Chop Chop Til You Drop

I’ve had a mini epiphany today just browsing through my universe of charts across bonds, equities, the futures, and even forex. In plain simple words – we are in the midst of a high volatility sideways market period right now. And that means that directional campaigns simply won’t work. You may get away with grabbing a good entry but just as you’re ready to reap the benefits the tape turns on a dime and stops you out. This has happened across several campaigns over the past two weeks but the incident rate is increasing. Which means it’s time to adjust our trading to the tape. In this particular case it means keeping entries to a bare minimum – personally I get extremely picky and reduce position sizing to a minimum during these types of market periods.

2015-04-20_spoos_update

So let’s look at some evidence supporting my outlandish claims. You guys have seen this chart on several occasions and I’m not going to explain it again. Clearly we are in a sideways range. A few days ago it looked like we may defy gravity and take off but it wasn’t to be. At this point the only context worth its salt is the 25-day SMA and even that one is way too precarious to afford us swing entries. I am staying the heck out of this one for now. If we push to the extremes I may take an inverse entry with a small position size. But I’m really not obsessed with having to trade equities frankly – happy to let this thing play out and revisit in a few weeks.

2015-04-20_GBPUSD_update

Cable – part of the story for sure – just look at the daily panel on the right. That’s one nasty trading range with a lot of long wicks. Meaning stop runs galore and only recently have we seen a bit more directional tape.

2015-04-20_EURUSD_update

The EUR/USD has gone nowhere fast int he past month. Thus far it seems like the 1.05 mark may wind up a long term low but the fat lady hasn’t sung here just yet. This is starting to resemble a real low however – the next few days should be interesting, but for now I’m not taking entires in the middle of the ongoing trading range.

2015-04-20_gold_update

Gold – just peeking at the ST panel is making me dizzy. The daily ain’t much better – once again we seem to be stuck in a sideways range below the 100-day SMA. However, the 25-day is now on the rise and if I see decent ST context in the morning I may be convinced to take a long position here.

2015-04-20_ZB_update

Bonds – just nasty – don’t even ask me when this thing is going to resolve. No interest in participating here.

2015-04-20_crude_update

Crude is the one exception which in the context of the ongoing LT campaign is extremely promising. We got really lucky here when taking our entry and I’m rather conservative with advancing my trailing stop.

2015-04-20_GBPJPY_update

Early morning setup update: GBP/JPY was one of the few charts that actually triggered and didn’t hit its stop shortly after. However I’m long inside a downside trend on the daily chart – my expectations here are extremely low and I’ve advanced my stop to the break/even point. It’s a small position anyway but alas.

No new entries for the day – time to hunker down and keep one’s powder dry.

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Cheers,

Monday Morning Briefing

Welcome to our morning briefing. Here we are reviewing short term setups ahead of the NYSE opening bell. If you are a scalper or swing trader then these setups may be of interest to you. As usual keep in mind that these are short term setups although they could be used as early entries for more longer term positions.

2015-04-20_spoos_briefing

Index futures are still in shake out mode - as I told you last week it’s best to stay away for now and let this play out. Thus far my caution seems to have been appropriate – just look at this tape on the hourly and tell me if that’s something you really want to be trading. As a side note – for some reason the 2088/2089 mark produces a lot of context. It doesn’t line up with anything on my charts except that I drew this line when I entered long and then got stopped out right there again. And I remember mentioning this level on previous occasions, so for some reason it keeps coming up. Like this morning when we’re bumping against it after a run higher overnight.

2015-04-20_AUDCAD_briefing

We have nice AUD and CAD related entries today. Which is great but if you take them I suggest very small position sizing as we have pertinent event risk a few hours away. Anyway here’s the AUD/CAD and I am long with a stop below the recent spike low. I’m giving this a few hours to ride higher and produce some distance ahead of the BoC governor speech. If it just hangs around here I’ll probably pull it as I’d be sure to be whipsawed out during the event.

