

“I dunno”

Of all the factors that you face as a trader, the one that makes sacrifice the toughest is faith. Without the necessary faith in your algorithm, you are toast. And at crunch time, when your faith will be tested, you must find the necessary courage to stay the course. If your heart isn’t in the right place you won’t make it in the long run.

Just showing up to trade expecting magic to happen isn’t an algorithm.

Have a great day everyone!

-vegas

P.S. Visit http://vegaspamm.blogspot.com for today’s action and wrap up.

CASTLES IN THE SAND

                                      Foundation For Trading?

We have all been to the beach and seen kids playing in the sand. They always seem to build some kind of sandcastle with pail and bucket. It’s fun to play, but would you lay money on the structural soundness of the sandcastle as the tide comes in and water starts rising? I didn’t think so.

But many of you base your trading on just such a foundation. Why? I submit that too many of you are blinded by the “glitz” of trading. You’ve picked the color of that new Mercedes without thinking critically about how you are going to get there.

Almost everything you read or touch, when it comes to trading, will promote “profits”, “big moves”, “untold riches”, etc. ad infinitum nauseum. Well, if it’s so easy making a fortune using common technical indicators [something most traders do], how come almost nobody is wealthy?

In other words, where are all the retail customer yachts?

I challenge you to find other “traders”, “system promoters”, “Expert Advisors” [EA’s], and those that spend most of their time trying to invade your wallet, and ask yourself if they talk at all about their limitations. Or is it mostly about money?

                                   Safe To Go Into The Water?

Red flags, warning bells, sirens, and the voice inside your head screaming at you should be your first clue that many things aren’t what they seem.

I can tell you flat out that professional traders, not those pretending to be professionals, spend 99.99% of their time dealing with failure scenarios and what to do if SHTF. Those that have been trained properly, and been around the proverbial block a few times shoot first and ask questions later.

Meaning specifically that money is money, and no matter the scenario, if I’m up money in a position, there is no way in hell it’s going to turn into a loser. Period. End. Of. Story.

                           Built To Last Forever. What Happened?

Forget the quantitative analysis, math PhD’s, and every indicator you can throw at me. It doesn’t matter. Non computable problems will always come up in trading. Why do you think 10% of the people make 90% of the money? [Hint: they deal decisively and definitively with non computable problems.]

So while the boat is sinking, and profitability is going out the window, you sit on the promenade deck and want to arrange the chairs to your liking. There comes a moment in time when you have to push the button and save profitability. There won’t be any signals; there won’t be any warning clouds on the horizon. All that is there is a winner that is about to become a loser.

Sorry, in my universe it doesn’t happen. Do I sometimes get caught by dealers who stop-hunted me and I end up making only a few Pesos and then get to watch the market resume its trend? Yes, of course!! Do I care? Nooooooo! It happens; I deal with it.

All I can ever ask for in trading is a probability distribution that is skewed in my favor. Mostly I win, but sometimes I lose. It’s the nature of the beast.

So, the next time you make a trade based on the foundation of that sandcastle on the beach, ask yourself if the probability of success is in your favor.

Today’s Action & Wrap Up

We came into the day in “buy mode”, after having watched the market rally in the Asian session. Our first buy signal came at 6:15 AM [Chicago time] at 1636.50. Stop was placed at 1632.90, about 70 cents lower than the most recent low from a few candlesticks prior to our getting in the market.

Gold rallied up to the 1641 level, and then started to back off. Now, at this point we are up anywhere from $4 - $5 on the trade. I haven’t moved my original stop yet, but do you think I’m going to let this puppy turn into a loser?

I know, from “The Power of $1.50”, that if I trade correctly I will be rewarded handsomely in the long run. There is NO WAY this gain is turning into a loser. I’ll take it one step further; there isn’t any way I’m not going to make a couple of pennies on this trade.

