THE MUPPET CLASS

                                          Which One Is You?

For the longest time, clients of Vampire Squid [AKA Goldman Sachs] have been known as “muppets”; the people who get the best trading information from the wizards-of-smart analysts making 6 and 7 digit salaries and bonuses. The fact that “your buying” is met by “their selling” shouldn’t concern you; “are you gonna believe us or your lyin’ eyes?”

To the best of my knowledge, the top FX strategist over there [the infamous T. Stolper] hasn’t made a profitable FX trade in over 3 years. Yet, people keep shoveling their hard earned money to firms like this year after year; why?

You can’t begin to explain chaotic systems through logic and intuition. You need the people who live behind the curtain in Oz. Of course, all that comes at a heavy price as you are never going to achieve the results you expect.

Does Vampire Squid allow you to profit from their HFT [high frequency trading] operations? Their proprietary trading algorithms [along with JPM] make billions and the number of trading days they lose money in a year are in single digits. Do you get to piggyback this if you are a “muppet”? Where do you go to sign up for this?

                             Following Algorithms ARE HARD

Two points here worth making; 1) you are the one who is supposed to supply the money, not take it, and by default 2) they are the elite financial class destined by divine right to take your money.

What they know they can’t share with you, because you are too stupid to understand advanced math and chaotic systems. Once given their HFT's, how long would it take the average sheeple to come to the understanding of, “err hey, whadda we need these guys for anyway?”

There is a reason for every rule in my long term algorithm; to keep you out of trouble. Aside from the abject stupidity on my part that cost us about $10-$15 per OZ. on Tuesday, so far this week the algo has done a fantastic job of preventing you from making ill-conceived trades both long and short.

[Like the Yellen up-its-bullish no wait a minute its-bearish price action that got people whipsawed like a seesaw in the last 24 hours. Welcome to news trading.]

We will see if the market is able to break its range tomorrow [Friday] and give us any trading opportunities [I’m not optimistic, but we’ll see]. I know it is hard to sit and be patient; if it was easy and intuitive, everybody would be able to do this and make a fortune. They can’t, and that should tell you everything you need to know about trading.

Have a great day everyone.

-vegas

FUBAR TRADING REDUX

                    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 [5] 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.

-vegas

MAKING TROUBLE PAY

                       Does The Market Know Your Middle Name?

Think of any market [Oil, FX, etc.] as an empty balloon. When the week starts on Monday, air starts to go into the balloon; as price starts moving up and down throughout the week, the new highs and new lows that are put in make the surface of the balloon expand and get bigger. The increase in surface area is volatility.

We know from the historical data what this probabilistic weekly volatility will be, and so we set out to capture it with the algorithm.

When I do speaking engagements I almost always bring up and ask attendees to give me a show of hands for those who started trading and then blew the account up when they got in trouble; and yes, there are a lot of hands in the air!

                                       Watching People Trade

The main premise of the “Long Term -vegas Big Bang Algorithm” is the singularity of the weekly open. If the algo is followed, there simply is no room for big “trouble”. All of the logic and mathematical “brain work” has been done; the probabilities calculated and analyzed; our risk defined; the MQ4 file visually plots [on the 5M candlestick chart] the exhaustion and yellow/plum lines respectively; it’s all there for you to see in real time.

Over many years, unless a market has a paradigm change that diminishes its usefulness as a viable financial derivative [e.g., short term interest rate futures because of the Fed’s ZIRP], its inherent volatility can be mapped and taken advantage of, IF [and this is a big if] you can reduce risk and stay out of big losing trades.

No matter how you want to characterize a markets personality, it really boils down to 2 states of being; normal and excitable. The yellow/plum lines and the crossover rules that apply to them in the algo really do a good job of mapping normal behavior; the aqua/red exhaustion lines guide us when price action goes into excitable mode.

Once a position is established [usually Sunday night or Monday morning], most often we are then guided by the behavior of the yellow/plum lines. How you choose to handle this “behavior” will ultimately effect your profit potential. No matter what you do, your action in this regard will fall into 1 [one] of 4 [four] courses of action; choose the one that best fits your risk tolerance, personality, and the time you can give the market to trade.

FIRST POSSIBLE COURSE OF ACTION

You do nothing. You know there is an approximate 94% probability of the week’s high/low being at least 200 pips from the open, and so when the 35 pip threshold is breached you take a position and stick with it and ignore everything else. 6% of the time you live with the consequences, whether that is a loss or smaller profits.

