Discretionary Trading
Now Reading
You Are Welcome
54

You Are Welcome

by The MoleOctober 17, 2013

Remember on Monday when I told you guys not to panic and instead to fade the doomsday news and to follow our charts? I hope you paid attention and ergo your accounts are flashing green right now. Well, you’re welcome, but as they say – you’re only as good as your last trade, so let’s get on with it, shall we?

At this point the bots appear to be in complete control of the equities side. Take a look at the Zero Lite and the Mole indicator right below which is producing a pattern I have NOT seen in five years of following it on a daily basis. More specifically I have never seen a day where selling pressure is absolutely non-existent. As of this writing the red line has spent most of the session in plus territory and that is highly unusual. Seems like a lot of folks are being squeezed out of short positions today and the bots are mercilessly driving this thing higher.

Which in itself strongly suggests continuation higher. Plus we have a weekly NLBL on the SPX which has been taken out today. A close above it tomorrow would be a weekly buy signal.

The P&F is also looking very interesting as we’re about to breach a previous high and that confirms the bullish price objective of 1880. Again, we probably don’t get there in one swoop but that’s what I told you guys a few months ago when the PO was pointing at 1770ish.

Gold has pushed higher today as well and is now finding itself near a daily NLBL which is positioned right below the 100-day SMA. Then there’s that 25-week SMA which is falling hard and should catch up with price  in a few days. Quite a bit of resistance. I would be short here with a stop above the 100-day. Now, the odds for a breach are actually not bad so I have no directional bias. Meaning that I’ll be long on a breach of the daily NLBL and the daily SMA. The weekly NLBL at 1,353.8 would be confirmation of the long side. But we’re far from getting there right now – until proven otherwise we should be thinking reversal right now – one step at a time.

Once again we are graced with some juicy setups today – please join me in the lair:

evil_separator

It's not too late - learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don't waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Please login or subscribe here to see the remainder of this post.

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.
  • SS_JJ

    Added more vxx. Die biatch!

  • Ronebadger

    That’s a lot of blue arrows…all bunched up

  • Rightside_ot_trade

    /CT nice example of a head fake below a long trading range;
    Hourly FO-B , held the 3 hour TD Risk Level
    >4R currently
    Now watching if it breaks top of the range and the response

  • newbfxtrader

    Mole thats exactly what I was trying to convey about the zero. Nothing bearish you can short into.

  • http://evilspeculator.com molecool

    Best to ignore them on a trending day like this.

  • newbfxtrader

    https://www.tradingview.com/x/BMJX1Z2H/

    Cant you wait for at least one green candle? Patience….

  • SS_JJ

    Looks like the bitch does not want to roll over and die today. Stop at 13.08.

  • newbfxtrader
  • http://evilspeculator.com molecool

    You need to give thought as to why you are taking a trade. What indication of a reversal put you into that trade? Frankly, this is pretty basic and we’ve covered it here many times. It’s time for you to start listening.

  • http://evilspeculator.com molecool

    Also, I did mention that trading the VIX and especially its ETNs/ETFs is very difficult – why do you choose to trade volatility this way?

  • http://dartht.blogspot.com/ Heisen_Gerb

    5 Years?! – are you sure? there was those times in Korea & Paris & Houston.
    you might have missed a day. 😉

    http://s15.postimg.org/f6dtkvjrf/elloquent.png

  • SS_JJ

    I cannot trade futures

  • SS_JJ

    Don’t worry mate. I’m still well into the green today, thanks to my yukky silver miners

  • SS_JJ

    reloading some VXX before EOD to keep overnight

  • Ronebadger

    Been there…done that…made a killing…also, got killed

  • SS_JJ

    I am no problem taking that risk today

  • mothwhoflysbackwards

    RE: Chase bank comments from last comments. Early 2009 I got worried about banks and took 100 k cash out of Chase with no problem. So I Bergmonts tale of the 12k last year is worrying. And yes I put it back around 2011 so now I wonder — translation: yikes!

  • SS_JJ

    I have most of my funds out of the US and leave only what I need to pay my bills

  • mothwhoflysbackwards

    How would you trade volatility? Straddle/strangle on things other then VIX?

  • mothwhoflysbackwards

    A little while ago I had a long comment on VIX/VXX and the ETFs that track it. Unlike some here I don’t hate these things and they can work, I don’t wanna repeat myself so you may want to check it out. It has all sorts of cool stuff from compounding to contango and why VIX options (I know you are in VXX) don’t work like regular options.

    If you find my comments also look at the link Mole gave us on this subject, it is right next to my comments and also worthwhile.

  • convictscott

    So what? That’s shit thinking mate, its ok to take a shit trade because you have profit in another trade? I don’t know anything about the VXX (don’t follow it) so I can’t comment on the actual trade. I do know that getting sloppy with profits will whiteant your account in the long term.

