The Game In A Nutshell

I think today’s session should serve as a stark reminder that the very last thing you should ever attempt is to apply even the slightest sliver of logic to market behavior, especially during volatile periods. I’m going to make this very easy for you rats, so listen up and listen carefully now. If in doubt or if you find yourself attempting to make a prediction as to where the tape may swing in response to big news events remind yourself of the following:

shark_tank

Now read the line above again a few times and then write it on a piece of paper and stick it to your wall or resident shark tank if you have one handy. I prefer the latter as it serves as a proper backdrop to that message and for all you pikers I have put together a little theme pic which you can use instead ;-)

2015-06-29_spoos_update

Case in point are the spoos which first gapped lower screwing anyone left long – then attempted to close the gap until the 100-day SMA (and weekly NLBLs) to then turn on a dime and continue lower. Clearly there is no explaining any of this and neither should we try. The chart above provided us with all we need to know.

2015-06-29_zero

So did the Zero I may add which has been pointing down all day since the open. But chances are you weren’t watching that one as you’re a nomadic ZeroEdge reading retail rat and thus can’t afford the monthly subscription for your $2000 E*Trade account.

2015-06-29_ZM_setup_freebie

Soybean meal – I just held my nose and take a spoon full long here with a stop below 332. 1/2R only as the daily context is looking rather bearish so odds have it I’ll be stopped out. But if not it’ll catch a bunch of folks off guard.

2015-06-29_Euro_setup

Euro – nice upper BB touch and I’m short here 1/2R. I do love this chart but the gap turned into a short squeeze. Why? Because a reversal higher and beyond didn’t make any sense whatsoever, which is exactly why it happened. If that confuses you please re-read the intro above.

The force today is definitely with Forex – and for my intrepid subs I have more setups waiting below the fold:


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That’s it for today – I hope none of you guys were caught off guard and are positioned nicely. Definitely no lack in volatility and odds have it that we’ll see a bit more before things quiet down for Independence Day weekend.

Cheers,

My New Soy Based Diet

I switched to a soybean based diet this morning when I posted not one but two pertinent setups. The soybean oil futures for you lowly leeches and the actual soybean futures for my subs – of course the latter was my all time favorite and it’s been rocking and rolling since my entry.

2015-06-22_ZL_update

The former is looking good though and I’ve now moved my stop to break/even now. We initially pushed up nicely but that daily NLBL at 33.3 had to spoil the party. Clearly this is where we should expect resistance going forward.

2015-06-22_soybeans_update

And here’s the actual soybeans contract – brilliant entry and thus far our nefarious plan is proceeding like clockwork. Evil is as evil does…. anyway, I’m moved my stop to break/even here as well. Nothing but air above and with a bit of luck and scotch tape we may just take the express elevator to the 1k mark :-)

2015-06-22_EURGBP_setup

EUR/GBP is looking like a nice long but DarthMole tells me that volatility is just about to run out of juice here. So I suggest you wait a few hours and then look for a long entry near the 100-hour SMA and that stack of Net-Lines.

Of course there’s more – I like to spoil my subs. And there’s a EUR pair I like even better today. Please meet me in the lair:


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Scalpius Update

On a sidenote – I was chatting with Mugabe in the comment section about Scalpius’ win/loss rate when suddenly something occurred to me. The system was build on top of CI legacy code and that one was taking break/even two pips behind the actual entry point. Which means that you’d count it as a small loss and given a lot of opportunity those pips may just add up.

EURUSD_A

So I changed that to one pip in front of the break/even spot and that completely changed everything. Here’s the original ruleset with the new break/even spot running against the EUR/USD. I call it Scalpius A. The P&L is almost identical but look at the win/loss rate! We went from 1:2.2 to 1:1.09. That is a system I would happily trade with 1% R sizes.

USDJPY_A

Here’s Scalpius A against the USD/JPY. 180R with the exactly same win/loss rate – that’s uncanny.

EURUSD_AB

Since this morning I developed a slightly enhanced ruleset which I call Scalpius AB. That one is a bit busier and as you can see the EUR/USD is now showing a much more subtle drawdown period. However the W/L rate and the expectancy suffered a little. I think I would stick with system A on this one.

USDJPY_AB

Here’s the same Scalpius AB ruleset on the USD/JPY – my jaw dropped when I saw this one. Again we have a win/loss ratio of 1:1.09. But we would have banked 280R in three years. The SQN number is bullpucky – I need the formula for SQN100 – anyone?

I’ll keep plugging on this – extremely excited about it as you can imagine.

Cheers,

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:

2015-06-16_DM_EUR

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

2015-06-16_DM_CL

Here it is killing it on crude.

2015-06-16_DM_GC

Here it’s calling out gold.

2015-06-16_DM_ZB

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:

2015-06-16_USDCAD_scalpius_LT

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

2015-06-16_copper_scalpius_LT

Copper

2015-06-16_ES_scalpius_LT

The spoos…

2015-06-16_USDJPY_scalpius_LT

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

2015-06-16_GBPUSD_scalpius_LT

Cable is just a beauty, isn’t it?

2015-06-16_EURUSD_scalpius_LT

EUR/USD – gorgeous…

2015-06-16_scalpius_19_months

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.

Cheers,




    Zero Indicator


    Darth Mole Alerts

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  3. recent misdeeds

    1. Happy Independence Day
    2. The Quiet Before The Storm
    3. Timing is everything – Black Gold
    4. Short Term Updates
    5. The Game In A Nutshell
    6. Filling The Gaps
    7. Greece Saga Precautions
    8. Furious And Furious Friday
    9. Dangerous Turf
    10. Forex Update