Personally [and this is just me and not necessarily you], I reject this option because I absolutely can’t sit there and watch a 150 pip profit turn into a breakeven [or losing] trade; I’d be climbing the walls looking to hang myself from the ceiling fan.

SECOND POSSIBLE COURSE OF ACTION

You hedge [or liquidate] on every crossover.

I personally reject this scenario because the Asian session for WTI is notoriously choppy when there is no oil related news in the marketplace; your account most likely is going to get “chopped” with a thousand paper cuts before anything of substance happens.

Last but certainly not least, let me know how staying up and alert to what the market is doing 24/5 works out for you. Send me a photo of yourself on Friday morning.

THIRD POSSIBLE COURSE OF ACTION

You are un-hedged and have open positions when the week’s high/low is expanding; the subsequent crossover of the yellow/plum lines you hedge and keep them on until the high/low continues to expand.

This is a conservative approach to the algo and limits your trading to those times when the week’s high/low is expanding to where we know it must go according to the historical data. However, you have to be there when that happens, so unless you are prepared to be in front of the computer screen for upwards of 16 hours a day until the week’s range is put in, when you miss a move it’s going to impact your weekly results.

FOURTH POSSIBLE COURSE OF ACTION

You choose the times you are un-hedged with open positions and follow the yellow/plum line crossovers during that time. If you miss a move so what? Opportunity is infinite!

This is the option I choose to trade my own account along with the Replitrader.

The aqua/red exhaustion lines are calculated using standard deviations from a time sensitive mean, in conjunction with Fibonacci numbers and ratios, to give us price areas [in real time] where the market has a high probability of stopping or reversing.

Currently, WTI Crude Oil CFD has a risk model [RM] of 1 on the 5M candlestick chart.

There are 4 RM’s in the algo; if you find market price continually breaching these lines on an intraday basis [aqua for slightly more conservative traders, and red for slightly more aggressive traders], simply adjust the RM from 1 to 4, or 4 to 1 depending on what action is taking place.

These exhaustion lines [aqua or red and any RM] are for hedging positions and NOT for reversing positions. The purpose of the lines is NOT to pick tops and bottoms; the purpose is to cover open positions and give us maximum profit potential via historical probability.

I want to be very clear here; neither my algorithm nor Vampire Squid’s HFT with 20 million lines of code can eliminate all potential losses from trading. I can’t eliminate all losses from the hedges, and not every yellow/plum line crossover is going to work.

Let market price = A, the yellow/plum line crossover = B; if the market makes a move up or down, you will absolutely get the proper appropriate crossover, so we can say with certainty that A = B.

However, we cannot say that B = A. Why? A crossover does not make a market move higher or lower. Markets are not mathematically commutative. So, we live with potential small losses to capture the volatility we know is there.

Big trouble is not for me, but for those who structure their trading activity ignoring probability and volatility in any market they choose to trade. There are no moral victories in trading.

Have a great day everyone.

-vegas

P.S.

I should have the Replitrader page up and going this week; I will link to it when it is finished.

EMPIRES OF DECEPTION

                                    An Inconvenient Premise

I recently read that Vampire Squid [Goldman], along with others too numerous to mention] had no day trading losses last fiscal quarter [equities, forex, bonds]. How’d you do?

Pick up any financial publication, and in the back you’ll see everybody is a financial genius. Everything is for sale and everybody is a millionaire. How are you doin’?

                            Modern Political & Financial Theory

Prices go up, the value of your house goes down, you work hard, and yet every day feels like you are being sucked down a drain. Why is this happening?

Welcome to the real live version of Orwell’s 1984. Government, Wall Street, and the TBTF banks are corrupt to the core, but facts mean nothing; only perception counts, and as long as the music keeps playing nobody will scramble for the chairs.

How important is it for you to be FREE from this corporate and government tyranny?

Many years ago I faced my family and announced I was quitting my job and going into Chicago to be a “trader”. My Mom’s immediate reaction:

                                OMG, Where Did I Go Wrong?

I know what it feels like to stand alone.

We live in an age where financial charlatans and wannabees are all over the internet hawking garbage to anybody with a credit card. I know how hard it is to find good solid information; trust me, it was much harder 30+ years ago.

I know many of you fence sitters have questions; great, send them to me after you’ve read  “-vegas For Life”. I can absolutely guarantee you won’t get material like this from anybody else.

