CAN TRADING CONDITIONS BE ANY WORSE?

                     What I Really Need Is Just One More Problem

On Monday, I am going to address today’s trading issues. I’m going to hold my tongue for now; discretion being a virtue and all that. But come Monday ….

The fact that I made a $1.10 today is a miracle; truly, under the same set of circumstances I don’t know how anybody could have done any better. It could have been worse, and I am slowly counting to ten every 5 minutes to cool, what is otherwise a very hot cauldron of frustration, my temper.

But, like I said, I’ll have a lot more ro say about today on Monday.

Today was our last trading day at HotForex for our PAMM. On Monday [or maybe Tuesday at the latest], the remaining monies will be wired out and switched over to our new brokerage house in a few days.

Over the weekend, I’ll be updating and revising this webpage to reflect our new paradigm. I’ve got a few surprises coming next week so stay tuned.

Have a good weekend everyone.

-vegas

THE DAY BEFORE

                                      It Was That Kind OF Day

The day before NFP [which is tomorrow at 7:30 A.M. Chicago time] usually is a choppy affair. Complicating things today is the fact that most markets have been beaten down to a point where some kind of snap back rally is to be expected. Most of the Asian session and into the European session saw sporadic bouts of short covering in the Euro [EURUSD] where prices moved erratically higher.

As we moved into the U.S. session, we stayed within a few pips of the high for about an hour before the market started losing ground. Now, there aren’t many sure things in trading, but you can pretty much count on the high and low of the day to be very brief in time. Errr, except today.

This was the reason for not selling; we simply spent too much time there for it to be a high. What I was looking for from this area [1.2420] was a spurt of 10+ pips to a new high followed by a quick retreat; this I would have sold. Unfortunately, we didn’t get it.

Later, as prices moved to a new low, the algorithm did give a buy signal down near the bottom. I basically ended up scratching the trade [Ok, a few pennies when it came back] as I am reluctant to be long EURUSD in this environment. So, pretty much a nothing day except for a few pennies.

Tomorrow should be interesting as weak jobs data should prevail; question is how much does the market believe QE3 is on the way at the June Fed meeting? We’ll see tomorrow.

Over the weekend I will be making changes to this website to reflect our new PAMM. If you would like to participate, drop me a line at vegasxau@ymail.com for details.

Have a good day everyone.

-vegas

THE ONE-WAY TRADE

                                              It’s Never Easy

Right now, EURUSD looks to be a one-way trade; sell it anywhere and come back when it’s zero; history says otherwise.

Today we got a brief glimpse into what a market that is vastly oversold does when confronted with a rumor that makes no sense; up 50 pips in about 2 seconds, thus wiping out a whole lot of shorts who piled in earlier today.

We had a couple of scalps that were basically scratch trades and I have positioned in an EURAUD short position that I’m hanging on to over rollover; we are long AUD and short the EUR. We will see how this turns out, but it gives us a play on further Euro weakness with at least some upside protection with AUD [hopefully].

Have a good day everyone.

-vegas

Update 3:10 PM

I decided to close the EURAUD short position with a tiny profit and not take it through rollover. So, on the day we made a couple of dollars but nothing like I was hoping. Gold retreated and so did equities, and I'm thinking the only thing holding up AUD now, relative to the EURO, into the rollover is today's [Wednesday] 3 day charge for short AUD positions at 4:00 PM [Chicago time].

Update #2 4:05 PM

Continued erosion in stocks and gold after hours saw AUD make new lows into the rollover. Very good thing I got out when I did with profits.

A BAD DAY FOR SPAIN

                                               3 … 2 … 1…

It was a very slow day from the Asia open into the U.S. session. EURUSD only had a 60 pip range and gold was sitting there with about an $8 range at 8:00 A.M. Chicago time this morning. Trading was very slow, with action more like the stop hunt variety; sharp moves with no follow through in any direction.

Then Egan-Jones down graded Spain from BB+ to B, at about 10:40 A.M. and the race to the bottom was on; gold hurling down $30 before it was over [the last $10 a pure 100% dealer stop hunt] and the euro going down about 60-70 pips.

Earlier, on a buy signal from the algorithm, I got long EURUSD and we rode it up for about a 0.2% gain on the day; I got out when prices stalled but equities kept rallying.

Today was one of those days that really lacked any kind of trading action. Granted the ranges got put in, but not in the traditional way I would like to see. We get much better action when prices start making their move in Asia or Europe, then finishing up in the U.S. session.

This is our last full week trading at Hotforex. If you would like to participate in the new PAMM at our new brokerage house, drop me an email at vegasxau@ymail.com for details.

Have a good day everyone.

-vegas

PUMP & DUMP FRIDAY EDITION

                                  You Did What In The Euro?

I came into today’s trading extremely risk averse; A) it’s Friday, B) the U.S. has 4 day weekend with Memorial Day Holiday, and C) Greece and Spain are imploding. Just about every cross-current you can think of was in play today. To say the markets are nervous is a vast understatement.

