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Friday Morning Briefing
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Friday Morning Briefing

by The MoleFebruary 20, 2015

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.

2015-02-20_NZDJPY_briefing

NZD/JPY – I’m waiting for a push back above the 100-hr SMA to grab a long with a stop below 89.3.

2015-02-20_PL_briefing

Platinum – short here with a stop above 1173.

2015-02-20_ZT_briefing

ZT – two-year t-bond futures – long now with a stop below 109’182. If it makes it above the 100-day SMA we could have ourselves a runner.

Plenty more lurking below the fold:

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You have been briefed – now have fun but keep it frosty.

Cheers,


About The Author
The Mole

Mole created Evil Speculator amidst the chaos of the financial crisis in early August of 2008. His vision for Evil Speculator is a refuge of reason, hands-on trading knowledge, and inspiration for traders of all ages and stripes. You can follow him and his nefarious schemes at various social media waterholes below.

  • evilasevildoes

    in crude april and may long june short balanced…thinking i will get stabbed either way lol

  • evilasevildoes

    komdkrief winter over here nut not in texas

  • http://evilspeculator.com molecool

    I don’t think that one is tough to get into as it’s facing daily resistance and a 100-hour SMA. On the positive side there is a stack of NLSLs below, which may serve as support.

  • DarthTrader

    /TF has completed 2 different ABC’s up 1 yesterday and another this morning so a reversal is likely. Also New Moon yesterday and I’m thinking this market needs a sell off before it breaks out above this major resistance area. I’m short the /TF tho I won’t be surprised if it breaks to a New High sometime today but I’m expecting a lower close on this Options expiration day I’m not expecting a major top just a healthy retrace . . . still looking for a strong bullish move in 2015 and perhaps a major top (Double) later in the year in the July – Sept time frame. Long Silver now as well

  • http://evilspeculator.com molecool

    Correction – I meant to say it ‘is’ tough to get into.

  • http://evilspeculator.com molecool

    You know I used to follow Chris Carolan’s work for a while and sometimes his solunar projections work fine but over the long term they are really 50/50 – coin flip really. The problem is that the cycles work for a while and you develop confidence – then they suddenly detach. And that kind of stuff can really kill you – just like what happens with wave counting.

  • randomuser6789

    Regarding earlier post from yesterday:

    I tried trading back in 2008-2009. Tumultuous times! Mole was trying to help us navigate through it, but I was clueless. I subscribed to the Zero for a time, but did not really understand how to use it. I lost lots of coin that the rest of you were banking. I blew up my account.

    Recently I have returned to the evil lair as a pathetic, scum-sucking leech. I feel like I am finally ready to jump back into trading. I am working on my own system, but I am in the early stages. I will not get back into trading without backtesting and an understanding of expectancy and draw down of my system to help me take the next trade. I am too emotional otherwise.

    What has been totally awesome about this site? Psychology stuff, the Radge video, campaign management help – entry and exit, when to move stops, when to take profits and when to let it run, understanding of position sizing and the important aspects of automated systems – expectancy, SQN, opportuniy, etc. This stuff is priceless. I am forever in your debt. I also enjoy the longer term outlook, and I enjoy following the comments, though I don’t say much personally. I love to hear from the many other traders who are still succeeding after all these years. Good job! Many others, like me, have been chewed up and spit out.

    What do I not value here? I have not been trading, so naturally, I have not been taking the setups. When I do get back into trading I expect it will be in equities only, so forex and futures will be mostly outside of my scope, though everything influences everything else.

    Why did I leave the lair for so long? I was licking my wounds from my earlier failed campaigns. I was absolutely clueless. I have since gained the knowledge that I was clueless, which is good. Now that I am more aware of what I can and cannot know or control, I will be better prepared for my next campaign. If I get taken to the woodshed next time I have no excuse. But with backtested trading rules, a trading log, disciplined entry and exit, I will not get shaken out unless “this time it is different.” We all know that it is never different. There is nothing new under the sun.

    Mole and Scott, thank you for your efforts here.

  • DarthTrader

    So true, I’ve run into that wall a few times. Now I try to find opportunities where multiple indicators support each other . . . realizing that I can still get my head taken off.

