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Better Tread Cautiously
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Better Tread Cautiously

by The MoleSeptember 19, 2018

We all wish we could predict the future. After all trading would be a hell lot more profitable and given a year of prescient entries/exits we’d be able to retire in comfort on our own private islands. Unfortunately it is exactly this deep-set desire for clairvoyance mixed with a healthy helping of hubris that more often than not drives us to engage in hare-brained campaigns. What’s worse however is when you get exactly what you wished for. The tape turns almost exactly where you thought and your ego instantly puffs up like the chest of a male frigate bird.

Now that you think of yourself as a veritable market sage, what comes next is fairly predictable. Your position sizing inflates along with your ego while your stops begin to shrink a bit more every time. Which eventually of course leads to a nasty series of concurrent stop outs, and that in turn triggers revenge trading.

Of course your mileage is always going to vary depending on your personality type. I am an ETNJ on the Myers-Briggs personality scale. I guess no big surprise there for most people who’ve been visiting here for more than a few weeks.  Look at that 73% ‘judging’ trait which appears particularly pronounced.

It’s one that in general has served me well over the years when it came to making tough decisions about my life. However it’s also the one that repeatedly got me into trouble when I started out as a trader, as I had a tendency to believe my own bullshit when things started to work in my favor. Can’t argue with success, right? Well, actually you can.

Here’s the AUD/USD in which I had a short position but then pulled my ‘once per month’ privilege to violate the rules and exit when I started seeing a pretty distinct floor pattern. And it was the ‘right’ decision in hindsight as I otherwise would have gotten stopped out today. In fact I just grabbed a long with a stop < 0.7155.

So far so good. But the take away I want to bestow on you guys today is that getting what you want in trading is a double edged sword. Meaning it cuts both ways in that it’s a rewarding experience but at the same time it shifts your perception of yourself and thus can quickly lead you to do stupid things. So every time I find myself getting what I predicted I tell myself to curb my enthusiasm and don’t let my ego get in the way of things.

Okay, the EUR/USD is not going anywhere fast and I wouldn’t really both you guys with an update here. But the daily pattern is worth noting. Look at that huge inverted H&S pattern. To me the odds support resolution to 1.2 at minimum, maybe even 1.21. That would really suck for my exchange rate here in Europe.

Worth considering as well is the lower probability bearish scenario. If it fails it would be contrary to what I would consider general market consensus and that may amplify the resolution lower even further. Keep in mind that these patterns often paint a little fake out move before they finally embark on the big final leg. So I expect things to heat up here and that pretty soon.

Wheat is looking good now but my ISL remains.

The 10-year bond futures crashed and burned right after my long entry. So much for my prescient abilities and I better stick with playing the odds. Not much lost as I only played a 0.25% position size as it was considered a lottery ticket.

BTW that was a major break-down on the daily panel and I don’t recommend that you step underneath this falling sword. Bonds are again in a world of hurt.

Crude looking good and my ISL remains until it hopefully gets out of the gate.

Natgas already at 1.6R MFE and my trail now is at 1R. We call her the widow maker but she’s always good for a fast and hard ride.


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 the usual social media waterholes.
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  • joe mcverry

    You probably mean “Better Tread Cautiously”

  • Mark Shinnick

    Its an idiom thing.

  • StockTalker

    10 yr pumping, time for our move now. Buyers are thinning out.

  • bankwalker

    Mole is NOT an idiom. How dare you!

  • Mark Shinnick

    Oh…and you’d say he was no oxymoron too?

  • StockTalker

    Shorting /HG

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

    Where is the test?

  • http://www.captainboom.com/ captainboom
  • bankwalker

    thanks

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

    The DOW filled the gap from January. I am going with superstition and not mentioning my trade today. (see if that works) 🙂 I like today’s post. I will have to take that personality test. I don’t consider myself any kind of great trader but I have learned to use stops and trade my view of a set up which is progress. I do have a nasty habit of “chirping” loudly as they say in Pool Hall parlance when I an right. I have always been kind of a joker, win, lose or draw, I find something humorous in myself or a situation.

