THE DAY BEFORE

                                      The Holy Alter Of Cntrl-P

Today is the day before Weimar Ben unleashes the next great wave of money printing and currency debaement easing; the only question is how much?

Today’s action in EURJPY felt very much like short covering; long pauses and very quick bursts upward. Sure, Spanish bonds rallied a little, and Europe’s Pols talked smack all day long about how things were progressing towards a satisfactory resolution, and for good measure even Greece looks like a patchwork government can be formed by tomorrow. Uh huh [and now read my post on the other blog and ask yourself if Nick is going to pay anybody].

It was the 7^th day in a row locked into an inside range; my feeling is the breakout will be rather dramatic, and tomorrow provides the perfect scenario for that to happen. With record shorts all over the place, I think we might see an explosion up in EURJPY [maybe the 102 handle] if Weimar Ben delivers the easing goods.

My intent is not to raise the fund NAV a few pennies at a time, but today’s trade gave no buy signals and came within 8 pips of a sell signal. USDJPY [the bottom part of EURJPY] had only a 23 pip range today, making EURJPY price moves almost entirely dependent on EURUSD. Without some kind of impetus, other than short covering, it’s very hard to maintain long positions given the bearish sentiment in the market. Thing is, when it turns and the short covering is over, you end up with no friends in the market to help you get the prices you want getting out.

And, as I write, the latest rumor dujour of Greece-and-Spain-are-saved has been denied, thus eliciting the obligatory 20 pip immediate dump in price in 1 second.

My gut feeling tomorrow is “The Bernank” will run with some kind of shock and awe that surpasses market expectations of easing. This should prompt a vicious dollar sell-off and stock market rally. We will see around Noontime tomorrow.

We had one trade today that produced a few pennies from the long side. Not what I want, but with no signals today from the algo, it’s what we ended up with.

Ending NAV:  0.8975

Have a good day everyone.

-vegas

IT’S BE CAREFUL WEEK

                                 And We All Want To Be Happy

Since the Spanish bailout was announced 2 Sunday’s ago, EURJPY has been capped in the range of  98.70 - 100.90. Today was the 6^th day in a row of being “inside” this range. It is not at all common to be locked into this type of arrangement, especially with all the news of the last 8 days. What we have seen is gap straight up, followed by straight down turn-on-a-dime, rinse and repeat.

We have been through 2 large gap up openings on Sunday, followed in the European session of selling. Gap openings in general skew the algorithm, and make trading difficult. Add to that the large spreads usually seen at the start of the Asian session, and you have a scenario for sitting on the sidelines.

We did get a sell signal in Asia, but I’m not taking any signal where the spread is 8-10 pips versus the normal 2 ½ - 3 pips. We also got some buy signals today, but after the first one fizzled and left us with a few pennies of profit before going lower, I ignored the subsequent signals.

If I had followed every one, I probably could have added a few more pennies, but I would have to have been very nimble. Outside of Asia, there were no other sell signals for the day for us to get short.

In general, nothing has been solved in Europe; in fact considering Spain and Italy it is getting worse. Unless Germany agrees to something not in the equation at present, I can’t see the Euro sustaining any rally. With “risk” generally off, it makes it difficult for USDJPY to rally as well [Yen weakening]. So, I prefer selling the rallies with an algorithm sell signal.

It’s also “be careful week” because of the Fed meeting on Tuesday and Wednesday, with an announcement around Noontime on Wednesday with their easing plans. Of course, news out of Greece, Spain, and Italy will influence prices as we move through the week.

While I would have preferred some better trade opportunities today, what we got today was sure better than Friday. I still haven’t quite gotten over the gold debacle, and the absolute insanity that rules that market now.

The only other time in my entire 35 year trading career that things got that stupid, in such a short period of time, was in the crash of ’87. Let it be another 25 years before the next one shows up.

So, whoop-de-whoop, we made a few pennies today.

Ending NAV:  0.8968

Have a good day everyone.

-vegas

IN JUST A FEW SECONDS

                                            Yea Mom, I Know

I can accept the losses I had in EURUSD yesterday; what I can’t accept is what happened in gold this morning near the U.S. open. I have stated before just how dysfunctional gold has become; today just took the cake.