  • BobbyLow

    TGIF and man, it is cold outside. Temp hit 11 Degrees this AM. 🙁

    Got stopped on my USD/CAD last night. This is the second time over the past couple of weeks where my stop has been hit by a couple of pips and then have price come back. These events are classified under my SH (Shit Happens category)

    Looking ahead to next week in Forex Land, it appears that we’ll have CB’s running amuck. This will bring back memories of Walt Disney’s Fantasyland “It’s a small world” but instead of having little puppets singing the song as you go through, I can visualize the faces of Central Bankers singing. “It’s a small world”

    https://www.youtube.com/watch?v=7tbm4Au3dZ0

    Tuesday 9:00 AM ECB Draghi Speaks
    10:00 AM Fed Yellen Testifies
    2:00 PM BOC Poloz Speaks
    Weds. 10:00 AM Fed Yellen Testifies (Again!)
    11:30 AM ECB Draghi Speaks (Again!)

    Looks like a minefield to me.

    http://www.forexfactory.com/calendar.php?week=feb22.2015

  • http://evilspeculator.com molecool

    No matter if it was 1 month or 6 years ago, it’s important that you learned from your experience. Did you ever sit down and analyzed what you had done and what had lead to your losses? Before you start trading again you need to make sure that you’re not falling back into old habits.

    If you don’t have a system of your own then buy or steal one! Start trading it on paper actively for a few months and see how it goes. Then start trading a very very small account – perhaps just $2k or $3k and play forex with mini positions – IB permits very small position sizing in units. Test your system(s) and get used to taking entries. Stick with 1% position sizing religiously and then slowly build yourself up. Only if you are able to trade your mini account successfully then you’re ready to get back into trading a real account.

  • http://evilspeculator.com molecool

    So you’re trying to correlate several predictive indicators/measures that all may be flawed. Have you ever just tried to trade on price without trying to engage in predictions?

  • http://evilspeculator.com molecool

    Oh, and welcome back 😉

  • DarthTrader

    In this situation we are at major resistance, 2 ABC patterns completed (the larger 1 from the Feb2 lows) get retraces after such completions, New Moon,

  • DarthTrader

    The ABC pattern is pure price but other indicators can incline towards greater confidence. If it was in a vacuum I would still expect a retrace but because we are at Major resistance I’m expecting a larger retrace. The Full Moon just adds to the mix. At other times if the price action is mid sentence, no patterns completing, no major swing levels . . . I would not be interested

  • Skynard

    Dollar tanked, important level to loose 94.50 again. Carving out a triangle. Shorts looking better thais AM, out of that FN range.

  • SirDagonet

    I bought Chris Carolan’s book not long after he won praise (can’t remember, but I think from the WSJ) for his writings… even subsequently subscribed to his newsletter… After watching his predictions in real time, I came to the same conclusion as you – he was as accurate as a coin flip… but Chris seemed to be a nice guy (based on my few written correspondences with him) and is a compelling writer…

  • http://evilspeculator.com molecool

    Indicators are abstractions of price and in most cases they are smoothed and lagging. What I’m asking is this – what do you use to take entries?

  • http://evilspeculator.com molecool

    I still have a copy somewhere in L.A. storage 😉

  • randomuser6789

    I had it all backwards: I took profits too soon (nobody went broke taking profits), let my losers run (they will recover eventually), my position sizing was way too large. I was trading my gut (emotions) not any real system. It was tragic.

    All of this in the context of working full time, raising a large family, and at the time, going to grad school for a MBA. I still have the job and large family, so I have to be realistic about how much time I can devote to develop and trade a system. It will take me a little while to get back in.

    Thank you for your encouragement and guidance. It means a lot.

  • DarthTrader

    Completion of an ABC pattern, context of the pattern (trend or countertrend) and size of the pattern are important. But right now I gotta go

  • tristan37

    5min Divergence?

  • ridingwaves

    opex shenanigans…

  • Darkthirty

    yup…out long / ready to short…or not. ESG15

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Yep, the games THEY play.
    that’s right, I said ‘They’. What about it? They are listening, no hey, put that straight jacket away, No. NO!

    S&P ’20’ – 2096
    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=1&dy=0&id=p25454606600

  • ridingwaves

    Greek Drama, a good play at the theatre of the absurd…..

  • squirrelsome

    Bobby, some Boston fun: http://wapo.st/1vWXVIs

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • mugabe

    if you’re interested re correctness, it’s Fawlty Towers with a w :=)

  • http://evilspeculator.com molecool

    Upsidaisy!

  • http://evilspeculator.com molecool

    Zero snapshot:

  • mugabe

    the smoothed part is not necessarily a bad thing. In one sense, even prices are lagging – some are just less lagging than others (e.g. 5 mins vs. 1 week)

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • jmoney3000

    Divergent…no?

  • BobbyLow

    OMG! They must be suffering from some kind of snow madness. 🙂

  • http://evilspeculator.com molecool

    I had a pretty tough day – glad it’s Friday. Wishing you guys all a wonderful weekend.