If it runs, and continues to go up, of course I will use the signals the algorithm gives to guide me in getting out. However, if like the Titanic, it starts leaking water, I’m going to bale on this at either breakeven or slightly above. No way is a $5 winner going to turn into a $2 or $3 loser. This is Trading 101 and the concept of the “free trade”. LEARN IT, LOVE IT, LIVE IT!

So, at 7:20 AM [Chicago time] when prices started turning lower with a vengeance, it was an easy liquidation to make. I’m saving the trade from being a loser after being up about $5 / oz, and I’m out at 1637.00. Gain on the trade of $0.50 / oz. [I could have easily picked breakeven, or 30 cents, or any other price close to where I eventually got out and it would be consistent with what I am saying. The point is, I ain’t letting’ it become a loser. At least I got somethin’ out of it for my efforts!]

Our second trade came at 7:50 AM [Chicago time] at 1638.50. Stop here was placed at 1633.90, which is just above the most recent lows around 1633.60.

During this second trade, the algorithm is going back and forth between buy signal and liquidation signal. The key here, and the reason we don’t act on these, is that there is no run in prices. Prices are basically going nowhere, + or – about $2 on either side of the signals. My stop hasn’t been hit.

So, we wait. I WON’T ALLOW MYSELF TO GET CHOPPED UP. I’M BASICALLY TELLING THE MARKET, “HEY EITHER GO IN MY DIRECTION OR STOP ME OUT.” The market goes a little for us, and then it goes a little against us; back and forth for about an hour and a half before it goes out on the upside.

Now, on this breakout, and run in price [from 1635 to almost 1645], we get a confirmation top at 1643.00 [discussed in the manual and Appendix IV]. Gain on this trade of $ 4.50 / oz.

With the first trade, we now have $5.00 /oz gain on the day. Thank you Mr. Market, we will play again tomorrow; time to call it a day.

                                       When He Wins, He Eats

It’s been a long day since the start of trading; all told, it was a little less than 10 hours. Not every day is profits in 90 minutes. The key to making money today was discipline and being patient bear. DON’T THINK, JUST DO WHAT YOU ARE SUPPOSED TO DO; FOLLOW THE ALGORITHM.

Have a great day everyone.

-vegas

WHEN WORLDS COLLIDE

                                       Microcosm of Trading

“Mr. Expectations, please meet Miss Reality.” Many are called, few are chosen.

I enjoy meeting prospective traders and discussing trading. Usually, I can give you a pretty good probability assessment of whether or not they will make it as a trader, or end up “chasing the wind”.

Absolutely nobody comes to trading a born natural. Too many things unspoken and unseen in your life to make anything else comparable. Soooooooo many expectations.

Usually a whole lot sooner rather than later, the trading world will collide with the real world you currently inhabit. Job, wife-girlfriend-mistress-whatever, money [of course], time, and last but not least commitment make a pretty good starting list of issues most newbies to trading wrestle with face-to-face. There is the proverbial game plan; then there is Plan B when SHTF.

Most people think the hardest part of trading is developing their proverbial “game plan”. Nope, it’s the easiest part of the hardest process you will face.

I’m going to tell you why the vast majority of people fail at trading: PRIDE.

I’ve finished the “easy part” for you; no sense in reinventing the wheel when the work has already been done.

Believing that you are worthy and can follow directions? Well, now we are getting down to brass tacks aren’t we?

STOP THE PRESSES !!!!

                                          Trade Forrest Trade!!

I have just run into Forrest Gump, THE World’s Greatest Trader, sitting here on a park bench waiting for the bus. What a coincidence; I mean, who could have known?

vegas:

Forrest, it’s good to see you again. Why I haven’t seen you since that fruit convention we both attended a few years back. How are you doin’ and what are you up to these days?

Forrest:

Uh-huh. I been trading your algorithm vegas.

vegas:

REALLY?? How is that working out for you?