You can download all my files at the links, go to www.4shared.com and view the files online after you setup a free account, or email me at vegasalgo@yahoo.com and I will send them to you.

All I’m asking anyone who is interested in personal freedom and money to do is get the file and critically think about what it is I’m saying. When you are done, if you reject more money and the personal freedom that goes with it, then I don’t have a problem with your decision to stay where you are, I can only help those who want my help!

Have a great day folks, and spend these dog days of August on your MT4 [demo or real] proving to yourself that the algo’s are your source for future wealth and prosperity.

-vegas

HOW THE FED STOLE CAPITALISM

                                  Your Government At Work

The world breathlessly awaits the new round of money printing & currency debasement easing from Weimar Ben today. Like kids tucked in their beds awaiting Christmas morning, thoughts of sugarplums dance collectively in the hearts of most market participants.

It doesn’t matter anymore to the collective crowd that the entire system of finance as we have known it has ceased to exist; all we are left with is the “up or down thumb signal from the emperor”. One guy, who has a track record that couldn’t land him a job as a greeter at Walmart, is going to decide what the economy needs and just how much it needs it. Markets used to decide such matters.

Remember, this is the guy who said back in 2008 that everything was fine regarding the housing market. Somewhere, Stalin is smiling.

What we are left with now is crony capitalism and the prop desks at JPM and Vampire Squid with more money to ramp stocks higher to make you feel good. In the real world, a place most Fed members rarely if ever inhabit, the situation is far, far worse.

My sense is that all that is happening now is a gigantic CYA exercise, so that when SHTF months from now, everyone can point the finger at someone else and say it wasn’t my fault.

I’m writing and posting this before the “magical” moment the world finds out what “The Bernank” has up his sleeve. In a very real sense, in the long run I don’t think it will matter much. The Fed wants interest rates as low as it can get them, thinking this is just what the economy needs. These people are stuck in the 1950’s.

What the economy needs is for Government, at every level, to get the hell out of the way and let people do what they want; this paradigm just isn’t programmed into the elites running things. No, I absolutely need for you to tell me what to do.

So, we wait for the skinny bald guy to tell us which way the wind is blowing and how he is going to make everything OK. Please, I can't stomach the Q & A session with the fawning financial press after the rate decision. Listening to guys like Steve Liesman makes me want to puke. I don’t know about you, but as for me, every time these guys lips move they are lying.

Only sure thing I know is that the math doesn’t lie. We are one day closer to that moment when the entire system collapses from its own weight. Debt doesn’t grow an economy; productivity grows an economy.

In the government dictionary, productivity is defined as money that someone makes that we can confiscate and then pass around to our political pals, who then donate back to us so we can favor those who “see the light”.

Welcome to the Ponzification of Amerika.

Have a good day everyone.

-vegas

AND THE WINNER IS …?

                             “Vanna, Show Chip What He Won”

What if they had an election and it didn’t matter? Kind of like an NFL Super Bowl overtime coin flip that lands on the ground on “edge”; and you flip it again and still it lands on “edge”. The Greeks couldn’t collectively decide this past weekend who they wanted in charge to sell the country down the proverbial rat hole to the banksters.

Well, nobody asked me … but ….

They could let the Neo-Nazi “Golden Dawn” party run security and law enforcement; the radical leftist party “Syriza” could be in charge of education [just like in Amerika] and welfare; the communists could just hang around and cause trouble and offer nothing; and the “New Democrats” conservative party can run the country and be in charge of finance. What’s not to like here?

Like Butch Cassidy once said, “I got vision and the rest of the world’s wearin’ bifocals.”

Then there’s gold; as nasty a market as the political rhetoric coming out of Europe. After what happened to me on Friday …I can’t tell you when the next time I will trade this. To recap, for those of you who don’t know, I was up 5% and then I was down 12% within seconds. Did I mention I hate gold dealers?

Watching Greece is like watching a soap opera on TV; no matter how long you watch nothing ever gets solved. It just keeps going on with infinite iterations of adulterous affairs, back stabbing, and people selling out for the money. Geeeeesh, what else is new? Sooner or later you just have to walk away because you can’t take it anymore. It’s just the same old crap.

So, no new coalition is going to be formed to run Greece and “new” elections in 2 months to do it all over again. Meanwhile in Spain, yields on 10 YR. toilet paper are over 7% and rising; in Italy, yields on 10 YR paper is over 6% and rising; and in Ireland they want to “renegotiate” their bailout.