  • BobbyLow

    Giving me the “Shivers” thinking about trading Straddles and Strangles. :)

  • convictscott

    At the Van Tharp seminar I attended recently I met a fund trader who specialized in trading volatility of currencies. This guy had degrees in physics and maths, super smart and a better trader than me (objectively speaking). You want to get in that shark tank, you are swimming with a different breed of fish. No thank you

  • SS_JJ

    When I play VXX (rarely), I usually do not hold it more that 2 days, 3 days max. Contango is a bitch and I burned myself with it in the past. These are quick plays for me. I am holding overnight today because I see a good return potential with a manageable risk.

  • mothwhoflysbackwards

    Yeah… I got “the pit and the pendulum” (remember the old Poe story?) more then a few times. Swings one way then the other and each time (as time runs out) the swing of the pendulum is just a little lower until you get chopped in half. They work best as a volatility play (IMO) but not very good for direction unless a big move.

  • http://evilspeculator.com molecool

    Vega plays – easiest when volatility is relatively low (i.e. historical vs. realized) – like long puts and calls, backspreads and long strangles/straddles. High volatility plays (meaning you want to sell it) are a bit more tricky but possible – like short puts and calls (dangerous!), ratio spreads and short strangles/ straddles.

    The safest way to play vega is to play the long side IMO – buy puts (ITM and OTM) at important inflection points. So if we see a topping pattern just getting long vega can be extremely profitable. You can treat them like regular trades in that you stop yourself out if your inflection point is breached. IF you play OTM you’ll incur very little damage actually but IF it actually drops it can get very juicy due to vega alone.

  • mothwhoflysbackwards

    Hey whatever blows up your skirt 😉 Contango may be a bitch but she is your bitch if you are short the VXX or anything constructed with futures. So I think (your) 3 day max is a good idea if long, but if you are short ride the bitch pull her hair and slap her ass. Trust me SVXY likes it!

    Of course this is all mechanical and has nothing to do with direction, but the short ETFs can gain 10%+ a month just from contango. Dig the cboe micro site if you have not already done so.

  • http://evilspeculator.com molecool
  • http://evilspeculator.com molecool

    I hear you mate – and as I’ve mentioned above – I only take the very easy setups. Like long vega during possible market tops. You don’t have to play vega all the time – only when it’s most profitable and at the same time easy to do with little downside risk.

  • http://evilspeculator.com molecool

    Futures are not affected by vega or other option greeks.

  • SS_JJ

    Why is it wrong to take a contrarian trade when there is no selling pressure?

  • BobbyLow

    Roger that.

    I think a couple of years ago you were saying that you had a difficult time trading options. I thought to myself well I can figure this shit out. After screwing around with Options over the years, I thought all I have to do is really put in the committment to learn the Greeks; Delta, Gamma, Vega and Theta and their relationship to the underlying stock and I can do this.

    What I should have realized at the time was that if you had a hard time with them, what in the world would make me think that I wouldn’t?

    Even after having a working knowledge of the Greeks, I still lost my ass. I understand that Wall Street is not Sesamee Street. But IMO, out of all the markets available to me, the Option Market is the most difficult market to trade.

    Option pushers always say, well you can only lose the relatively small cost of the options as opposed to the underlying. But what they don’t say is that these losses can end up being “Death by a thousand Cuts.

  • mothwhoflysbackwards

    Thanks for the reply Mole. Yeah I only play the long (vega) side when dealing with options just because of the risk you pointed out. It also seems (from what you said) that buying puts as directional play (topping) will give a huge vega boost in addition to directional gains and I can “treat it as a regular trade”. Options for long vega plays may thus be better then ETFs. On the other hand if you want to bet on Volatility going down maybe the ETFs are the best (safest) way to play it as opposed to selling option with high vega.

    My idea with straddles/strangles (was) to have the call ITM giving me a better delta so if (underlying) goes up my call should move up faster then put moves down and help to make up for falling vega.

    Thanks again for the reply, I respect your opinion.

  • BobbyLow

    Yep, I remember playing a few complex Option Trades just before earnings on GOOG and a few other big movers a few years ago. I hit on a few of them but for the most part it just wasn’t worth it.

  • mothwhoflysbackwards

    i.v. crush? Apparently you were not the only one expecting a big move into earnings!

  • convictscott

    It wasn’t in a single reputable news source. Take zerohedge with a big grain of salt.

  • convictscott

    I’m not the smartest guy in the room, by any stretch of the imagination. As a student I had the stupidest job in the world. I used to dress in a giant koala suit and juggle for money for the wilderness society. Now what I learnt there (aside from Koala suits need to be washed regularly) is that anyone can learn to juggle 3 balls. Add one extra ball to make 4 and its not just a little bit harder, its damn near impossible.

    Options compared to futures is juggling 4 balls compared to 3.

    Adding the extra time element makes it dramatically harder. Add in the wobegone syndrome from yesterdays excellent post, and we all believe we are better than we are, and underestimate the difficulty involved.

    The other thing about options is you get your ass handed to you on the spread. Beginner traders really really underestimate the effect of slippage and brokerage on trading.