Forrest:

Well, I’ve made so much money, I’m thinkin’ of buyin’ my own bus company so I don’t have to pay the fare when I ride it.

vegas:

Gee, that’s swell Forrest, but what …..

Forrest:

Ohhhhhh, it’s real easy vegas. I just follow the directions and all. I’m not the brightest bulb in the closet, but Mama did teach me to read and follow directions. You know vegas, life’s a lot like a box of choc………

vegas:

Yea yea Forrest, I get that part. Can you tell my readers Forrest, what’s the hardest thing about making money with the algorithm?

Forrest:

Uhhhhh, well when I opened my account and had to send them the money, I was late for the bus, so I had to walk all the way to the Western Union. I think it was 5.135 miles, ‘cause I counted the steps. That was kinda hard.

vegas:

Errr no Forrest, I mean when you started trading was there anything that was hard about the process? You know, getting going trading using the algorithm?

Forrest:

Well, sometimes I have a hard time adding up the money I make because they put all those commas between the numbers. It’s confusing! What do those commas mean anyway?

vegas:

Well Forrest, thanks for the input. I see by my watch I gotta go get my hair washed. Tell Jenny I said “Hi” when you see her, and continued good trading with the algo.

Forrest:

Uh-huh. Can’t wait ‘till I buy that bus company.

Well, there you have it – proof positive that your greatest enemy to becoming a millionaire is simply being NOT STUPID ENOUGH.

Today’s Trading Action & Wrap Up

We came into today’s action in “neutral mode”, and have since changed into “buy mode”. Some days are quick; then there are days like today where it seems like the ice age ago when you started.

It’s important to be patient bear. I know you all have an urge to trade, but you must be disciplined. Let me say this again: you must be disciplined. Do I have to go back out and find Forrest at the bus stop again?

Our first trade came at 9:20 AM [Chicago time] at 1635.50. Stop on this trade was placed down at 1631.70. We got a confirmation top at 10:20 AM [Chicago time] at 1637.50. So, our gain on the day is $ 2.00 / oz. Not enough for a Ka-ching, but enough to show up and know that over the long run this is the type of gain that will make you filthy rich.

So, $ 2.00 gain for the day.

Have a good day everyone.

-vegas

GENERATION TRADER

                      Generation Trader Bud Fox & Gordon Gekko

I graduated from college and came of age just a few short years before the financial revolution was about to hit the world with a vengeance.

The first derivatives that hit the financial scene were the introduction of currency futures in 1973-1974. In rapid succession came the precious metals, and then interest rate futures. By 1982, when stock index futures were introduced, the world was being reshaped

When I first started my trading apprenticeship under Bert in early 1977, he introduced the concept of  volatility to me and how very important it was in trading.

“Vola-what?????”

And while I had a handsomely looking college degree under my belt from a few years earlier, I didn’t know jack-squat what made traders rich or how they viewed markets.

                                   Doing What You Gotta Do

On Saturday’s, when the stock-peddlers were taking the day off, Bert and his staff [including me] were at the brokerage house at 7:00 A.M. sharp. As a few of his secretaries found out, getting there at 7:05 was an invitation to find another job.

I mainly helped with calculating various technical indicators he used for his charts. Bert had a literal vault of charts, all meticulously done by hand in various colored pencils on 3ft. X 3ft. charting paper he had a local printing company make for him via special order, that he kept in his drafting table.

After doing charts, we then would talk about how I was doing building my book of business, what markets I was trading [or attempting to trade], what indicators I was using and how, mapping out volatility, what if any problems I was having, etc.

When I hit the trading floor years later, I was under the impression that I could then ignore what Bert had taught me. After all, you could just walk in there, wave your hands around and make some gestures and walk out with money. Gee, what could possibly go wrong?

“Aw man, the guy trades eggs and lumber. This is fuddy-duddy old-timer stuff. What does he know about currencies, interest rates, and gold? Guy trades eggs for cryin’ out loud! I’m part of a new generation of traders.”