As it says in the Bible; “Nothing new under the sun.”

The markets now are in no mood for “happy talk” from the bozo’s running things; they want concrete plans, not spin. Expect the half-life from spin to get shorter as time passes this week.

Oh, and let’s not forget Wednesday “the Bernank” is up on tap, and he better show the markets some love with QE3 or else. Markets are looking for at least $150 billion in new money printing stimulus for the prop trading desks at JPM and Vampire Squid.

Have a good day everyone.

-vegas

IT’S QE OR ELSE

                              The Bernank: Man Of The Moment

Next week, the world literally turns its lonely eyes to the Mariner Eccles building for more “Hope & Change”.

“Ohhhhhhhh, Chalky Soetero is giving his umpteenth campaign speech?”

“Errrrrr, not quite.”

The world is hoping, praying really, that Weimar Ben opens the money printing monetary easing floodgates at the June Fed meeting. As with all things, the devil is in the details, and even if he comes through, the key will be if it was enough. Hide the kids if he does nothing.

The monkey wrench in the equation is Greece; with a newly elected socialist government only a couple of days old, and ready to tell the banksters in Brussels to go pound sand, how much of the taxpayers money does Ben give away?

Not to worry, Vampire Squid [GS] will let the moneycrats know what to deliver early next week before the meeting. The real question is which Belgian or French caterer is doing lunch. Remember, “The private sector is doing fine.”

Gold especially is subject to the “buy the rumor sell the fact” mantra of Trading 101. How many times have I warned [and been right by the way] that the rock gets rolled up the proverbial hill, only to be rolled back down when the Central Planners sense the public is now just a tad long the yellow stuff?

And on cue today, the EURUSD put on a blistering short covering rally because of course too many people are short the pair. Forget the disappointing retail sales figures; it’s all about QE and the “Hope” the Fed bails out Europe and saves the day; the “Change” of course is that something but failure will be the result. Now that’s what I call “Hope & Change” trader style.

Too bad it won’t change anything because Italy is next; say goodnight Europe, the party is over in 3 …. 2 ….. 1

Have a good day everyone.

-vegas

LET THERE BE LIGHT

                                       A Moment Of Clarity

Perceptions are everything; reality is nothing. The former is fluid; the latter is fixed.

Today, we know 2 things we didn’t know yesterday. The first is that Public Sector Unions are toast [thank you people of Wisconsin]. It was an impressive victory [about 8 points] for Scott Walker, the incumbent Republican Governor, and a total rebuke of spend, spend, and spend some more [of your money] union thugs.

Take away union vote rigging in libtard nation Madison, and decaying corrupt Milwaukee, and the margin of victory probably really was on the order of double digits.

A world away some hours later we get the Vampire Squid Alumni, Mario the Great, holding his usual ECB presser after the ECB formally met to discuss monetary policy for the Eurozone. Like Greenspan, and all true great economists, he said nothing better than just about anybody normal.

“Spin it all you want Mario, you have no clue what to do to get Europe out of its mess.”

Which brings me to gold: it’s now $100 off the lows on the heroin hopes of QE3 on June 20 from our buddy Weimar Ben. Anybody but me ever hear of the adage buy the rumor sell the fact?

From a trading standpoint, who isn’t already long gold looking for a pop up if we get the anticipated money printing easing? The Fed’s street mouth piece, J. Hilsenrath over at the WSJ [Wall Street Journal] confirmed it yesterday. This guy leaks more info from the Fed than “Deep Throat” ever did on Nixon back in the 70’s. So, when it comes, who’s gonna be there to buy it from you at a higher price?

And what if we don’t get it? Pleeeeeeze, don’t write me with what happened to your “protective” sell stop.

And what if that election in Dairyland is the start of something bigger come fall? With Chalky Soetero gone and a true Republican House and Senate, can and would the Amerikan economy be unleashed for growth and maybe a balanced budget? I dunno, we’ll see.

What I do know is this: gold is not a one-way street. Jumping back in the vegas hot tub time machine once again, I take you back to this exact moment on the calendar 32 years ago. Gold has come off its historic highs in January of $850 / oz.; pessimism is high, Carter looks like a shoe-in for re-election, and then gold bugs are talking about price levels for gold that make people’s eyes glaze over, and budget deficits are huge and growing.

Then, an interesting thing happened; Reagan was elected and set off the 80’s boom and gold went into a 20+ year bear market that saw prices back at the $250 / oz. level.

Funny thing about history; it tends to repeat itself.