  • convictscott

    Futures are so much easier :)

  • convictscott

    I didn’t say it was wrong to take a counter trend trade. I said your statement “I’m still well into the green today, thanks to my yukky silver miners” is implicitly excusing poor process.

    If your systems and setups allow you to take a trade here, then fuck yes, take it.

  • convictscott

    And the helpful label “beginner”… I call bullshit on that 😉

  • convictscott

    Until you are a consistently profitable stock/futures/fx trader you have absolutely no business trading options. You have even less business writing them.

  • convictscott

    I flat out suck at options. I understand the math. I just suck at them.

  • convictscott

    Vix futures

  • http://dartht.blogspot.com/ Heisen_Gerb

    winner winner, blue chicken dinner.
    1733.
    http://evilspeculator.com/?p=38850#comment-1085981032

    http://stockcharts.com/h-sc/ui?s=$SPX&p=D&yr=0&mn=3&dy=0&id=p28964907271
    I know, I know – next thousand trades

  • bdoone

    1st day of options class in college the prof. walks in and says, ‘I have 110 business and finance majors here today. A quarter of you wont be back after today; half of that will drop by withdrawal date. Of the 40 or so left, a dozen will eventually stop coming. Whoever is left and puts forth the effort will at least pass because you are either a masochist or serious finance diehards, most likely both. A handful of you will actually get it and if you can understand and trade options, then you can trade anything.” He was dead on right and it was easily the hardest class I had but I got one of his rare A’s. It was like a whole new way of thinking.

  • convictscott
  • neowave

    @ scott, mole

    I enjoyed your post “perception versus reality”. I don’t want to be a quiter and stick with the system. Unfortunately my timing couldn’t have been worse to join crazy ivan. Since you were already up 10 R when I joined. So I took the fall but not the profits sofar. But still I am going to stick to it. Since I know over time, it will pay off.

    Yesterday we had a small discussion on how I am being fucked by my broker. And I am going to move to IB, just like you guys. There was however a question you didn’t answer. AND I really want to have exact the same result as you guys. So could you please reply on this question. IF this is the trade you should make.

    LONG SIGNALS: IP-L
    IF BUY AUDJPY STOP @93.925.
    THEN SELL AUDJPY STOP @93.635.

    RISK: 29 pips.

    1.a.your entry on IB is 93,93?
    b. and your fx calculator is basis 29,5 pips?

    OR
    2.a. your entry on IB is 93,925
    b. and your fx calculator is basis 29 pips?

    I need this info in order to be able to mimic your performance 100%

    Thanks

  • convictscott

    The way I personally do it is EXACTLY as the emails. The order is entered exactly as above, 93.925 stop 93.635 risk calculator is 29 pips.

    Honestly – we wouldn’t say 29 pips in the email if we didn’t want you to use 29 pips. Similarly we wouldn’t tell you to put your stop at 93.635 if we really meant some other number. Mole would, but I wouldn’t 😀

    Now it is up to you and we certainly don’t endorse it (and don’t want to answer a million questions about it), but if you want to get a little fancy you can get in on a StopLimit order for the correct price above, or a half or full pip better price, thus guaranteeing zero slippage, or some positive slippage on the first leg of your round trip.

    The effect of this will be to cause you to miss out on the occasional infrequent winner that hits your buy price and never looks back (like would happen on a news event with an explosive price move). It would also save you a tiny fraction of an R every trade that would add up over time. The average R value is about 30 pips, so saving a pip each trade (including the losers) is a bigger deal than you think.

    This is not something I would recommend beginners do (I don’t do it either I just take the setups just like you get em) but as you become more proficient you may want to consider checking news releases for the day and if there is nothing coming up, doing it (I would never use this strategy if there is event risk).

  • convictscott

    Crazy Ivan 480 painted a very nice win on EURUSD and is currently long which I think is a very nice trade, capturing the volatility contraction/expansion nicely

  • convictscott

    There are downsides with IB as well as upsides. The spread and costs structure is unbeatable, that part is great. Very close to institutional level. The software is not so easy to use as MT4 based stuff. They also don’t automatically convert back winnings to your base currency, so you are left with little bits of CAD, JPY, etc in your account that you have to periodically convert back, which is a pain. The customer support is always available on phone, but its proper professional customer support, which basically assumes you know everything there is to know about trading. They won’t explain what different order types mean or help you too much, you can query a transaction or fix a problem, thats all.

  • neowave

    Thanks for the reply!

  • http://evilspeculator.com molecool

    “Mole would, but I wouldn’t :D”

    Don’t make me come down there!!!

  • http://evilspeculator.com molecool

    ¤ø„¸¸„ø¤º°¨¤ø„¸¸„ø¤º°¨

    ¨°º¤ S H A K E N ¤º°¨

    ¸„ø¤º° B A K E !“°º¤ø„¸

    ¸„ø¤º°¨¤ø„¸¸„ø¤º°º¤ø„¸

  • dking42

    That does look like a nice result, but looking at the records, the last EURUSD.480 trade was on October 4, when it went short at 1.36145 and covered at 1.3597. It’s been silent since then. Was this trade announced?