“I AM GENERATION TRADER” !!

In reality of course, I’m generation dumb-ass, with just enough knowledge to be dangerous and enough cash to get myself in trouble trading with the “big boys”. Who needs Bert when you got guys like “Magic” flipping Kruggerands before the gold opening, and making more money than I have ever seen in my life? [12/9/2011 – The “Magic” Market As Illusion]

                                            Big Losses Hurt

After I crashed and burned, and got a good dose of reality stuffed into my head, one of the first trading concepts I set about putting into my trading algorithm was volatility. It is a critical component of “The Vegas BFSG Algorithm”. It is the primary reason we only trade one side of the market during a trading session.

Volatility almost insures you will run out of money before it has finished taking the market to a place you hadn’t thought was possible.

So, while we have the luxury of looking at a computer screen that visually represents the thousands of computations necessary to give us the algo, behind the numbers is rock-solid logic and market experience.

We don’t deal in certainties; we deal in volatile probability distributions. At first glance, this may seem risky, but “The Marble Game” [free download at link] we play has much higher profitability than any Las Vegas casino could ever hope to dream.

Today’s Action & Weekly Wrap Up

                                             Waiting To Eat

We are still in neutral mode, awaiting a fresh signal from the algorithm. Since we are well into the US session, and nothing is happening on the last business day before Christmas, the prudent course of action is to go home.

No trading today, so $ 0.00 gain.

Weekly Wrap Up

            Monday           $ 8.00

            Tuesday           $ 5.00

            Wednesday      $ 0.00

            Thursday          $ 0.00

            Friday              $ 0.00          

Total For Week            $ 13.00

Running Total Since November 1, 2011

11/02/2011 – 11/04/2011        $ 25.00 / oz.,

11/07/2011 – 11/11/2011        $ 86.00 / oz.,

11/14/2011 – 11/18/2011        $ 49.00 / oz.,

11/21/2011 – 11/25/2011        $ 11.00 / oz.

11/28/2011 – 12/02/2011        $ 41.00 / oz.

12/05/2011 – 12/09/2011        $ 26.00 / oz.

12/12/2011 – 12/16/2011        $ 34.00 / oz.

12/19/2011 – 12/23/2011        $ 13.00 / oz.

Total                $ 285.00 / oz.

Have a Merry Christmas everyone!

-vegas

ILLUSIONS IN TRADING

                                              Trader Prayers

I didn’t say, “Illusions In Markets.” Trading is the space between your ears. It exists as a function of you and nobody else and is entirely personal. Markets are what they are whether you choose to participate in them or not. They exist separate from you and won’t even acknowledge your participation.

Oh, I know you do it. As Thomas Pynchon said in the opening line of his famous novel “Gravity’s Rainbow”, “A screaming comes across the sky.”

“Oh pullleeeeze God, just this once, let this trade be a winner-winner-chicken-dinner.”

“Aye vegas, it’s a pleasure to finally see you here at Mass”, says Father O’Byrne.

“Ohhhhh, I been at Mass Father!”

“I haven’t seen you, my son.”

“Well Father, you obviously haven’t been in the gold pit lately!!”

                          A Loss At Some Point Is A Certainty

                          The Pain of Loss Depends Entirely On You

Is there anything else in the world that at 2 A.M. convinces you gold is in the biggest bull market of all time, and then at 1 P.M., the same day, you are totally convinced gold has entered a multi-year bear market?

                             Dilbert Q. Public Wants A New High

Why the illusion?

We are human and seek meaning in events that can have multiple quantum outcomes at different times. In the end it’s going to be a probabilistic “1” or it’s going to be a “0”. In the meantime, as you wait, the possibilities SEEM infinite.

You are blinded by the ILLUSION OF PRICES. What do they mean, where did they come from, and most importantly, ONLY FOR YOU, where are they going?

We are constantly bombarded with internet, TV, radio, and print media that can’t wait to tell you WHY what just happened. After time, you become desensitized to its message and confused as to its effect.

