TYPICAL FRIDAY TRADING

                                    Some Things Never Change

I made a couple of trades today; one in gold the other in EURUSD, and we added about a 0.1% gain. Once again, everything was pretty much in Asia and at the start of Europe and very little in the U.S. session. Asia is becoming either totally active or totally dead and not much in between. Remember just a few short days ago when Asia & Europe combined had a $4 range in gold?

Trading in gold is becoming a nightmare as slippage and microsecond moves just skew everything. Add up slippage on both sides of my trade today and you got about a $1.60 the dealer just pockets. Going forward, here at HotForex for sure and most likely at our new PAMM location, trading in gold I will use limit orders to get in a trade and floating stops to get out. I’m not willing to play the slippage game any longer.

Once we get into next week I believe you will see fund performance improve as I do more currency trades and less gold.

One has to wonder; can EURUSD and AUDUSD hold any kind of rally going forward before we go much lower? It very much looked and felt like a reversal day in both pairs was in the cards from around the start of Europe. Here’s the problem: gold is up $85 / oz in about 35 hours and EURUSD is down a few pips, but AUDUSD is down about 60 pips or so. Well, if gold rallies $85 and AUD is still lower, what’s it gonna take to get it higher?

AUD is down 12 out of the last 15 days, 6 days in a row, and so you would think with gold screaming up AUDUSD short covering would kick in and take it at least 100 pips higher. “Errrrrrr, no.”

Europe of course has its own problems, and more likely than ever, looks to go lower. It appears today EUR will close higher and we will see what the weekend brings, but rallies higher next week I will definitely sell.

At some point AUD will rally and more than likely it will be a sell there also. The problems in Europe and China really impact AUD and its economy. The fact that it can’t rally when gold rallies $85 in a very short period of time tells you all you need to know as AUD is considered a “commodity” currency.

The history of AUD will show that this currency pair can really run when there is a real change in the AUD economy. 1200 – 1500 pip [and more] straight runs have a common occurrence throughout the last 10 years of price action. Looking to buy AUD just because it’s been down 6 or 7 days in a row is dangerous.

Like Euro, I’m looking to sell any and all rallies here in AUD. It very much looks and feels it has a long way to go before it bottoms; and if China slows down [probable] and Europe implodes [highly likely] this pair could be sub 90 in no time flat. Looking at all the currency pairs, this looks to be the most overvalued pair I can see.

As most of you know I hate Friday trading; it has become the last hour of trading back before the internet took over and pit trading ruled. I refuse to get stuck in something that I can’t get out of and then have to hold over the weekend; this isn’t gonna ever happen. I’ll trade early and into the U.S. session, but before Europe closes I will at some point decide not to open any new positions.

I have been notified by our new brokerage house that some of you have opened new accounts and these accounts are awaiting funding. By the end of next week I am assuming some current PAMM clients will have accounts funded in the new PAMM. Sometime during the last week in May [starting the 28^th] I hope to start trading the new PAMM.

For new prospective clients to the new PAMM, send me an email if you are interested and I will send details.

Have a good weekend everybody.

-vegas

Update 3:15PM Chicago Time

In case you were wondering why I have Friday rules, I present EURUSD as prima facie evidence of what the Central Planners can do when conditions are thin and stops are on the plate. At 2:00 P.M. we had a melt up stop hunt in the EURUSD of about 60 pips within a few minutes on zero news.

Whatever can make your weekend can destroy your weekend. I wonder how many Euro traders are crying in beer as I write; only it won’t just last a few minutes, it will be there all weekend into the open on Sunday night. Been there done that once in 1980; ain’t ever happened since.

Sometimes it may seem to those who are new to trading and creating wealth that my methods can be restrictive and that I may miss some profit opportunities for no apparent reason. Lesson #1; first do no harm, then make money. I rest my case.

The Dow 30 closed near the lows of the day as FaceBook closed at $38. Another pump and dump scam Ma & Pa Kettle will eventually lose money.

Over the weekend [probably Sunday] I’ll have a special post. Tune in for details.