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The Slow Churn Continues
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The Slow Churn Continues

by The MoleDecember 2, 2015

We continue in upside churn mode – meaning we climb one step up and then fall back three quarters of that – then climb again and fall back again a little. It is starting to look like a sideways correction here as the opening for the bears to drive prices down a little ahead of a Santa rally is diminishing rapidly with every session now. The medium term resistance zone near 2010 is proving difficult to overcome and I guess the strategy seems to be death by a million paper cuts.

2015-12-02_spoos

As you can see there isn’t much activity beyond ES 2005 on the volume profile. The ambiguous remarks by Yellen earlier this morning seem to be interpreted as ‘no news is good news’ as all equity indeces are holding strong. As you know I’m still trailing my long positions from 2013.75 and there is no reason to mess with that right now.

2015-12-02_GBPCAD

I am grabbing a 1/4R long in GBP/CAD with a stop a very respectable distance away. It’s not exactly a fast mover this one but at the same time it’s also not prone to wild emotional swings as of late.

2015-12-02_events

The remaining 1/4R I’m taking out after the interest rate decision at 10:00am – assuming she holds near that diagonal and I didn’t get stopped out.

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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.
  • BobbyLow

    Mornin,

    Just another day in the hood and another day “Churning”. Sometimes there just isn’t a Santa Rally. But Ms. Market will let us know one way or the other over the next 3 weeks. 🙂

  • http://evilspeculator.com molecool

    “Sometimes there just isn’t a Santa Rally”

    True, but it’s also early in the month. Let’s just take it one session at at time…

  • kudra

    all the way out of UGAZ and it feels good despite losing over $87K total. What a waste. Why are all of you not getting rich shorting NG? seems like a no-brainer, one-way trade.

    currently short GDX via DUST and SPY via SPXS – underwater on both. gonna be a red year for trading. sigh.

  • mugabe

    I’m dreaming of a bull Christmas ,just like …

    you know the rest

  • RoastBeeph

    Nice divergence on 5 minute ZL. Starting to look for a long here.

  • Huey

    Nice, I have a long setup forming here too. Only thing I don’t like is TICK has been leaning negative all day.

  • BobbyLow

    I think we might have discussed this before, but did you use any kind of charting system before entering your UGAZ trade or did you go short on gut because you didn’t think it could go down anymore ? Or perhaps someone else said it was forming a bottom and greed overruled common sense? Gut trades like these can make me feel like a hero or a zero. They are no longer worth the risk to me because I can do just as well flipping a coin.

    I don’t know the size of your trading account but to have as many shares that you had in a 3X might be considered reckless even under a well thought out technical trade.

    An upside from getting completely out of this trade is at the very least a possible sense of relief that you don’t have to worry about it anymore. However the most important upside might be extra motivation for you to develop a bonafide system for entries, trade management and exits that have a proven edge.

    Regarding my position in DUST, I mentioned yesterday that I would be out on a Daily Close on GDX above 14.23. GDX closed at 14.16 yesterday so my trade remained alive. When I am eventually stopped at this price or prefferably something lower, it might or might not be the correct move but it is a DECISION that will have been made from a Pre-Designed Chart and a Pre-Designed Rules Based System. There will be no need for any thinking, hopium or second guessing. I strongly suggest that you put in your own set of Pre Designed Rules ASAP.

  • Huey
  • wandering196

    liking the bean oil

  • randomuser6789

    “Gut trades like these can make me feel like a hero or a zero. They are no longer worth the risk to me because I can do just as well flipping a coin.”
    I could do just as well on entries by flipping a coin, but I would still come out a loser because I could not manage the campaigns well. It seems simple: Cut your losers: let the winners run. But my dysfunction always leads me to do the opposite: Lock in your (small) profit; let the losers come around to my way of thinking eventually. It does not work out well. I am still developing rules while I sit on the sidelines and paper trade and back test ideas.

  • Huey

    Not taking this one. TICK continues to show weakness.

  • BobbyLow

    “Lock in your (small) profit; let the losers come around to my way of thinking eventually. It does not work out well.”

    “Been there done that”. 🙂 And I still have to fight this and every other bad trading habit I’ve developed over a period many years.

    Let’s not forget the major drivers in this business. Fear and Greed. We want to take profits early because of the fear of giving them back and the greed of wanting to make sure we keep them. Then we want to hold on to losers for the same reasons. Fear of recognizing a loss and the greed of missing out on profits when “it turns around”. Yeah right. 🙂

    Being patient and working on your Rules Based System is the best thing you can ever do in this business. Good for you!

  • mugabe

    ‘let the losers come around to my way of thinking eventually.’

    that’s a classic!

  • kudra

    Chalk up the UGAZ trade to greed, laziness, stupidity, unwillingness to take pain (to be wrong), etc. Trade was risky and mismanaged from the jump.