                                See A Market, Not Just A Trade

The ancient philosopher Plato told of a man, who at birth, was chained in a cave and it was forbidden for anyone, under penalty of death, to show themselves to this man. As he grew and became a man, all he ever saw were shadows on the wall of his cave as people passed by.

In his mind he formed all kinds of relationships and meaning to “light on rock”. His entire life and philosophical outlook hinged on the interplay of shadows. He could not understand why he was different, not of shadow but of flesh. Imagine his confusion!

One day the King relented and ordered his release. Stripped of illusion he finally saw humanity.

                                         Clarity Of Purpose

Professional traders think in terms of VOLATILITY.

Is your trading algorithm specifically programmed for volatility, or is hope the bullet in your gun? Volatility doesn’t depend on prices; its focus is on the day’s range. I know that if gold market volatility is normal or above average, that there are very few scenarios that will cause losses in “The Vegas BFSG Algorithm” for the trading day.

                                    Hey, It Makes Sense To Me

So, I start the day differently than you; I could care less where gold is or what price level we are at. I care about what the range for the day is going to be. Because I know with a very high degree of confidence that if the volatility is there the algorithm will produce the profits.

I am under no illusion as to price or what the high or low of the day is going to be. I simply don’t care.

Logically, I love my chances. How about you? Are you ready to be set free from your cave?

Today’s Action & Wrap Up

We came into today’s session having watched Asia rally gold without much, if any, break in price. A $20 range in Asia and the day has barely started. The algo was still in “buy mode” when our day started at Midnight [Chicago time]. Once again, like yesterday, the algorithm caught a case of the “DIP’s” at 12:45 AM – 1:00 AM [Chicago time], staying right at the proverbial “line in the sand” between a buy signal and waiting. I’m talking literally a couple of pennies in price making the difference.

Now, even though I personally caught the trade up to the highs with a long position, I know some who didn’t because there wasn’t a distinct clear signal to buy. Therefore, for purposes of reporting the algorithm’s performance I’m going to assume we didn’t take this profitable trade.

At 8:00 AM [Chicago time] the algo went into “neutral’. We are now waiting for a signal. With only a few hours to go until our cutoff point for initiating new positions, the prudent course is to wait until tomorrow and let the dust settle for today.

                                If I Am Patient, Food Will Come

Remember, the algorithm’s first priority is to keep you out of trouble. Opportunity cost is not a real loss. Capital is precious. Tomorrow is another day. Go live some life.

So, no trades on the day as we patiently wait. Net gain for the day of $ 0.00 / oz.

Have a good day everyone.

-vegas

MAPPING SUCCESS

                                   Success One Step At A Time

Somehow, people bring a perspective to trading that is unlike anything else they experience in life. “I should be able to plug into the market and make millions!”

“You buy low and sell high: how hard can this be?”

“I watch the news like a hawk and am on top of what’s happening in the world second-by second. Plus I’m a smart guy, so I should be OK. Right?

                             The Devil Is ALWAYS In The Details

Did you get your college degree in 48 hours? Did you meet and marry your spouse in the first 10 minutes? [Those that answered the last question with a yes, please turn off your computer and get help quickly.]

You are the kind of person who spends 6 months shopping online for a new dishwasher so you can save $50, but Ohhhhhhhhhhh, you’re gonna plop 5K into an account and compete in the marketplace and be “a professional” trader because you bought a book on technical chart patterns?

                               Pay Attention Potential Traders!!

Trading isn’t rocket science, yet you wouldn’t know it talking to people who somehow want the rewards of trading without actually doing anything to get it. I introduced “The Vegas BFSG Algorithm” to the public to help those that wanted the freedom and money that goes with successful professional trading without having to reinvent the wheel.

