WHERE DO I START?

                                           Words to Live By

If you haven’t read my other post, go do it now and then come back; it will give you some much needed perspective on today. http://vegasxau.blogspot.com

To be perfectly honest, I’m getting sick of dealing with side issues that have nothing to do with trading. For the last 3 – 5 weeks it has been something almost every day. It’s like every day I start by pulling a non-trading problem out of a hat.

“Here vegas, pick one!”

Today, I had to deal with the brokerage house over ridiculous gold spreads that lasted from the Asian open well into the U.S. session; over 13 hours. When I wanted to buy and get long the spread was $1.45.

You really want me to trade with $1.00 - $1.50 spreads? Sorry, can’t do it.

Problem has been fixed [so they say], but by the time they got off their collective butts and did something about it the day is shot time wise.

Crude oil? What they did today in crude is almost criminal; $2.40 / bbl spike in 2 minutes. If you were short, the only thing that could have saved you [in spot, not futures] was a stop; otherwise your account is probably gone.

The culprit? North Korea babble about firing a rocket. Unreal.

If these issues can just go away, the adjustments I have made with the algo to deal with this type of trading environment will produce some very good results. Today would have been a very profitable day if only. But that is water underneath the bridge; it’s only one day. Time to focus on next week and trading.

I need the weekend to cool off. I’m hoping yours is enjoyable. Have a good one everyone.

-vegas

Trading Hell

                                        Gold Dealer As A Kid

Today felt like a low was put in for gold. We’ll see of course, but it sure felt like it. In the 2 hours between 7:30 A.M. and 9:30 A.M. [Chicago time] market trading was as chaotic and crazy as I have ever seen it; and having done this for 30+ years, that’s pretty crazy.

The fact that I lost a few pennies almost seems like a victory today.

Slippage is becoming a major issue in trading. The dealers are moving prices faster than I have ever seen it in the electronic trading era. Stops are also becoming a major issue as most of the moves through support and resistance result in huge dollar price gaps.

I’m hoping things can settle down a bit, but I have adjusted my trading to deal with what we have seen today. I’ll be playing more of the daily range within the confines of the algorithm. Look for bigger volumes being held for longer periods of time as we try and take advantage of the volatility. I’ll also initiate more trades earlier in the day so that we can get on the right side of the market for bigger moves.

Have a good day everyone.

-vegas

TRADING HAZARD

                             The Little Guy Learns Early In Life

I made a good chunk of the money, which got hijacked yesterday by the gold dealer, back today in a market that can only be described as psychotic. Pick your spot; liquidate on the spike. If you don’t, count the seconds until you are underwater on the trade.

Oh yea, add to this dealer slippage and it becomes a professionals game of hit and run. You have money on both sides that have thrown a lot at this market, and are pushing their financial weight around influencing prices aggressively.

This was the 5^th day in a row gold was basically stuck in a $20 range. We get knee-jerk spikes/drops that take us to the edge of the range and then it’s a very quick reversal to the other side. This is a market that doesn’t have any idea where it wants to go.

And just when you think there is a correlation between gold and whichever other market you watch, BAM! – whoops, sorry, that ain’t gonna work anymore.

Watching crude oil today could have made you wonder if the circus is hiring. Very tight range all day and night with 2 spikes that literally came in 15 minutes each and put in 100% of the day’s range of 156; no test of yesterday’s low [not even close], only knee-jerk buy stop induced trading after hours of nothing. Yuck. And here we are, smack dab in the middle of the approximate 18 day 104 – 108 / bbl range.

I don’t like these trading conditions any more than most of you; last time I can recollect things were like this was in 2005, where it lasted about 3 – 4 months before returning to more normal conditions. Making incremental returns isn’t why I’m in the trading business for over 30 years; but neither is losing 10% or more of my account in 10 minutes.

We simply deal with it; you absolutely can’t force things. In retrospect, this is the market’s way of taking back money you took from it in earlier periods of trading. We take what the market gives us and trade accordingly.