I had gone overnight positioned long gold; I had a long position slightly larger in size than a short position to get around the minimum amount for trading and make sure we weren’t too over leveraged.

Down $5 to a new low, straight up $14 to a new high, down $15 to another new low, then back up $5 to the middle; all this in a matter of minutes. I’m sorry, this stuff is no longer tradable, and until I see definitive evidence the dealer games aren’t going to hurt me, I refuse to trade gold any longer. Period.

How bad was it?

Usually, my absolute upper bound for losses is 10%. Because of the nature of the gold trade today, the way stops are set off and subsequent quotes gap in a microsecond, our loss from yesterday and today is about 12%. The difference between being up 5% and down 12% in just a few seconds. That isn’t trading, it is gambling.

Ok, so we got whacked around some. No matter what I add to what happened, the outcome is the same, so it is time to move on. Greek elections on Sunday will make Sunday evening Asia trade interesting to say the least.

The only thing you can do as a trader when something like this happens, is to not cry about it and whine, but to adjust and get back to the algorithm in the currency pairs and focus on the next trade; and not think about how some gold dealer screwed us beyond belief.

Ending NAV:   0.8967

Yea, it’s ugly, and I’m not happy about it, but it is time to look forward to Monday and start to make the NAV go consistently higher again. It’s all I can do after the mugging I got.

Have a good weekend everyone.

-vegas

TRADING UGLY

Sorry, I’m in no mood for a pic.

Algorithm got clocked today. Every time I took a signal in EURUSD, it went in my favor for about 2 pips and then reversed with a vengeance. That’s the bad news; down about 7% total for the day in Euro.

The good news is we are long gold, and I’m trying to ride the profit wave up. So, until I get out of the gold trade, the NAV is pretty much meaningless. Long gold from 1619, and if it goes lower I will add to the position.

I’ll post when gold trade is done on Twitter and then post results here with updated NAV.

Until then, have a good day everyone.

-vegas

SO, YOU WANT TO BE A MILLIONAIRE

                                                 Listen Up

It’s not meant to be a rhetorical question. So yea, that’s why you trade or that’s why you want to trade, or that’s why you want me to manage some funds for you.

Now, if you are familiar with my work, and have read some of my stuff, you know I am paranoid when it comes to risk. I want the most from risking the least.

Some months ago, I wrote a computer program in Python that deals with projections from trading. If you were to do the calculations by hand, with calculator, it would take you many hours and reams of paper. Now, I have known the data I’m going to share with you for many years; as a young pup trader it was drilled into my head by my mentor Burt, as well as veterans from the trading floor.

Here’s the first vital question I want to ask; with normal volatility and leverage, how many pips on average can I expect to reasonably make from a day of trading? When you consider that average daily ranges are between 80 – 130 pips, is making 10 pips unreasonable? No, I think it is entirely doable [all daily profits and losses averaged over time].

Here’s the second vital question I want to ask; what size leverage should I use? Being conservative, I would say between 5X-8X on the low side to 15X-20X on the high side; nothing past that.

Given the criteria above, let’s look at what happens when you make 10 pips per day [average] and use conservative leverage [8X]. Since Forex FS requires a minimum deposit of USD $500 to open an account, let’s go with that figure for an opening balance.

Now, do you remember 6 years ago? Unless you are in your early twenties, 6 years for most of us seems like a heartbeat. I remember fraternity pranks from 40 years ago like they were yesterday; please, 6 years ain’t nothing.

So, now that you have your trading goals laid out, what does your account look like at the end of 6 years, assuming you didn’t add or withdraw any monies and maintained constant 8X leverage along the way? How about $ 1.3 MILLION !!

If you started with $1,000 it would be $2.9 MILLION !!

If you started with $500 and averaged 11 pips [instead of 10] it would be $3.0 MILLION !!

If you started with $1,000 and averaged 11 pips [instead of 10] it would be $6.5 MILLION !!

Can you see why every pip matters? Can you see why NOT losing is as important as winning for your average pips?

AND HERE IS THE KICKER ……

These figures already take into account my incentive fee of 30% along the way: they are NET figures.

Now, this doesn’t mean that when I trade I panic and hit the liquidate button when I see 10 pips. What it does mean is that I know the importance of every pip in trading and that all those people who taught me were right. Every day I make more than 10 pips, it gets everybody closer that much faster!