However, you need to bring the perseverance necessary to make yourself successful. That means becoming totally familiar with the algorithm and getting help when you need it. For most people it takes about 10 – 20 days of trading on a demo to “get it”. After that it’s like walking and breathing at the same time [I think you can handle it if you’re human.]

It’s understanding one concept at a time, getting comfortable trading and placing orders and getting used to the time differentials, etc. Like anything else in life that is worth keeping and protecting, don’t be in such a rush to become rich.

                          When The Food Shows Up, He Will Eat

Little steps are the key to your success. Be a "Patient Bear" and  cover a great distance through perseverance!!

Today’s Action & Wrap Up

We came into the day in “buy mode”, and our first buy signal came at 12:15 AM [Chicago time] at 1591. Within the hour, we got a confirmation top [discussed in the manual and Appendix III] at 1592.50. Our gain was $ 1.50 / oz.

Our second buy signal came at 1595.50 at 4:50 AM [Chicago time]. About an hour later we got a confirmation top [discussed in the manual and Appendix III] at 1594.50. This second trade resulted in a loss of - $ 1.00 / oz.

Our third buy signal came at 1596 at 6:40 AM [Chicago time]. Within the hour we had a confirmation top at 1603.50 [discussed in the manual and Appendix III]. Our profit on this trade was $ 7.50 / oz.

Adding all the trades for the day, our profit total was $ 8.00 / oz.

Ka-Chingggggggggggggggggggggggggggggg [This bugs you doesn’t it Skeptic Cat & Skeptic Dog?]

Some of you got out at better fills, but I’m taking just about worst case scenarios. To the rest of the world, the invitation to join us is still open!!

Have a good day everyone.

 -vegas

ZENO’S PARADOX MARRIES THE TWILIGHT ZONE

                                      Through This Door ……

If you are a trader, at some point you’re going to feel as if you passed through this door into something you wished never existed.

Meet Zeno of Elea, a Greek philosopher, who posed the famous tortoise and hare thought experiment. For those uninitiated, if you want to get from A to B, and go half way each step, you can NEVER reach B.

Although Zeno didn’t know it at the time, what it boils down to is mathematical limits, integral calculus, and discrete functions.

In trader parlance it means this: sooner or later the math will fail you and you have to make a decision that has no mathematical basis. I touched on this in the post “Non Computable Trading”, and its application is the reason I would never “EA (expert advisor)” my algorithm. You will eventually find a problem that can’t be solved without human intervention. This isn’t something unique to my algorithm; it exists FOR EVERY ALGORITHM.

I am, of course, referring to those days even the trading Gods would have a hard time making money. You buy, it goes down NOW; you sell, it goes up NOW. Repeat the process over and over until you feel like Rod Serling is living rent free in your head. No matter what you do it’s the wrong decision and bad goes to worse very quickly.

 

               Use Your Imagination. What Can Possibly Go Wrong?

You take that first little step and dream up something you think just might get you out of this mess. Losses are mounting, and you need a solution fast. Double up?  Triple Up? “Nahhhh, tried that before in silver and it didn’t work.”

I got an idea! “Yea, sell the Swiss Franc against my long gold position; that’s the ticket!” Gold goes down, the Swiss Franc rallies; you are now doubly hosed. At this point it will take you 6 months to dig your way out of this mess and it’s only 10 AM; still plenty of time to make the situation far worse.

Many years ago I labeled these types of problems as “discrete information packets”.  The “DIP’s”, as I call them, creep into the trading realm when you start to get extremely small price movements that change the buy/sell signals in your decision making. No matter where you draw the proverbial line, you will always at some point, have to deal with the DIP’s.

When you prepare ahead of time, before they appear, you won’t have to guess when time is of the essence. It is because of this, when I initiate a new position coming into the trading day, I will either profit from the upcoming move, or my stop will get taken out. Minute changes in the buy/sell signal around price changes that are very small will not influence my decision.

