TRADING TROUBLE

                              Some Days Are Worse Than Others

“Oyyyyyy”.

As I detailed over on my other post, markets today were in the FWD mode. Take your pick: crude or gold.

First Crude.

Thank you Chalky Soetero for the “I’m releasing oil from the SPR” to 35 minutes later the White House releasing a denial. Can you say floating a trial balloon and in the process screwing a ton of retail specs.

Remember the first rule of trading: nothing the government does is for your benefit as a trader.

Sure, crude put in its range [240 ticks], but today size didn’t matter. Looking at the way the range was put in only courted disaster. First dropping $2 / bbl in 5 minutes, then rallying most of that back on the White House denial; if you made any money at all in crude today, thank your lucky stars.

With all that happened, the one positive of the rumor is the gap on the daily candlestick has finally been filled. If today’s low is taken out in subsequent days, it could spell a whole lot more weakness than you have seen in the last month or so.

Now gold.

Nothing really happened until 11:30 A.M. [Chicago time] when gold went on a straight up $20 tear as Europe was closing, before backing off.

The trade has become very difficult, not from an algorithm standpoint, but from a dealer standpoint. Spreads are widening, and slippage is increasing, as it should be obvious to all traders that dealers want more income to compensate for extremely quick moves. They aren’t going to risk their income so that they can give you a good fill.

As I stated yesterday, if you’re buying on the way up or selling on the way down, you got a real problem from slippage.

Once again, during the “busiest” times of the day when both Europe and the U.S. sessions are concurrent, trade is very choppy or completely one-sided. The algorithm is in “buy mode”, and I had a “free trade” going until it came back and I took a small profit. Incremental gains again today.

While I would prefer to let algorithm signals take me out of a trade, market conditions at the moment mean slippage of maybe as much as $5 - $10 / oz. if the market turns before the algo responds. That is not something I am willing to tolerate; therefore the sometimes “quick flip” in the trade.

Have a good day everyone.

-vegas