  • squirrelsome

    Thanks Mole. Same to you and everyone else.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb

    Cheers.

    looks like the QQQ’s have finally ‘released’.
    108.41 – getting closer.

    https://disqus.com/home/discussion/evilspeculator/low_probability_high_payoff_lottery_ticket/#comment-1837816685

  • Skidmarkalot

    Good evening Mole,

    As you know I am a subscriber that has recently come back into the Lair!!! When I had left before the “Blue Directional Arrows” located in the upper right ES 5M panel were in test mode,,, I think.

    My question, where did I go wrong?????

    Before the close last night I took a small short entry in SPY. This morning I was pleased with the progress. Shortly after the open I considered closing the option. After watching a solid 4 downward blue arrows on the Zero I decided to hold the sell (I’m really good at getting out too early). Thinking the blue arrows confirmed my thoughts the move still had some legs I added to my short. Rest is history.

    Did I miss something or just add it to the Shit Happens file. I searched the tutorial but must have overlooked directions on usage.

    No big loss as you have taught me to keep it low risk.

  • M E

    i made those mistakes before analyzing my trades and realizing my biggest weakness was trying to catch small counter moves. If you manage to catch a small counter move, which I don’t find to be a good strategy, get out while you’re ahead and don’t be greedy hoping for a trend change.

  • http://www.ProfitFromPatterns.com/ Ivan K

    A simple back app will show you the ‘best’ exit CM … for both with- and counter- ‘trend’ entries … not rocket science at all … just roll those sleeves up and Nike.

    EDIT: An avalanche starts with a single snowflake falling … not every snowflake that falls creates an ‘avalanche’.

  • M E

    I find it’s easier to make money on the trend than the counter trend.

  • http://www.ProfitFromPatterns.com/ Ivan K

    ‘Easier’ versus the real goal from trading … some goals require more frequent campaigns … to attain the goal … which may or may not be ‘trading for a living’.

  • http://www.ProfitFromPatterns.com/ Ivan K

    The weekend is the window in time / life to really make great progress with applying / refining your personal RBT approach … as opposed to the more traditional use of those precious 86,400 units.

  • bullethead

    it’s opex, so knowing where the option relationship stands on a relative basis is quite useful. I was waiting (and hoping) for an early sell to get long this am

  • Skidmarkalot

    My biggest issue is I have a difficult time reading the words in a book,,,,, I am ass backwards to most people way of thinking. I have read most every piece of work Mole and Scott print but it doesn’t sink in well. I have learned some but at a high cost.

    Greedy, I agree. In the past I believed in flying pigs…. I keep my wins tight. But, in saying that I fail in seeing longer trends that I close the position too early on.

    Until I can win more than I lose its just a hobby.

  • Skidmarkalot

    Rocket science,,,, LOL, I leave that to my son. He is one.

    I am persistent in my direction to achieve positive forward progress in my trading account. I will win someday!!!!!! I’m a hard headed person with a German heritage.

  • http://www.ProfitFromPatterns.com/ Ivan K

    We all have a history … history is neither a validation nor excuse for behaviour or actions … we are dynamically evolving entities.

  • Skidmarkalot

    Back to the original question,,,, I remember you making comments about the blue arrows in past posts. I see them come and go but this morning seeing 4 in a row I assumed,,,, down we would continue.

  • Skidmarkalot

    That we do, some of my personal history I would love to forget.

  • http://www.ProfitFromPatterns.com/ Ivan K

    The very failure of an ‘expectation’ can be an invaluable clue … as to the road ahead … eg … a chart pattern that evolves in the opposite to a traditionally expected direction … clues abound to … only … open-minded souls.

  • http://www.ProfitFromPatterns.com/ Ivan K

    Make it work for you … as opposed to lamenting or … ‘forgetting’ … no-one is perfect.

  • Skidmarkalot

    You are with great wisdom.

  • http://www.ProfitFromPatterns.com/ Ivan K

    I am simply who I am.

  • Scott Phillips

    One of the characteristics of robust systems is that the actual exit strategy doesn’t make a dramatic difference to overall R but makes a huge difference to win rate, drawdown, risk of ruin, SQN, sharpe ratio etc. One of the characteristics of good traders is they are focused on this stuff instead of total money made.

    If your system is good, almost any reasonably derived exit algo should be ok (but not optimal), in other words you should be looking for a good number in a forest of good numbers. If not, back to the drawing board.

