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Sitting On My Hands
36

Sitting On My Hands

by The MoleFebruary 13, 2017

I don’t see anything in my charting universe this morning I deem worth mentioning, and believe me it hasn’t been for a lack of trying. My parents taught me a long time ago: If you have nothing good or nice to say then better don’t say anything at all. Not that that has ever stopped me of course.

2017-02-13_spoos_update

Our equities campaign is actually the only one that requires attention right now and fortunately it is to advance our trailing stop a little higher. My campaign management rules post 3R in paper profits involve either -1R MFE or the most recent spike low, whichever is lower. In this case the previous spike low is a bit below the current MFE and thus I’m placing mine below ES 2305. A bit of discretion is one of the advantages of manual or semi-manual trading, of course your mileage may vary.

Slow Frequency Trading

Before I let you run for today I wanted to share a neat little story. My brother from another mother down under, Scott Phillips, visited his hot new wife’s extended family in Thailand recently. Whilst there he met one of her relatives who apparently lives somewhere out in the jungle and when he’s not busy roasting rats on a skewer (no joke) charts all his favorite stock symbols manually on paper.

hardcore_charting

I don’t know how he actually places his trades but I suspect it probably involves inscribing the trade on a scroll made out of frog skin which is then relayed post haste via express donkey to some Bangkok bucket shop several hundred miles away.

And there you have it – the exact opposite of high frequency trading, So next time you find yourself complaining about a missed entry or a crappy bid then just chill out and think of this guy.


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.
  • Tomcat

    Blue screen on the Zero anyone?

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

    very interesting. The red and blue numbers trigger a movie I recall. (Knowing)

    http://nyuz.elte.hu/wp-content/uploads/sites/6/2016/11/979516.jpg

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

    Yes the infamous one.

  • Yoda

    Anybody likes NG for a long trade at this price?

  • http://evilspeculator.com Sir Mole III

    I’m on it guys!

  • http://evilspeculator.com Sir Mole III

    Working on it.

  • Yoda

    The end is nigh when the tape has assumed an exponential rate of growth, with little participation to support the move. It’s OPEX week after all so anything is possible. To paraphrase Gartman:“Melt Up” has begun in earnest and it will stop when it stops and not a moment before.”
    Personally, I’ll pass on the “euphoria” stage.

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

    If anybody can speak to exponentials, it’s Mole.
    He did a great job with silver back-in-the-day.
    I expect similar performance!
    😉

  • Yoda

    FWIW, VIX is up today

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • http://evilspeculator.com Sir Mole III

    Do you guys understand how the VIX works?

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

    I think so. if it (Market) moves radically VIX goes high.
    Direction, is indifferent, yes?

  • Yoda

    Definitively not like you do.

  • http://evilspeculator.com Sir Mole III

    The VIX is calculated using tranches of S&P 500 options in the next 30 days or so (it’s a bit more complex as there are two sub components – VXN and VXF). The time to expiration is measured down to the second and the algorithm is involved and can not be fully explained in a simple answer here.

    But essentially VIX represents the annualized magnitude of a 1 std dev move. So that this means is, if VIX is at 11.68 today, then a 1 standard deviation move in the SPX will be +/- 11.68% one year from today.

    Assuming there are ~256 market days in a year, this translates to 11.68 / sqrt(256) = 11.68/16 = 0.73% is the magnitude of 1 standard deviation (1 SD) move in 1 day.

    So if VIX is 11.68, then 1 SD move for today = 0.73%, 2 SD move = 1.46%, 3 SD move = 2.19% and so on…

    The moves of the VIX track prices on the SPX options market, not the general stock market—this is a key point. The SPX options market is big, with a notional value greater than $100 billion, and is dominated by institutional investors.

    A single SPX put or call option has the leverage of around $200K in stock value—too big for most retail investors.
    In general option premiums move inversely to the market. In a rising market, stock prices tend to be less volatile and option premiums low—hence a lower VIX.

    Declining markets are volatile (the old saying is that the market takes the stairs up and the elevator down) and option premiums increase. Much of this increase occurs when worried investors pay a large premium on puts to protect their positions.

    While S&P 500 option premiums generally move opposite to the S&P 500 itself they sometimes go their own way. For example, if the market has been on a long bull run without a pullback institutional investors will become increasingly concerned that a correction is overdue and start bidding up the price of puts—leading to a rising VIX in spite of a rising S&P. Historically 20% of the time the VIX moves in the same direction as the S&P 500—so please don’t claim the VIX is “broken” when you see the two markets move in tandem.

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

    Yep.

    Tho, I’m an elitist and prefer the VXO.

    Because high volatility is traditionally associated with bearish price action, the VIX is often referred to as the “fear index” or “fear gauge.” … The CBOE S&P 100 Volatility Index (VXO) is similar to the VIX, but the benchmark index from which it derives its value is the narrower S&P 100 Index (OEX).

  • http://evilspeculator.com Sir Mole III

    The VXO is in fact the ‘old’ VIX as it was calculated prior to 1993. It mainly uses strikes near the money and as such was insufficient in expression the ongoing risk potential.

    I think the VIX (and its brethren) are the most misunderstood market measures in existence. They have and continue to frustrate especially retail investors. Many have attempted to trade the various derivative ETFs and the VIX futures and most have failed.

    IMO the VIX on its own has zero predictive capability. In correlation with some of its related products, e.g. as a ratio I have however been relatively successful in extracting predictive value.

  • Yoda

    thanks for that

  • ridingwaves

    the gap is filled, I have no idea what will happen next….that futures market seems owned….

  • Yoda

    you sure that gap is filled? I see a gap between 2.843 and 2.891on Nov 21st 2016

  • Edd

    My daily system has triggered a short on the RUT if it holds till close(340pm). SPX up 13. Hmmmm

  • Tomcat

    I see the exact same thing, which is why my limit buy order is @2.85

  • ridingwaves

    let me look at that tonite, running like crazy..I might have missed lower gap

  • http://evilspeculator.com Sir Mole III
  • randomuser6789

    Wow. I am now much more informed on the real meaning of the VIX.
    Thank you!

  • CandleStickEmUpper

    Im long at 2.950. I still like to see the large gap filled at the 3.5-3.7 area. However, Im prepared for it to swing lower at 2.840 after today’s close on the lows. The weather has been quite warm here on the east coast lately, not much of a cold winter…

  • http://greenlander1.blogspot.com/ Greenlander

    Added IWM short for 1-2 day hold, holding beat up AMZN Mar puts, and trimmed off 1/2 GLD short bc of potential equities weakness. Super low put/ call ratio at .65 which usually means chop or a bit of wkness

  • Billabong

    Mole, the jungle story is priceless … thanks!

  • Billabong

    Heads-up — Humphrey Hawkins testimony for the next two days …. prepare for the Yellen effect.

  • http://greenlander1.blogspot.com/ Greenlander

    hedging perhaps by entities very long

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

    Poor Mrs. GG

  • Yoda

    LOL. I would pay to see the face of the one in the center once the other one stops spinning the thing.

  • AcoBrasil

    Nice doji following a small gap on SPX yesterday with slightly overbought RSI with a break of the upper bollinger. Now that the V1 has rolled over and is almost touching spot, it looks like a good risk-return here.

    I picked up some UVXY in premarket.

  • http://gerb-reloaded.blogspot.com/ Gold_Gerb
  • http://evilspeculator.com Sir Mole III