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! ;-)

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Cheers,

Dr. Seuss’ Worst Nightmare

I’m not one to brag but when it comes to enduring extended periods of crappy tape the market Mole has grown to be rather resilient over the years. But the spasmodic gyrations we had to endure of the past six months or so has put things on whole new level. I think the last time I saw random swings even remotely resembling this mess was in 2010 and that was not a happy trading year for many. Even when I back test various strategies that year is usually one that ends up on the flat or negative side.

2015-06-03_spoos_update2

I’ve watched several of you guys trying to make sense of this woodchipper and I implore you to just let it go. There is simply too much noise and confusion out there –  it’s our inherent human nature which insists on attempting to see patterns where there are none. If you draw enough lines and squiggly things you will convince yourself that you’ll see a distinct formation. I happen to be long since ES 2113 which I grabbed on a dip lower this morning – my stop still stands below 2007. But frankly I don’t really care – as I said a week or two ago: the less credence/time I give this POS tape the better I’ll be for it.

2015-06-03_gold_update

And equity futures aren’t the only culprits – just look at what gold has put us through. Not even CrazyIvan is liking this and it eats spasmodic gyrations for breakfast. You have been warned – just stay away for now.

2015-06-03_GBPUSD_update

Cable update – still in this one but I have moved my stop up to the recent spike low. I do like the general concept here and I’m going to hold it. But either this one gets out of the gate now or not.

2015-06-03_AUDJPY_setup

We’ve seen quite a bit of movement on the Forex side however. AUD/JPY at an inflection point – either it’ll start correcting here or it’ll swing that upper BB to the upside. I’m currently long with a stop near 96.55 – below that I’ll flip for a short. 1/2R sizes only – way too much volatility out there right now.


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Cheers,




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