    The secret of designing exit algos is that logically at some point the risk of holding does not match up with the risk of exiting. We all look at a chart and want to grab that 10R winner that happens once a year, but optimizing for that comes at a cost. An analysis of “maximum favorable excursion” of winning trades will show you sweet spots that can be optimized for.

    In developing your MFE numbers, apply logical common sense. So for example, you have a trade that makes 3R, returns to breakeven, then makes 7R, then returns to 2R, then goes to 20R. That is NOT a 20R winner, since there is no way in hell a smart trader would let a 3R winner evaporate.

    From then the process is simple. Answer the following question in order, relying on the data and not your opinions which by definition will be stupid and based on the last 3 charts you saw (like a monkey always thinking of the last banana)

    1) What is the optimal time to move stop to breakeven?
    2) At what point should I be looking for any excuse to bank profits or get out of a trade? (that could be a target at resistance like a bollinger, keltner or spike high or a trail) For example Gabriel whose systems I used to trade that number was 4R MFE
    3) In that “middle portion”, between breakeven and the time I’m looking for any excuse to get out, how loose should the stop trail be? (roughly)

    Once you have those questions conceptually figured out, it is unlikely in the extreme that one exit will do it all for you. Choose a number of different exit algos, mix them up like a soup, and race them to see which one can take you out of your trade first. If your drawdowns are too large you can reduce them by banking partial profits along the way to reduce standard deviation.

    Again at that point you go back to the drawing board as Ivan suggested and back-app the unholy crap out of it. What you are looking for, is once again a good number in a forest of good numbers and not random incredible results (which are nearly always curve fitted)

    Once you have something decent, start forward trading micro sized and see how your results match up with the back test. Adjust, backtest small changes, and iterate towards a solution like the men of science you should be.

    THIS is a lot of work. Probably 6 months of full time work, being truthful. It’s no wonder people are attracted to just throwing up charts with whatever indicators they like and saying “see this proves xxx”

    If you want to be a winning trader I know of zero professional traders who have not been through this.

  • Scott Phillips

    The race is not always to the swift, the battle to the strong, but that’s the way to bet!

  • Scott Phillips

    I had a drawdown this week too, but traded well, and that is what counts 🙂

  • http://www.ProfitFromPatterns.com/ Ivan K

    Unless stats show otherwise … small fish can be very sweet … in smoothing out the Journey.

  • Scott Phillips

    I’ve done every single one of those mistakes, more times than I can count. Trading well is like being a recovering alcoholic (actually Alexander Elder talks about this) – you do it ONE DAY AT A TIME!

  • http://www.ProfitFromPatterns.com/ Ivan K

    Part of my accelerated learning curve was just that … ODAT … a programme written by Frank Wilder … (coding brother of Mr RSI etc) … I have mentioned my involvement with him before here … One Day At a Time … works in all aspects of life … I have found that to be a valuable truism.

  • http://www.ProfitFromPatterns.com/ Ivan K

    ” So for example, you have a trade that makes 3R, returns to breakeven,
    then makes 7R, then returns to 2R, then goes to 20R. That is NOT a 20R
    winner, since there is no way in hell a smart trader would let a 3R
    winner evaporate”

    What an argument for partial exits … as opposed to the all-in-all-out syndrome.

  • Skidmarkalot

    Thank you Scott!!! I greatly appreciate your advice.

  • Scott Phillips

    Absolutely 🙂

    Logically your drawdowns are a function of the standard deviation of your results. So lets say you have a standard trend following system which runs at around 30% win rate and only one in 3 of those winners is a big win, and you make your bread by riding that trend right to the beach when you see it (Richard Dennis method)

    For most people that would absolutely suck to trade. You have a .3 x .3 or 1 in 11 chance of a winner that is going to get you out of the hole. The odds are high that you can go 30, 40 or 50 trades without seeing that winner, and then cluster 5 of them in a row. Profitable, but emotionally terrible.

    You can lessen the emotional blow by lowering the standard deviation of your results by taking partial profits

  • http://www.ProfitFromPatterns.com/ Ivan K

    All about ‘attachment’ … and ‘expectation’ … you have been there on many levels … with both … in entirely different spheres … so same page sans the fancy maths !

  • http://evilspeculator.com molecool

    Actually not in the shit happens category. Those reversal arrows should be ignored during trend days/periods. Now yesterday wasn’t officially one as we got a little shake out in the first hour before the tape snapped higher. But once it started to ride higher hard the writing was on the wall.

    Also in general those arrows are a pretty binary play – either they work shortly after or they don’t. It’s not the hand of God that triggers them – sometimes we do get false positives. So you take your entry in the context of whatever other measures you’re using and set your stop. Most people focus too much on entries and too little on campaign management. Meaning in plain old English: expect to lose every time and have your stop in place to get out. No exceptions.

