Thursday Morning Briefing

First up – good news for you rats. Due to the crappy weather throughout Northern Europe all weekend as well as next week I have decided to postpone my mini vacation. No reason to go through all the motions of traveling if you have to bring umbrellas and jackets in June. Yes, I admit it – 20 years living in Los Angeles has completely spoiled me. There’s no way I could ever live in those parts again. Yikes.

Instead we’re just going to head to the beach this weekend right here in Valencia where it’s going to be sunny and warm. Then we’re going to pull up the Alpine reports whilst laughing maniacally. Yes we are easily entertained…


Still long the spoos since 2070 and so far so good. My stop is now dangling below the slightly slipping 100-hour SMA. Yes, the tape is looking positive but unless this thing gets out of the gate soon I fear we may see more shake out gyrations. See summer weather in Northern Europe…


Bonds looking more positive and I grabbed a small long position near the 100-hour SMA. Stop goes below that stack of NLSLs. On the daily we have yet to break the series of lower highs and lower lows. Which is why I’m playing cautiously here. On the positive side the 100-hour BB is compressing suggesting that we see resolution soon (i.e. today or within the Sunday/Monday session).

This is all I got this morning – see you later this afternoon.

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Meanwhile Down At The Evil Lair

Over the past few weeks I have hinted a few times that I was developing a swing trading system based on Darth Mole. Which you may recall is a simple indicator I developed last year with the aim of predicting expansion in price volatility. Quite a good thing to know if you’re about to enter a symbol and over the past few months we’ve been watching it nail one big swing after the other. Some of you are subscribed to the free email alerts or have seen it in the twitter feed. But for the uninitiated here are a few screen grabs:


Here’s DarthMole running against the EURUSD. The blue arrow indicates when you received the alerts.


Here it is killing it on crude.


Here it’s calling out gold.


And here it’s having fun with the 30-year bonds.

I guess you get the idea – it’s bang on when it comes to predicting volatility. Of course the missing piece always has been DIRECTION. Quite frankly DarthMole has been driving me crazy over the past six months or so – I kept watching it nail those volatility swings day after day and became almost obsessed with developing a system that would take advantage of its uncanny abilities.

For months I spent almost entire weekends scrolling through mountains of charts. Just watching and taking notes of anything that stood out to me. Exhausted and desperate I tried to get Scott involved who took a long look at it and pretty much told me he was seeing no edge. There simply seemed no way of making a directional calls and thus building a system around, no matter how tempting, seemed out of reach. After all volatility knows no directional allegiance – it’s great to know when it’s coming but what to do with it?

But persistent (and a bit obsessive) as I am I kept plugging and testing various ideas – correlations, other indicators, Net-Lines, moving averages, heck, everything I could think of. I realized that taking losses would be part of the process and that any successful system would thrive via large outlier winners followed by a succession of small losers. But when exactly to take that entry was the big puzzle I needed to solve. I was laboring for weeks on end until about three weeks ago the light bulb suddenly came on. The result is a fairly trivial and unoptimized swing trading system which is frankly speaking is killing it across the board. I call it (drum rolls) SCALPIUS. Let me show you:


Scalpius vs. the USD/CAD – all stats show the past 19 months (i.e. since early November 2013).




The spoos…


But it really really loves Forex for some reason. Here’s the gofer.


Cable is just a beauty, isn’t it?


EUR/USD – gorgeous…


And finally here’s a graph showing all symbols above combined. I know – 732R – insane. Took over 2700 campaigns to get there – a bit over six to seven campaigns per week day (i.e. about one per symbol). Yes, it loses more than it wins – the ratio is a win rate of about 1: 1.6. But the winners can be huge and it loves to ride the trends.

In case you’re wondering – no this is not something I plan to offer as a service via email/Jabber alerts. It’s way too busy for that and I’ve learned my lesson with CrazyIvan (remember, only 4 subs left). And honestly I’m still pondering whether or not I’ll be accepting LAMM signal subscribers either. Perhaps a small number in a few months from now – if so only the people who already signed up for the LAMM service recently. Frankly it’s probably the best system I’ve ever build plus it very much suits my trading style. A bit busy but it’s manageable as it’s running on a 60 minute chart.

I’ll be leaving for Austria for a few days on Friday morning and will start trading Scalpius after the 25th when I’m scheduled to be back in Valencia. I’ll keep you guys posted on how it’s doing. In the meantime keep watching out for those DarthMole alerts – I always told you guys there is a great system in there! ;-)

The future is now – so don’t bring a knife to a raygun fight. If you are interested in becoming a Zero subscriber then don’t waste time and sign up here. A Zero subscription comes with full access to all Gold posts, so you actually get double the bang for your buck.


Freebie Friday

Equities are heading lower as I’m typing this and I have decided to move my stop a bit further up to the 100-hour SMA. Quite frankly speaking there comes the time when a market simply doesn’t hold much of an edge and it’s best to simply focus on other verticals (i.e. forex, bonds, and various other futures).


Given what we’ve had to work with I think we’ve done brilliantly. But observing the developing mess it’s clear that this may not resolve until the FOMC makes a more decisive statement about the planned hike in interest rates. Until then things appear to circle in a general holding pattern.


Plenty of movement in other markets however – here’s the 30-year bond contract which looks like it just may want to climb higher. However the general trend is down and I’m only attributing 1/2R to this.


Crude has been testing our patience and I don’t think it’ll make any big moves anytime soon either. However a long position here could be good for a few ticks and I’m throwing 1/2R into this pit.


EUR/USD touches its 25-day SMA earlier and I’m grabbing a long with a stop below the spike low (and new NLSL). As you know this is the trade I love to hate – in general I’m pretty happy about the current sideways formation as I earn in $s and spend in €s.

Otherwise, not much going on this morning. Summer is nigh and many of you guys are busy planning your well deserved vacations. Next week I may actually put together some educational posts as the tape is surely putting us to sleep lately. If you have a particular topic you’d like to see covered then please chime in here.

It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.


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