I may get a paper cut now and then [can you tell I’m still steaming over yesterday’s fills and action?], but for the most part I don’t give money back to the market.

Have a good day everyone.

-vegas

HIJACKED

                                          Me & Gold  - BFF!!

Getting hosed and held hostage by a dealer is no fun, and today was my day. The bullet had my name on it; the only good news is that, dollar wise, it was fairly insignificant. The gold dealer never even kissed me, instead holding my order for a full 2-3 seconds before filling me a good dollar away from where I thought I was going to get filled.

Of course after that it was straight down to my stop a few dollars away, and you have the makings of a nice hijacking. Yes folks, even I get stung by these criminals every now and then. Nothing you can do about it, as there is absolutely no rule of trading that says it can’t go a lot farther against you in a very short period of time.

So, we take the paper cut and move on to tomorrow.

Crude put in its range and I had a few trades here today; lost 2 trades made it almost all back in the next trade off the low of the day. Pretty much a wash in the 3 trades.

Rumors of China being overthrown, Saudi Arabia pumping more oil to ease supply fears, and the news from a large miner that demand of iron ore is easing in China, all factored into today’s trade.

Going forward into tomorrow I’m looking to buy weakness in crude; playing the daily ranges that have been in effect since the end of February. Instability in Iran, supply problems, and the world awash in excess liquidity are all factors in supporting crude.

Only a move below 104 / bbl. would change the overwhelming bullish tone this market is exhibiting. While gold is getting walloped almost on a daily basis, crude has a better fundamental outlook at least over the next 5 – 8 weeks as we head into the peak demand driving season for distillates in oil.

Rumors notwithstanding, I’d rather be long crude on breaks than try and be long gold and be subject to these whipsaws.

Have a good day everyone.

-vegas

PLAYING THE RANGE

                                           Yogi Trades Gold

A pretty dull Monday in Asia and Europe. Not much better in the U.S. session, but the range got extended to about $17 on a spike. Of course, the “Lemmings in Asia” put in the early high before Europe sold it off.

“Hey, there isn’t anything you can’t buy that Europe or the U.S. sessions can’t take lower and make cheaper!”

Until crude starts to put in its normal range [230 – 280 ticks per day for at least a couple of days in a row], I’m going to forgo commenting on it. I’m not getting involved unless it has volatility, and right now it is definitely lacking intra day.

I’m playing the range in gold, looking for those opportunities that expand a low probability range into something more normal [$16 - $23 / oz.] and then taking the money on the spikes.

From midnight until about 1:30 PM [Chicago time], the algorithm had 5 buy signals, 4 of which either broke even or lost money. The last signal would have gotten you back to break even with the rally that made a new high. However, this isn’t how I want to trade.

Until we get ranges and intra day volatility that is more normal, I will continue to trade the range and pick the algo signals that confirm a high probability trade or trades.

Today we had a nice trade that added an incremental return of about 0.4 %. I was only off a few pennies from the high when I sold before the market broke back a few dollars. In this type of current market, you can’t wait for the algorithm liquidation signals to get out; you are giving up too much money because of the spikes/drops that are currently in vogue. Take the money and run. Rinse and repeat often!

We make the dealers, hedge funds, bankers, and the rest of the retail field pay us.

Have a good day everyone.

-vegas

ELEVATOR DOWN ELEVATOR UP

                              Feels Like Your Typical Gold Trade

Six hours straight down followed by 3 hours almost straight up. Pretty much sums it up in gold today, as position squaring for the weekend almost guaranteed stops on both sides of the market would get taken out and shot.

I continue to pick my spots with low volume given current market conditions. While boring, incremental gains beat losses hands down. This too shall pass. Meanwhile, we move the proverbial ball forward.

So what’s the deal with crude? Again today, we have a market that is almost comatose; stuck in a very tight range until the end of the day when they squeeze weekend short positions to put in the range. Getting long and hoping they squeeze the shorts at the end of the day isn’t a strategy.

Have a good weekend everyone.

-vegas

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