  • http://evilspeculator.com molecool

    Indeed…

  • http://evilspeculator.com molecool

    Watch a few of the videos – in several of them we cover trending tape. Especially if you see strong signals and strong divergences in the signal you want to be careful with the reversal signals as they may be overrun by the ongoing thrust of the move higher or lower.

  • http://evilspeculator.com molecool

    Exactly – it’s just one or two trades – no need to start worrying about what you have done wrong. Those reversal bars work often enough to offer a sufficient edge – especially in the context of your own scalping or swing trading system.

  • http://evilspeculator.com molecool

    Favorited…

  • http://evilspeculator.com molecool

    You asked for where you went wrong – I think I found your problem right here.

    http://content.screencast.com/users/evilspeculator/folders/Jing/media/7daa4c46-cf2d-49fc-a109-65a0c3a107af/00014094.png

  • http://evilspeculator.com molecool

    You asked for where you went wrong – I think I found your problem right here.

    http://content.screencast.com/users/evilspeculator/folders/Jing/media/7daa4c46-cf2d-49fc-a109-65a0c3a107af/00014094.png

  • http://evilspeculator.com molecool

    You can really only learn properly by doing and by correcting and learning from your mistakes. If you attempt to ignore or suppress them then they have been wasted. Instead try to embrace and accept them – only then can you choose another past. You are exhibiting traits of a gambling addiction and I would be cautious if I was you. Instead of running try to walk slowly first – take small trades.

    The sheer fact that you are apparently emotionally tied to a few losing campaigns tells me that you were probably over exposed. If you are who wrote me the other day then you know what to do.

  • http://evilspeculator.com molecool

    I can’t remember a weekend in the last 20 years that I haven’t spent working on some project or another. Frankly I could use a few fun filled ones at this point and it’s planned for late March…

  • Skidmarkalot

    Thank you Mole, I had forgotten about trend alerts sent to subs. I will do some reading on how to read those as trend up, neutral or trend down day.

  • Skidmarkalot

    Exactly,,,

  • Skidmarkalot

    Yes I did flush some money down the toilet but just a small amount. It amounted to one Diamond level seats with food and drinks at a Royal’s baseball game last year. I have had employees toss 10 times that amount at my business without caring, but only for a short period before finding employment elsewhere..

  • Skidmarkalot

    You are correct! Emotionally involvement is 100 percent correct in the past. I have set trade amount limits as you describe in writing below my computer screen. I follow those limits 98 percent of the time. Yesterday I misread the blue arrows as gospel when it should have been just another useful tool. I will back down a bit and use the Zero to better my odds of winning.

    Gambling, I don’t visit casino’s as the odds are stacked against you. The few times I have gone to satisfy my friends all I see is sad old people just setting in front of machines. They are a far cry from the happy, drinking fabulous time shown in the TV advertizements.

    Also, I do limit my exposure to just a few lotto tickets……

  • Skidmarkalot

    Thank you for your very sound advise. I do expect to lose most every time. I keep the gambling tickets small, small enough that I ready could care less if it wins or not. My other account is for long term which I don’t really make fast adjustments in.

    Currently its just fun and games hoping to improve enough that when I retire years end I will have a good hobby playing the market.

    I did blow up my account several years ago,,,, hard lesson to learn but I think I learned it well.

    Thank you again for your observation of me, you were spot on!

  • Skidmarkalot

    I want to thank everyone that have given me advise this past two days. You made me feel good with the responses I received. This thread is the best!

    Skid

  • http://www.ProfitFromPatterns.com/ Ivan K

    EDIT: ‘We all have a history … ‘ … rereading what I wrote reinforces the fact that English is not my first language … propa englush shud be … ‘history is neither a validation of, nor an excuse for, behaviour or actions’

  • http://evilspeculator.com molecool

    _____ ________ __________ _______ .___ _______ ________._.
    / _____ \______ | | / _____/| |
    / / / | | _/ / | | |/ | / ___| |
    / Y / | | / | / | _ \|
    ____|__ /_______ /____|_ /____|__ /_______|__ /______ /__
    / / / / / / /

  • http://evilspeculator.com molecool

    Did any of it stick? 😉

  • http://evilspeculator.com molecool

    Except the Mole of course.

  • Skidmarkalot

    Absolutely!!!!! Bet the farm on horse #3! Just kidding. Honestly, I must say it has sunk in deeper. I’m a VERY slow learner. I feel I have made progress and will continue going to the Evil School to hone my skills.

    Thank you!