So tell me, how do you program this into an EA [on the MT4 trading platform] while you are sitting on the beach drinking pina coladas? You can’t, and 3 hours of this and your account is down 30% from chop-chop and nothing has happened. You and Zeno have just gone through the door and are officially in the never-never land of account destruction.

From the trading floor you eventually see every human emotion. I’ve seen the DIP’s cause tears, laughter, denial, and delusion among professional traders. Check the horoscope in the paper followed by a 900 toll call to Madam Zulu for guidance.

                                            It’s Never Easy

You must have the necessary courage to avoid these types of situations. They can easily spiral out of control and ruin your trading account. For some of you newer traders, this may seem patently obvious, so why write about it?

Nobody ever starts the day looking for the Twilight Zone trading door. Successful trading is a process, not a collection of lucky bets. Decide what you do ahead of time and CONSISTENTLY APPLY IT.

Luck is not a variable in “The Vegas BFSG Algorithm”. Remember “The Marble Game?” Las Vegas was built and functions on probability gross margins of less than 2%. The algo operates on much higher probability histories than that. Treat trading as a business, not as a money losing hobby.

Today’s Action & Wrap Up

Yesterday afternoon, I emailed ALL algorithm traders and made sure that they knew the algo had turned bullish and was therefore in “buy mode”. You people out there that think you can piggy-back the signals by what you read in the “Today’s Action” section can forget it. I’m not going to give you enough to be able to do that. It’s simply not fair to all the people trading the algo. Download the algo - IT'S FREE FOR HEAVENS SAKE!

Our first buy signal came at 12:10 AM [Chicago time] at 1738. Stop was placed at 1733.90, just below the low that occurred in the Asian session at 11:20 PM at 1734.62. At 12:50 AM [Chicago time] we got a liquidate signal at 1738. So, here we had a scratch trade resulting in $ 0 / oz.

At 5:45 AM [Chicago time] we got our second buy signal at 1739. Stop was placed at 1735.80. The market then went into melt-up mode.

Now, I am going to reiterate a point that I hope, with today’s action, has been reinforced into the trading part of your brain. I have stated this before so many times, I can’t remember them all. YOU CAN NEVER, EVER TRADE GOLD OR SILVER WITHOUT A STOP SOMEWHERE. NEVER!! Whether it is a stop-loss on a buy/sell new position, or a trailing stop with profits locked in, you just can’t trade without stops.

Some of you have to learn this the hard way, and today was that day if this describes you.

I have the algo coded specifically for those events that have the highest probability of occurring. At today’s high, the algo missed the top. The high was 1756.07 bid on the HotForex platform. It came close at the close of the candlestick in giving the signal, but it just wasn’t there with enough information to justify a closing of the long position. In other words, the math missed it with a “DIP”.

OK, so we just melted up and went over 1750; what to do next? Well, the first thing is to raise my trailing stop, which I did to 1749. Why 1749? Because it is right below the low of the candlestick that went straight up to 1756, and it is the most I’m willing to give up from being long at 1739. In other words, remembering what I have said earlier in this post, I’m not going to risk the gain I have; I don’t care what anybody says I’m not going to watch a good gain become a small gain or a loss. Fugetaboutit!!

I got a ton of emails this morning from algo traders telling me that they got out anywhere from 1748 to 1755. The reason? “Dude, I’m up big money!! I’m taking it!! And you know what? Good for you!!

Now, go code this into an EA! Good luck with that OK?

About the worst trailing stop you could have had is at 1743, just below the low of the candle that started the rally at 7:20 AM [Chicago time]. If you didn’t use a stop, or didn’t trail it properly because you got lazy, then you gave up money for nothing. You simply can’t justify giving up more of the gain than that without being stubborn and somewhat delusional. Who cares about the reasons for the drop off the high. It is what it is!! It’s more than $13 / oz off the high for cryin’ out loud.

Again I say, go code this into an EA! Good luck with that OK?

