Rammstein

If it’s going to happen then it’s going to happen now:

2015-08-26_zero

Perfect bullish divergence on the spoos. Make or break point here. If this rally attempt falls apart we are sliding lower. Grabbing a few longs with a stop below today’s session lows.

Wer wartet mit Besonnenheit
Der wird belohnt zur rechten Zeit
Nun, das Warten hat ein Ende
Leiht euer Ohr einer Legende.

The one who waits with prudence
Will be rewarded at the right time
Well, the waiting has ended
Lend your ear to a legend

Indeed…

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,

Sky Diving Elvis’

I’m going to dip my toe into a few symbols today again – however let’s re-emphasize again that small position sizing clearly should be our modus operandi for the foreseeable future. It is important that you understand that a practice of small position sizing (e.g. < 0.5% per campaign) and wider stops does not hamper our ability to profit but instead leverages this high volatility market phase in our favor. To place large bets during this period is tantamount to gambling, and if that’s what you’re after then I suggest you head for Vegas or Reno.

At least there you get to enjoy low priced hotel rooms, pool side entertainment, a sky diving Elvis, and girls in skimpy outfits serving you free drinks while they suck money out of your wallets*. You have been warned.

UPDATE: I had posted a ZB and ZN long trade but they hit the stop a few minutes after. I don’t see much edge in a short position here so I’m waiting for instructions. Meanwhile this is what’s left on the menu this morning:

2015-08-26_GBPCHF_briefing

GBP/CHF has been dancing on the 100-day SMA and I’m long here. However if stopped out near 1.46 I plan on reversing to short position. Again, SMALL position sizing – I’m taking 0.33% R position sizes today.


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2015-08-26_events

A little bit of event risk today an hour before the open. You have been briefed – now have fun but keep it frosty.

Cheers,

* Why am I not in Vegas right now again?

Steadily – Consistently – Systematically

Oh boy – the horse-wash I have been hearing over the past few sessions deserves a category on its own and they should be giving out Oscar nominations for the most hare-brained mental masturbations. It seems the hamster is running in overdrive as justifications for blatantly bad trading decisions are literally crawling out of the woodworks, blaming everyone from the Fed, ZeroEdge, the Chinese, Russian hackers to the Easter Bunny. Without exception the one true culprit is being ignored, which of course is the very person who placed the losing trade in the first place.

2015-08-25_trade_gone_bad

Turns out that certain individuals, who should know better and shall remain unnamed, took it upon themselves to go massively long ahead of the weekend. Quite frankly I don’t even know where to begin. Not only have I (and a few others) repeatedly documented evidence pointing toward large scale distribution in equities over the past few months. But at minimum it should have been clear that market conditions were changing and that the bull market we had been traversing since 2009 had either ended or was limping along on its last leg.

But even if you ignore all that for a second – at minimum the sheer fact that intra-day volatility was steadily increasing was screaming at us from almost any chart. On a daily basis now we have been witnessing wild swings in equities, futures, bonds, forex – the signs of market dislocation were literally everywhere. Now taking out large directional positions is considered a fool’s bet in normal market conditions, but to take large risks in a sideways volatile market is tantamount to begging to be stomped on. If one insists on participating then the exact opposite should be done – hunker down and use small position sizing in combination with wide stops. Volatility now works in one’s favor as opposed to wiping out your account if you happen to be wrong. And the chance that you’ll be wrong in a sideways volatile market is the only safe bet one can take.

But all this is symptomatic of a much more serious underlying disease. Many retail trader don’t have a system and make discretionary trading decisions based on hunches and spurious trading ideas. I keep seeing a sole focus on taking entries instead of position sizing, campaign management, and most importantly self management. To once again quote Van Tharp: Successful trading is 40% risk control and 60% self control. In turn the risk control portion is only half money management and one half market analysis. Yet most traders emphasize market analysis [and especially entry taking] while avoiding self control and de-emphasizing risk control. To become successful traders need to invert their priorities.

What I find even more tragic is to see experienced long term traders with years of experience ignore very basic tenets of the trade and engage in what I would categorize as pure gambling. Not only does this lead to more addictive behavior but it can as quickly destroy one’s career and even one’s family as it can wipe out a trading account. Over the past few years I have repeatedly documented my journey as a trader and in particular have highlighted that small incremental gains in combination with compounding is the only avenue leading to a successful long term career in trading.

Now if you sat the past few days out then you may just regret that fact and kick yourself for missing a ‘huge opportunity’. As a matter of fact one of my readers here decided to ‘take some time off’ yesterday after he was unable to pull the trigger on a volatility long  play before the weekend. And you may guess what I’m going to say to that: Better wishing you were in a trade than wishing you were out of one. 

Clearly being able to act when the odds are in your favor is a big aspect of successful trading. But I ask you – are the odds really in our favor when market volatility is on the verge of exploding? You always hear about the story of the guy who was short before the market tanked (I actually held a small number of contracts but so what). The story you should be paying attention are the ones of dumb or emotional trading decisions in the face of mounting evidence that things are about to become unhinged.

So there is no reason to kick yourself over sweat over virtual profits you may have missed out on. I suggest you fade all the noise and excitement which you see circulating right now. That’s all yesterday’s news and although we may see more red candles what happens in between those big memorable days is where the real coin is being made. Steadily – consistently – systematically.

2015-08-25_spoos_LT

There is not too much to be said at this point. The obligatory snap back is in motion as I’m writing this and things are about to get a lot more interesting. Because what follows over the coming days will decide whether we are done here or if this was the first leg into a LT bear market. Clearly a lot of technical damage has been done over the past few sessions which is now on the books. Unless a small miracle happens we will most likely close below the monthly NLSL at ES 2023. At minimum however I expect a gap fill on the weekly panel – if we don’t even get this then we may be looking at a full scale crash situation. And that means – don’t get greedy – take out small positions. Don’t be that guy I described in my intro.

2015-08-25_NQ_LT

The NQ touched both the 100-week and 25-month SMA. May just be coincidence as it has very little technical value given that we haven’t touched either in many years. So price is going to have to do the talking for us here – what we need is more context. Absolutely follow the Zero – it has been invaluable over the past week – as usual.

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


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  3. recent misdeeds

    1. Inside The Mind Of A Retail Rat
    2. Taking Profits
    3. Relive The Bounce
    4. Rammstein
    5. Sky Diving Elvis’
    6. Steadily – Consistently – Systematically
    7. The Tale Of The Big Bad Bear
    8. Long Term Support
    9. Medium Term Support
    10. FOMC Wednesday



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