    Closed 15/16K DUST shares at 18.74 for .35% profit. I sold too early, in hindsight, but the trade was busted (was underwater 7.6% at EOD yesterday) and too big. I was given an out, and I took it. Looks like yesterday’s GDX move was just a sharp counter trend rally. However, the downtrend in GDX looks like it’s weakening. In any event, the daily moves in this symbol are significant.

  • kudra

    I am guilty of the same trading offenses.

  • hellbent

    “Why are all of you not getting rich shorting NG?”. Because we are all blind mate. Probabilities, as if any amateurs can calculate them, seldom go beyond 55-60%. Confidence is probably a better term. If our confidence is justified then our trading turnover should be 55% profit, or better, and 45% loss… Is anyone beating those numbers?

  • Huey

    Trying a small short here as /YM is breaking down from its range. Don’t like breakout plays in this type of market though.

  • kudra

    DGAZ up 54% since 11/17/15. Anyone on this?

    Most amateurs, like me, shy away from anything that’s really working out of fear that the run is over. We ask: How could it be that easy? We’re attracted to beaten up losers like UGAZ because we think we’re getting a bargain and wrongly view this as an edge. How much lower could it go?

    I’d take a 10% hit on UGAZ in one day and say wow, that has to be the worst of it. a lil more patience and this thing will show some life. each momentary counter rally gave me false hope that i thirsted for. can’t take a huge hit, so wait. Ridingwaves said he was interested in NG – another shred of hope, since I respect this particular poster. all of that was account crushing thinking.

  • http://pugsma.wordpress.com/denalis-turning-points/ denali92

    Mole – From a technical perspective, you may be spot on about the Bears running out of time….

    but from a December historical perspective (which I know certain people tend to hate…), we are actually in line with the typical pattern. December – more than any other month has an extremely distinct pattern that it generally (though not always) follows. That pattern is as follows:

    -Early December or late November low (note: has not happened in 2015)
    -Rally in to employment – generally ending post employment
    -Pull back for a few days generally ending on the Thursday or Friday before opex
    -Rally in to opex
    -The opex period can then be a high or more usually a double turn with a high and a low
    -Rally in to year end or at least post Christmas

    It does not always happen – but as most aspects of this pattern have occurred 12 out of the last 17 years, it is a pattern that is at a minimum useful to be aware of. In 2014, the rally to employment occurred, but the market fell in to opex Tuesday (instead of the usual rally) and then topped post Christmas.

    The November bear pattern which suggested a low during opex or post Thanksgiving for a good rally worked well last month… just like it did from 2007 through 2012 (though I must admit the set up for a long was never super high probability – so well done on catching that long at 2013.75 and running with it)

    -D

  • kudra

    Without a concrete plan, a trader is a feather in a tornado.

  • Huey

    +2R – trailing stop

  • http://evilspeculator.com molecool

    Yeah, I got no issue with that script – only question is whether this is a sideways correction or if we actually get a real one.

  • Scott Phillips

    Actually for once I agree with you – there is sufficient evidence of an actually statistically valid long edge… whether it has anything to do with opex is highly doubtful, but still.

  • http://evilspeculator.com molecool

    I’m going to mark the calendar.

  • http://evilspeculator.com molecool

    Good choice – always wait for price confirmation.

  • http://evilspeculator.com molecool

    Zero UPDATE:

  • BobbyLow

    That looks like about a $300,000 Position? So at a 2% size this would fit a $1,500,000 Trading Account. I’m not saying that you have to be at exactly 2% but anything higher than that massively increases your chances of going completely bust.

    There’s many more people besides me that will tell you the same thing. Your sizes are way too big especially if you don’t have rules to go by.

    I’ve had massive losses like yours but they were accumulated over numerous trades and not on just one. But nevertheless what I did over time was still fucking stupid and like a little lamb led to slaughter.

    Lastly, once you get to where you are almost totally busted like I did, it takes an extremely long time to come back because total bravado is turned into over cautiousness out of necessity.

    You don’t have to be that guy.

  • BobbyLow

    Do yourself a favor and read these quotes from around 80 years ago by Jesse Livermore. Most if not all of them are still true today.

    http://leavittbrothers.com/chartspeak/ChartSpeak_040608.pdf

    EDIT: READ THEM OVER AND OVER AGAIN!

  • Scott Phillips

    You are thinking the wrong way 🙂

    This is my most recent results, measured in multiples of risk (R). You can see that I have 12 winners and 13 losers. My biggest win is 3R and even that is unusual. I’m not trying to catch the next DGAZ, which is a fool’s errand, but control my risk and make sure my wins are a little bit bigger than my losses on average. This is my daily profit for the financial year 1 September to date.

    You can see how small edges will make your account grow in a most satisfying way, compared to that amateur hour “catch the next google” stuff.

    http://snag.gy/zVvow.jpg
    http://snag.gy/ZHr5A.jpg

  • Scott Phillips

    Certainly not me 🙂

  • Huey

    Closed out for +7.2R on an entry I didn’t like. Sometimes just have to close my eyes and follow the plan.