Have a good day everyone.

-vegas

CHOOM COUNTRY, CHOOM MARKETS

                                Official Presidential Limousine

Our Narcissist-in-Chief spent the better part of his youth using/abusing drugs and alcohol. I’m sure he still has a clear mind. After all, if you intentionally wanted to economically destroy Amerika what would you do any different than he has done?

It looks like the gold market too is in some kind of drug induced state. Take today for instance; where else can you get 4 $5 rallies, a $7 rally, 2 $5 breaks, and to top it off a $20 break, all within 2 hours? And, the day has barely started! Obviously, some people need to clear their collective heads.

Maybe it’s from spending too much time in the Preezy Limo trying to suck in “bud smoke” off the roof. I dunno, just askin’, because what we are seeing in gold is pure unadulterated account destruction going on at the retail level. Open interest is dropping for a reason; nobody can handle these wicked spikes/drops that come out of nowhere multiple times during the U.S. session.

As if you needed to be reminded, gold has always had a reputation for stop hunts and dealer games. Throw in slippage on fills and you have cooked up a recipe for disaster. You really want to risk your account for a trade?

Meanwhile ….. over in fantasy land Europe, the Pol’s still pretend and play around like a solution to the continents problems are at hand. What they are missing is simply this: it’s not a liquidity problem it’s a solvency problem. Greece is gonna cost Europe a trillion Euros; in a country with roughly 11 million people, even if they were better workers than the Germans, there is no way that amount of money owed by 11 million people evahhhhhhhh gets paid back. Extend and pretend all you want, it ain’t gonna happen. Eat the losses and let’s get on with it.

But sadly, that these Pol’s would allow people for generations to suffer so that greedy bankers who made bets can recoup their collective bond losses at the public’s expense is nothing short of criminal. And until this changes, nothing is going to save Europe.

Tomorrow is NFP Friday; my favorite time of the month. Based on data received lately, I don’t know how the liars at BLS [Bureau of Lies and Statistics] can spin there way to a rosy number. In the “choom equity market” though, remember that bad news is good news because Weimar Ben stands at the ready for more QE. Nothing makes the prop desk traders over at Vampire Squid drool more than the thought of more money for the stock market.

Because as everyone knows, you are too stupid to know how bad things really are if only your stock portfolio is up and showing a 0.001 % gain. Nothing else matters, and with this new found sense of financial delight, you will happily [and blindly] go out and spend money and vote for Chalky Soetero in November. See how good things can be if only you would let them be good?

Back in the real world, away from Chalky Soetero and his “Choom gang”, things are a lot more clear; the jobs situation is worse, the inflation situation [especially food] is worse, Europe is in the process of going over a cliff, and of course FaceBook stock is 30% [or more] lower than a week ago.

So, put on that Bob Marley album, sit back and relax; I’m sure things are gonna work out.

Have a good day everyone.

-vegas

A LINE IN THE SAND

                              I Bet He Loves To Trade Gold Too

It takes a brave soul to be long gold these days; you got the “Lemmings in Asia” throwing in the proverbial towel, a disintegrating Europe that sells everything, and of course the ever present Central Planners along with the JPM prop desk.

However, Vampire Squid [GS] is telling their Muppets that this is the time to buy gold.

[ http://www.zerohedge.com/news/goldman-sees-%E2%80%9Ccurrency-last-resort%E2%80%9D-15-1840oz-6-months]

Here’s my question: Is the recommendation for real, in order to really enrich clients, or is it a ploy to be on the sell side when the Muppets take their advice? Based on past history you would be better off running quickly from The Squid.

But has anything really changed to warrant a lower price in gold sub $1600? Me thinks not. As hard as it might be to get gold back over $1800, it might be even more difficult to get it lower than the $1550 area. Governments all over the world have the printing presses going full tilt, debasing currency on a monthly basis that 5 years ago you would have thought literally impossible.

I think you have to give gold the benefit of the doubt [buy breaks and be long sub $1600], up until the time it breaks [if it ever does] the $1550 area. It may be a tough hold, but fiat creation is everywhere and not going away. Anybody that thinks Europe or the U.S. will opt for “austerity” is nuts: they will print money until the revolution forces a change.

A definitive break of this area [by more than $10 or $20] and I think gold has some real problems going forward; not the least of which would be it would be lower on the year. What would real panic selling look like? You’ll find out if it goes lower on the year.

Have a good day everyone.

-vegas

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