Today provides the perfect example of the things I have been writing the last couple of weeks. If you plan on being a professional trader, you have to take this post and tattoo it on the back of your eyelids!!

Based on where most everybody got out, and I realize this is wholly subjective, for purposes of reporting algo performance I’m going to go with a liquidation of 1749. Gain on this trade of $ 10 / oz.

Message for Skeptic Cat: “Go eat some grass and throw up that fur ball.”

Since we had a scratch trade earlier, gain for the day is $ 10 / oz.

Ka-Chinggggggggggggggg!!  [Patient Bear must go rest now Mr. Market. Thanks for the memories]

Have a good day everybody.

-vegas

PERCEPTION & REALITY

                                    Perception IS Everything

A few years ago, a fraternity brother from my college days dropped in, and since he was a Major in the US Air Force, he took me up in the F-16 trainer he was flying for the day. We had a blast up at 50,000 feet, but what I remember the most from the experience was experiencing not knowing UP FROM DOWN.

                                      Which Is Up & Down?

                                       [You Sure?]

The fact is, we often mistake our perception of events one way, only to find they are something in reality much different.

Markets present a laboratory of human emotions, endless data streams, and money flows that boggle the imagination. Not only do we have to think correctly, but there is another trading dimension most people give little thought too: timing.

                                   If I Wait I Will Be Rewarded

Meet my little friend “Patient  Bear”. Unlike my pal “Skeptic Cat”, who almost never does anything for fear of fear, Patient Bear knows what he wants and then waits to get it. Both, in reality, want the same thing; viz. something, anything, an algorithm if you will, that will allow them the easiest existence they can muster for themselves. In trading, hopefully you look for the easiest trade to make money.

As humans, we want that same kind of “easy existence”. What holds you back are the perceptions of getting it don’t match up with the reality of achieving it.

Until now!

                                               I’m Waiting

“The Vegas BFSG Algorithm” is FREE. If you wish to send me 5K so you can feel better about it, write me and I’ll let you know where to deposit the money. No other trading professional is willing to do what I am doing. NONE!!

While others reach into your pocket for your credit card, while preaching hypothetical results, I am here to show you how to get the kind of money and income you want from trading.

The response I have received from traders is gratifying, yet at the same time I know there are many of you who visit my website to read the posts, and then walk away wondering if this is for real. All I can say is join for FREE and find out. You don’t have a thing to lose, except the perception that somehow you can’t do it.

Gains today in all markets that trade “The Vegas BFSG Algorithm” were truly staggering. Once again, being on the right side of everything [buy mode] paid off in spades, as the timing kicked in to produce huge gains. Not just in Gold, but everything: oil, stock indices, and currencies [AUDUSD for example].

Today’s Action & Wrap Up

Like yesterday, we came in to the day in buy mode. There were 2 occasions in the wee hours [1:00 AM – 2:00 AM Chicago time] where the algorithm came very close to giving a buy signal. It didn’t happen, so we didn’t get long. The first buy signal in gold came at 3:15 AM [Chicago time] at 1707. Stop on this trade was at 1701.95 which was never hit.

At 5:00 AM, another buy signal from the algorithm at about 1707. Every market soared form there on China news and news from the Fed that they are providing liquidity to Europe. Gold immediately rallied hard up to the 1716 area.

Now, almost as if on cue, and remembering what I said yesterday about “non computable trading”, I believe there was a confirmation top at 1716. However, if you viewed the signal just slightly different than I, you would not have sold and liquidated the position. As I said yesterday, as long as you are consistent there won’t be any problem.

If you stayed long, then you definitely got the sell confirmation a little later at 1736; almost a $30 gain.

For my reporting purposes, I’m not going to exaggerate or embellish what the algorithm can do. It does what it does, and doesn’t need any help in reaching profits. So, a net gain on the day of $ 9 / oz [Realizing that some algo traders got a whole lot more. Congrats if you did.]

Ka Ching!! [again]

Have a good day everyone.

-vegas