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Three Strikes You’re Out
23

Three Strikes You’re Out

by The MoleJuly 23, 2014

Equities have been whipsawing near our inflection point at 1982 which led me to lose 1/2 R twice (one short and one long) and it looks like my third short entry is about to meet its maker at any moment. Looking at equities across the board the odds seem to support a continuation higher but this is where I have to draw the line.

Three trades per campaign is my maximum no matter what. Either way this one swings it’s going to be annoying as I did not have any directional bias and thus attempted to get positioned near inflection points. But as I internalized my emotional response today I realized that this was exactly when I needed to step back and follow what I preach – not let my emotions get in the way of trading. Fact is that right now I don’t see a good entry here and let’s be clear: the worst thing one can get drawn into are revenge trades or attempting to chase a big move.

Fortunately however my AUD/JPY campaign has made up for some of the damage on the equities side and then some – plus it may have legs. Nice breach there yesterday and today it managed to climb just a few pips short of the 2R mark. I’ll be putting my stop at 1R now and now we see if we got a runner here.

By the way, this goes to show that it doesn’t make sense to fall prey to one-ities (a.k.a. an obsession) for a particular symbol. I’ve said it before and I’ll say it again – I don’t HAVE to trade equities just because it’s on everyone’s radar all the time. As a matter of fact if it wasn’t for the blog I would probably only look it once or twice a week. The forex side is actually where most of the action is these days which is why I have been trying to get more of you retail rats up to speed. More on that in the coming soon – I actually have an exciting announcement planned for next week.

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You have been briefed – now have fun but keep it frosty. See you guys later tomorrow.

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.
  • wandering196

    nyadv:nydec and VIX:VXO pointing down makes me keep my shorts on! (for now)

    http://stockcharts.com/h-sc/ui?s=$NYADV:$NYDEC&p=D&b=5&g=0&id=p93109363294&a=353746780

  • BobbyLow

    Excellent Post on all Points Mole!

  • Billabong

    Mole, it’s a killer market right now. I didn’t take any positions on Mon or Tue and today isn’t much better.

  • bdoone

    Thanks for the update Mole…Came across the chart below and caught my eye because in the past there have been quick spikes higher in SKEW but see now that it has been above 130 since June 18.
    Skew measures the perceived tail risk of the market via the pricing of OTM options. Generally, a rise indicates that ‘crash protection’ is in demand among institutional investors (the biggest traders in SPX options). An unusual move in the skew index is especially interesting when it diverges strongly from the VIX, which measures ATM and close to the money front month SPX option premiums.
    Basically what a ‘low VIX/high skew’ combination is saying is: ‘the market overall is complacent, but big investors perceive far more tail risk than usual.’

    I think there’s been some talk of SKEW on ES and if anybody wants to weigh in on this feel free. In the past +130 spike readings were time to take notice but 25 days +130 looks to me like institutionals are loading up on OTM protection perhaps? Food for thought!

  • BobbyLow

    Totally agree. I took two positions off yesterday for a net BE that were put on Sunday night and Monday Morning. Then I stayed away until I put on a 1/2R Position this morning and have a 1/2 R Position Buy Stop Pending on another Pair. If it gets filled fine if it doesn’t that’s fine too.

    I feel really great about yesterday because I didn’t force a trade. Forcing trades in the past has been one of my self destructors and not doing this was a win all by itself! :)

  • Billabong

    “I feel really great about yesterday because I didn’t force a trade.” Congratulations on showing discipline and patience (for a better probability situation).

  • wandering196
  • bdoone
  • wandering196

    look at this chart it ties these ideas together

    http://stocktwits.com/message/24924632

  • http://evilspeculator.com molecool

    Thanks for the pointer – if I may offer my own version:

  • http://evilspeculator.com molecool

    Yah, plus the GBP/JPY is pointing down as well but equities aren’t budging. When in doubt go with price.

  • http://evilspeculator.com molecool

    Well, I haven’t been stopped out yet (ISL at 1983) – but I have little hope it’ll hold.

  • bdoone

    Thanks, knew I could rely on you to throw something out there…as the brain searches for patterns: Dec 13/Jan 14 ‘M’ formation in SKEW looks telling although price has passed. Will look at it tomorrow with fresh eyes.

  • wandering196

    Your right! Looking forward to the announcement

  • BobbyLow

    Newbie was looking for something to push the NZD/USD off the cliff. Well it looks like the 5 PM EST Announcement did that with a 70 Pip Drop. I have no current position in it because there is too much luck involved in which way it goes after major announcements and sometimes it goes both ways to clear out all stops.

    Anyhow, congrats to anybody short this one.

  • newbfxtrader

    Was also long aud/nzd which I think may have made an important low for a while.

  • BobbyLow

    Congrats Newb. :)

  • newbfxtrader

    https://www.tradingview.com/x/7vX6sDmZ

    Get in at some point. Unless its a false break theres no support nearby.

  • BobbyLow

    I probably will. I’m just waiting for the dust to settle before I do. I don’t expect any big changes but I think there’s one more announcment at 6 PM EST.

  • ridingwaves

    Shorting during earnings season is bad for your account should be motto for last 4 years….the MM’s eat it up…that is the hopium they sell with better than expected revenues-earnings though we reduced estimates to make it look better…its a canard that they play well. I bet if you look at spx during earnings season over the last 4 years you will see much of the entire move over last 4 years… I can’t do it….Sitting at SeaTac waiting for plane…hard to trade when your on the road…

  • BobbyLow

    I went in for a 1/3 Position and will add when appropriate. This Pair has been very good to me over the past week so I want to be a little cautious to see what kind of retracement there is. Were about 900 Pips away from the 52 Week Low so potentially there’s plenty of room to maneuver here.

  • BobbyLow

    Also want to add that it was only on July 9th that it hit a 52 Week High of .8836.

    What a game. :)

  • Scott Phillips

    NEW POST