Warm & Fuzzy Markets
Puppies snoozing make me want to take a nap.
Welcome to gold trading circa January, 2012. Do I still need to remind everybody that volatility has dropped from 2011?
I came into trading today and was hit with plenty of tangential trading issues. First up was the spread in XAUUSD when I started to trade at Midnight [Chicago time]. The average spread at HotForex is $0.38 between bid and offer, and I’m immediately staring at $0.63 to as much as $1.26 within the first hour of trading.
I know from experience that when I see stuff like this, dealers are up to no good. Chatting with the brokerage house is a complete waste of time and energy because all you are going to get is the standard corporate crap of “the spread is determined by the liquidity providers and there isn’t anything we have to say about it”.
Add to this Asia is still on Holiday for the Chinese New Year, and when these guys get through partying and decide to get back to work is anybody’s guess. Maybe February will see them back, but for now ranges in Asia have collapsed and really give no clue as to direction or momentum going into the European open.
We came into the day in “buy mode”. We get our first buy signal at the 1:15 AM [Chicago time] candlestick at 1670.50, but the problem I have here is that I’m staring at a $0.70 spread [which should be about 0.35]. Now, I know if it stays like this I’m going to just not trade, because I’m not willing to line the pockets of the dealers because they need somebody to pick up their Christmas party expenses. But guess what? The market goes nowhere fast and just drifts slightly higher and then slightly lower.
Watching the market drift here, I want to be long [because I got the signal], but the day’s range is unusually tight and spreads are still not stable. I’m basically competing with the algorithm for best prices.
By the 2:30 AM candlestick, spreads are still slightly out of whack, but reasonable at just above $0.40. With the market at 1670.80 offer, I hit the market buy button. I’m only getting in a few pennies from where the algorithm originally said to get long. However, I get filled at 1671.50 on a market price spike.
“Hey vegas; thanks man for that order. I had a bar bill from New Years that had to get paid. Thanks man!”
So, right out of the gate I feel as though I’ve been taken out to the woodshed and beat with a stick. Add to this internet service interruptions, the MT4 trading platform crashing a few times, and no real market trading that I can see on my screen, and you got yourself a recipe for “why didn’t I stay in bed?”
The good news is that the algorithm is long and our stops are in, so no matter what happens next, it’s only one trade and it’s a longggggg day.
So, I’m long from 1671.50 at 2:30 AM [Chicago time]. Stop on this trade was placed at 1668.00.
From where I’m sitting, we are almost half way through the trading day, it’s dull as dishwater, and volatility seems very low. I’m looking for the price spike [s] that can get me out at a good price. At the 3:25 AM [Chicago time] candlestick the market spikes. This is exactly what I’m looking for to get out. As long as volatility remains below normal, although I’m looking for algorithm signals, I’m not letting the liquidation opportunity pass me by on a spike.
At 3:28 AM [Chicago time] I liquidated the long position at 1673.52 for a gain of $2.02 / oz. on the trade.
I’m staring at a market that doesn’t seem to want to play today, so I’m taking my chips and calling it a day. Gain on the trading day of $2.02 / oz.
It’s not enough for a Ka-Ching, but if you would just “run the numbers” Skeptic Cat, you would see with the leverage I use that in a relatively short period of time you have the personal and financial freedom you desire.
I get accused of going for “chump-change” all the time by traders who have no clue. Others will say I leave too much on the table and call it a day too soon. It’s OK; we need guys like you to provide money to the marketplace; somebody has to.
Have a great day everyone!
-vegas
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