Today I lost a #6 meal at McDonald’s. I gave it a couple of shots in the EURUSD and the market just wouldn’t go on the algorithm signal. If I had waited and given the trades more room [read more risk] they would have made us a little money, but at the expense of a much higher threshold for loss. Sorry, not today, and not this Friday. I’ll get the meal back next week. No biggee.

The algorithm actually performed very well in this Friday mess; at the bottom today in the EURUSD it gave a nice buy signal that I chose to ignore because of the weekend risk. But again, the risk in my view wasn’t worth the potential gain. I don’t like trades that are asymmetrically skewed against me.

For those of you who are relatively new to trading [5 years or less], I want to impress upon you the degree to which trading, these last couple of months, has evolved into. I often mention the “Flying Wedge of Death” [FWD], for the simple reason it is a big account killer. Double and triple reversal days, with large ranges, are simply a version of the FWD where the back side just keeps going instead of stopping; so, the “W” at the end is taller/lower.

I can remember years where you didn’t see 2 double reversals the whole year, and as I stated the other day I don’t think I’ve seen 5 triple reversals in 30+ years of trading; they are that rare in gold and currency trading. Now, in the agricultural and food commodities sphere, you see these all the time, but not in the financials.

As a professional trader, I know that my top priority is to avoid these FWD and be aware of reversal days; nothing kills an account greater than these two. We have seen an inordinate number of these over the last few months; in fact more in the last 2 – 4 months than in the last 5 years total. This has been the single biggest reason I have scaled back my leverage and become cautious in my approach.

OK, so I take a couple of extra months making you a millionaire; so what?

With my most recent update and revision to the algorithm [The Vegas Multi Time Algorithm, which is the newest version of the old BFSG Algorithm and not available to the public – only PAMM clients], by definition we can’t get hurt by these developments. We might not make much money when they occur, but any losses are insignificant to our goal.

Next week will be our last full week of trading at HotForex. If you would like more information on becoming a PAMM client at our new brokerage house, drop me an email at vegasxau@ymail.com and I will send details.

Have a good weekend everyone.

-vegas

WHAT HAPPENS NOW?

                                                Oyyyyyyy !!

Today we saw trading in EURUSD and AUDUSD that very few will ever see; [near] triple reversal days. I can’t remember 5 times I have ever seen this in 30+ years of trading currency pairs. Wow. Seriously, WOW!

We made a little money today trading EURUSD, where the algorithm did a good job of picking entry points. If price had gone another 6 pips on the high, we would have gotten a great short position, but it missed by only that much.

Gold is a complete mess; there is no way I’m trading it in its present market condition. There simply is no way to gauge risk in a position. $3 - $5 stops are a joke; you would be lucky to get your stop in before it went $3 - $5 either way, that’s how random price change has become. $10 breaks/rallies don’t mean anything. Throw into the equation dealer spreads and slippage and there is no way. Sure, you can get lucky, but your losses will be killer to your account.

The algorithm, after some very recent revisions and updates, is performing very well in the currency pairs. I have intentionally been using low leverage in the past couple of days to trade given current market conditions to verify the recent changes as profitable; simple as that. I don’t optimize data and turning points when updating the algorithm; I care about now, not 5 years ago. I make changes based on theoretical and philosophical trading ideas and then incorporate them into the algorithm.

Leverage is ample and risk can be optimally controlled with the changes I have made. So, look for my leverage [and profits] to increase in EURUSD and AUDUSD as we go forward here.

As I mentioned yesterday, if you are a current PAMM client or interested in being in the new PAMM at our new brokerage house, contact me for details on how to make the transition. If you have any questions email me at vegasxau@ymail.com

Have a good day everyone.

-vegas

FALLING DOWN

                    Nothing Goes Down Faster & Better Than Gold

Unbelievable.

We are at the point in gold where, unless you are willing to commit account destruction to be right, every trade has no risk management. Needless to say, you can count me out when conditions get like this.

We made a few dollars today, trading both EURUSD and AUDUSD. The algorithm did very well in the currency pairs; gold was a complete mess.

As I stated earlier, because of the way gold is trading, the currency pairs are doing better with the algorithm and are producing more stable profits. Expect more trading in AUD and EUR.

News flow out of Europe continues to dominate, and it’s only a matter of time until Greece leaves the Euro and markets get really roiled. The EURUSD has broken down too fast to allow the big money to exit gracefully. Expect every short covering rally to be sold aggressively. Ultimately, I’m thinking with a Greece exit we could see EURUSD sub 1.10. We’ll see, but I’m pretty sure it would happen over a weekend; this would give some time to banks.

If you haven’t started the paperwork for the new PAMM, send me an email and I will send details of our transition to our new brokerage house. Some of you should be in the process of getting monies into the new brokerage house. If anyone has any questions or problems please let me know via email at vegasxau@ymail.com.

Have a good day everyone.

-vegas