So, for all of you people out there who are not in my PAMM, you should be if you want these kind of results. Now, I know there are people that are going to say, “Well yea, but what if you have a mediocre month or two”? OK, so what? It takes a few extra weeks to get where you want to go – where else are you going with complete funds safety and total 100% transparency?

Of course, nothing in markets or trading is guaranteed; you already know that. I don’t look for guarantees, I look for opportunity. So, no matter what your age is, or what you do for a living, you probably have goals and dreams that need to be funded.

My question to you is this: what are you waiting for because you are only a few years out from changing your life.

Going into today’s trade, I knew the event of the day would be the retail sales report at 7:30 A.M. [Chicago time] and that anything I did prior to that could be wiped out in a second when the report was released. Overall, I did 3 trades today [all in EURUSD] and made a fraction over 8 pips.

The algorithm buy signals I didn’t trust that much because they came at higher levels in a market that is decidedly bearish towards EURUSD. I didn’t make as much as I would have liked, but hindsight is always 20/20. For the day then, we made about 0.4%.

Daily Recap

Start NAV    1.0119

P/L:              0.4269%

End NAV     1.0162

For those of you that would like to participate in the PAMM, email me at vegasxau@ymail.com for details.

Have a good day everyone.

-vegas

MARKET INDECISION

                                   Really; My Thoughts Exactly

The currency pairs put in the “Flying Wedge of Death” formation today; pick your pair. In hindsight, it was indecision Tuesday from the get go.

I made 3 trades today; one was a slight winner in EURUSD, one was a slight loser in EURUSD, and one was a slight loser in EURJPY. Overall, losses were about 1%.

Algorithm signals today were not winners very long. I’m looking for bigger gains than fractions, and as a result we have to hang on to positions longer. Generally speaking, I’m looking for gains that will produce 2% - 5% or more, while holding losses in the 1% range or lower.

Daily Recap

Start NAV    1.0241

P/L:             (0.0122)

End NAV     1.0119

We will attack it again tomorrow. Have a good day everyone.

-vegas

TRADING STARTS AGAIN

                                               We Begin

One of the things I’m going to do here on the web page is start a hypothetical NAV [Net Asset Value] for PAMM participants. I think it is important and valuable for 2 big reasons; 1) it allows a day-to-day look at what the fund is doing on a percentage basis, thus cutting threw the clutter of numbers over time when people deposit additional funds or withdraw funds, and 2) it’s easy to follow.

Each day [and week] I will provide a recap of what we did, what the P/L was, and the new NAV for the day. As a PAMM participant, all you have to know is what the NAV was on the day your money joined the PAMM. NAV was started at the beginning of trading today at 1.00 [as in $1.00]. If you had $1,000 in the PAMM at the start of trading today, your number of hypothetical shares would be 1,000. If the NAV is 1.10 when you deposit $1,000, your number of shares would be 909.091 [1,000 / 1.10].

Now, obviously there aren’t any shares, as this is only an accounting scheme. But it makes things extremely easy for comparison purposes because you now don’t have to worry about other people’s money taking the percentages up or down based on deposits and withdraws. Everybody comes in or out at the NAV times the number of hypothetical shares.

Over time, all it takes is a glance at the NAV to know how you are doing. For example, you came in to the PAMM at 1.05, and a little later it is at 1.25, you know you are up about 16%.

Now, I want to be clear on this point again: this is only for accounting purposes to make things easy for you. It is not meant to be an exact, to the penny, calculation like this is some mutual fund.

Remember, you always have access to your balance at the brokerage house, so you can see the exact amount of balance.

We started the day with a huge gap open higher in Asia, due to the perceived success of the Spanish bailout. EURUSD and EURJPY both opened over 100 pips higher. From there, it was all downhill.

Our main trade of the day [I had 1 scratch trade, 1 trade made a couple of pips, and 1 trade lost a couple of pips] was selling EURJPY and taking about 25 pips out of it before it hit the first algorithm exhaustion point on the down side. Net result was a 2.41% gain on the day.

Daily Recap

Start of Day NAV:  1.00

End of Day NAV:   1.241

Gross % P/L:          2.41%

Have a good day everyone.

-vegas