2015-04-20_events

Here’s what we’re facing today – set your clocks.

More setups below the fold:


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I mentioned in the sub only section that I’m taking very small position sizes here. Reason being is that we’re in clear shake out mode on both the forex and equities side. It’s a tough market to be active in and you need to be on top of your game, remain nimble, patient, and not get emotional. All those attributes are easier to fulfill when you don’t really care about pulling a loss – ergo take small positions and know your stops and targets before you enter a campaign.

Cheers,

Chasing The Market’s Tail

Judging by the measly comment count it seems most of you guys are ready to call it a week. Plus the market seems to be in shake out mode and my E-Mini campaign met its maker, fortunately at the break/even point. Heck,  it was worth a shot but the odds were low to be begin with. Just one out of 10,000 campaigns  - moving on. So I won’t bore you with more short term setups this morning  - instead let’s talk about a cognitive bias of sorts that many of us have fallen prey to but which I don’t see being addressed very often.

2015-04-17_spoos_briefing

Today’s events are actually a prime example of what I call ‘chasing the market’s tail’. In a nutshell this rather common behavior is triggered by a series of events that cleverly draw you into taking repeated entries despite diminishing probabilities of success. You may start out with getting out clean – meaning at break even or with a little win. But after being stopped out you look at your chart and you think to yourself – hey, I got swiped just by [one handle, one tick, just below that SMA, etc.]. And you just know that after shaking out those weak hands it’ll reverse and continue higher [or lower] again.

What’s happening here is that your ego has been bruised. You got stopped out – be this for a loss or perhaps at break even or a little gain. But you really really liked this campaign, especially as you got a great entry, grabbed it right off the lows, who knows what. And you want it back – plus remember your ego is a bit bruised – and there’s that little voice in your head that keeps telling you that you’re smarter than the market and that your supreme charting skills or your unique ability to predict the future will surely overcome this temporary setback.

Yes, of course you’re never going to say all this out loud – sounds quite ridiculous after all. But we all have been there – we all have felt that temptation to go right back in, haven’t we? I mean look at that E-Mini chart above – such a juicy bounce off that lower 100-hour BB and who’s to say we’re not going to run up from here after having shaken out all those weak hands?

Of course none of us really know – especially on a Friday with only a few hours left to go. All that stuff going through your head is mental masturbation and needs to get cut at the root. That is exactly how you wind up getting drawn into bad entries – and never forget, that in fact is the main function of the market – to suck you in when the odds are aligned against you. Or maybe there are no odds – it may look that way to you now but is this entry really in line with your system rules? That’s right – I didn’t think so.

Of course Dr. Mole has the right remedy – just watch the above. Whenever I find myself after a ‘regrettable’ stop out I habitually ask myself if a new entry is justified. I also monitor my own emotions and if there are any vestiges of regret or disappointment – if so, then I simply repeat the following mantra:

Homey Don’t Play That!

That’s clear enough and it usually fixes the problem. Look guys – we’ve had a great ride recently despite equities running around in circles. Let’s not test our luck, shall we? I’m fine with letting this one go – perhaps it’ll jump higher from here and perhaps it’ll drop like a rock and we test the lower border of this sideways range again. I really don’t know and my crystal ball is still in the shop. But what I do know is that this is not a good spot for taking entries and so I’ll graciously decline and wait for a better opportunity. Which will come – believe me – if nothing else we have proven that over the past seven years ;-)

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.

Cheers,




    Zero Indicator


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  3. recent misdeeds

    1. Chop Chop Til You Drop
    2. Monday Morning Briefing
    3. Chasing The Market’s Tail
    4. Still In The Game
    5. Nothing Thursday
    6. Well I’ll Be Damned!
    7. Wednesday Morning Briefing
    8. Bait And Switch Tuesday
    9. Futures Setups Galore
    10. Monday Morning Briefing