  • Scott Phillips

    You are going to go broke trading that size.

    Don’t be a fuckhead. Just stop.

  • kudra

    Sage advice.

  • BobbyLow

    Great Trade Huey!

    But ain’t that the truth? Sometimes it’s both Closing my eyes AND holding my nose. 🙂

  • OJuice

    good volume on ES spike lower. nice entry provided the volume tapers off and the low holds or is only tested.

  • Round we go

    is it bear time yet?

  • Huey

    No doubt!

  • OJuice

    bull time is my bet.

  • Ronebadger

    not sure, but it’s definitely deer season…

  • Round we go

    vix at breakout point. will see…

  • Round we go

    or it all ready happened. cus the EM was on the ropes in sep-oct.

  • Scott Phillips

    Not playing out so far

  • http://evilspeculator.com molecool

    If it doesn’t take off I’m closing my position at the close.

  • http://evilspeculator.com molecool

    Not gonna happen – I’m closing this one out.

  • http://evilspeculator.com molecool

    You were supposed to read up on some of the stuff in the favorites section. Clearly you have not done so otherwise you would be familiar with proper position sizing.

  • mugabe

    james bond reference? absolutely true, what you say.

  • mugabe

    You MUST NOT blow up your capital. This is very serious stuff.

  • Scott Phillips

    A first time for everything

  • OJuice

    I agree it looks suspicious. I’m gonna let it ride though.

  • Bernie

    hi guys,

    I’m not a programmer and I have been using the pencil and paper way (scott’s way) of coming up with a strategy based on daily close/chart. Backtesting for only 1-year for 1 instrument took me quite a while. It worked well for the an index from the beginning of this year.
    Trades:25
    Winners:16
    Losers:7
    This sample is too small for me to feel confident bout this strategy and it is only 1 instrument.

    Should I backtest with more instruments or backtest further backwards? What would be the next move?

    Also, I have been forward testing it over several instruments but the results have been mediocre at best. How would I know when the strategy/system is going through a bad patch?

    Comments would be gratefully appreciated 🙂

  • BKXtoZERO

    so looks like a spreadsheet to me… 1.2, 2,4 are R I guess…. 25%?

  • BKXtoZERO

    Saved as PDF Thanks!

  • TheRooster

    hey Bernie

    1yr is not long enough to get a feel for how a daily system will perform in different market environments.

    What index were you looking at? Also, what was your ave win and loss size or expectancy?

  • Bernie

    from that one year: average win 3.15R average loss is 1R
    How do you calculate expectancy? I have not reached that part yet in Van Tharp’s book

    The index Im trading is the KLCI. I’m from Malaysia

    I know 1 year is not long enough, just wondering is there anyway of hastening the process without programming knowledge? It would probably take me weeks just to run thru all the years from 2005-2015

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

    Bernie – Pick a year that you deem to be a tough one with your concept … and then pick another year … all the same market … I suggest 1987 and 1990 be included in your sample … irrespective of whether your market of choice is a stock index or not.

    From a pure stats perspective, 25 sample size is but a grain of sand on the beach … I urge my students to have a sample size of 200 + … quite possibly an over-kill from a theoretical perspective … yet it works … and provides mega insights into the DNA of the person + the market + the RBT … it certainly helps to have all three in accord.

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

    The number of ‘events’ dictates the linear time of a sample.

  • Bernie

    Thanks Ivan… good stuff 🙂

    200+ would be roughly 6-8 years… ok… that can be done…

    So it is better to run a backtest on 1 instrument rather than a wide variety?

  • TheRooster

    ok, I don’t have great charting for KLCI but it looks like it has been broadly sideways in the last year within a 20% range?

    based on your stats you made 43R on 25 trades – this is an outstanding result but seems to good to be true – you have nowhere near enough trades for this result to be statistically significant unfortunately

    I would aim for 250 trades minimum – thats my minimum number for daily systems but others use higher or lower figures……

    i see some of the masters have come out to play now so i will take back seat and chime if I have any value to add….

  • Bernie

    Thanks Rooster for your help… yes, I am also a bit skeptical… so i guess i still have lots of work to do b4 i can start trading again 🙂

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

    Bernie … 1 instrument is purer and simpler … and takes away 1 weak link … that is choice of instrument.

    One test of the robustness / reality of a concept or RBT … is my test of Universality … translation … it must produce ‘acceptable’ profits / drawdown on more than just 1 instrument and 1 timeframe … a very tall order in terms of effort and efficacy … yet not impossible to achieve.

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

    TR – everyone has something worthy of contemplation to contribute … so do soldier on I suggest.

  • http://evilspeculator.com molecool

    Fucking FT.com – they sent out a tweet 5 minutes before the ECB decision that (and I paraphrase) “they’re leaving it unchanged in shock decision”. This cut a Scalpius EUR/USD campaign from 2+R profit to 0.5R. Actually we got lucky to get out so quickly!

  • http://evilspeculator.com molecool

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