  • bankwalker

    short /CL dec contract …

  • Yoda

    It’s a good start

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

    ..could roll over, just like that cliff pictured above.

  • https://evilspeculator.com Sir Mole III

    Slow here today – where’s my crew?

  • https://evilspeculator.com Sir Mole III

    I think they mixed up the letters – you are clearly a S-PITA.

  • https://evilspeculator.com Sir Mole III

    If you score as psychopath you get a free internship at GS.

  • https://evilspeculator.com Sir Mole III

    YES – sorry

  • BKXtoZERO

    heading to my day job since I am such a great trader 🙂 helped my girl with glitter project this morning also

  • Julie 35 – 25 – 36

    I be here Chief Had a tight stop BAC and was stopped out basically break even on remaining 1/4
    JULIE

  • Julie 35 – 25 – 36

    Taking profits MNKD and SLV Leaving 1/4 on (long) tight stop on remaining 1/4
    JULIE

  • joe mcverry

    Good, for a moment there I thought this was going to be a pre-Halloween article

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

    Long drv.

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

    look at BTC hourly, right panel.
    whoa.

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

    Yom Kippur ends tonight.

  • nirav777
  • http://gerb-reloaded.blogspot.com Gold_Gerb

    the 5min (center) panel is loitering around the vwap. I concur.

  • https://evilspeculator.com Sir Mole III

    Total chop fest today…

  • https://evilspeculator.com Sir Mole III

    @nirav777:disqus Yeah, this is rare and usually it’s the harbinger of nasty things to come.

  • Julie 35 – 25 – 36

    Back to work Everyone Have A Great Rest Of Day Getting ready to short SPX possible double top
    JULIE

  • Mark Shinnick

    Yes, Mole…glad you sad that. Weird stuff brewing.

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

    bye!

    HYG, “we don’t need to stinkin double top”.

    https://stockcharts.com/h-sc/ui?s=HYG&p=W&yr=3&mn=9&dy=0&id=p41255448012

  • bankwalker

    bye Julie

  • randomuser6789

    I have been living on buy and hold until I see weird stuff like this.
    And this is why I am a sub. How many times would I hold too long or sell too early without the Zero? Certainly pays for itself.

  • https://evilspeculator.com Sir Mole III

    Nice input – glad it’s working for you. The Zero is the gift that keeps on giving 🙂

  • https://evilspeculator.com Sir Mole III

    I’m getting tucked in soon!

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

    Nite Nite chief!

  • BKXtoZERO

    I was eyeing up that same trade. Took the first move and my 11% bird in hand and left the others in the bush

  • http://iberianviews.blogspot.com/ catracho

    https://uploads.disquscdn.com/images/4fbaaad771fc28e7d6cbfa125cebaebb788bee59c05bae1ccd5b36ad354ee28a.png
    Rather than double top – possible new high – but no new high RSI – this is LONG term chart…

  • Mark Shinnick

    So…here we are returned to pre-February volatility.

  • HD

    GM all, buyers picked it up before 2900 but other than that pretty much following the plan. I got 2 pretty crappy replies to the idea so I knew I was on the right track.

    Some see, most don’t.

    https://uploads.disquscdn.com/images/eafe4e4bbaf0a31925571a92ff8c2d2c1d539cf378431367e015763dacca3907.png

  • https://evilspeculator.com Sir Mole III

    Hey guys – I’m working on a coding project today. How’s everyone?

  • bankwalker

    just ducky …

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

    just waiting for the next cute cat post.
    ;-D

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

    the dollar swan dive before open.

    https://finviz.com/futures_charts.ashx?t=DX&p=h1

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

    Equities to Treasuries ratio. Big Chart.

    look to the left.
    https://stockcharts.com/h-sc/ui?s=%24SPX%3ATLT&p=W&st=2006-09-04&id=p11417343512
    -GG

  • HD

    Anybody getting long Volatility?

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

    at the risk of dating myself.
    “Homey don’t play that”

  • BKXtoZERO

    oooooh ya.

  • Julie 35 – 25 – 36

    Is SPX a channel trade or what Top of channel will be at RSI 70 Again a rising wedge developing Waiting patiently https://uploads.disquscdn.com/images/05a10d28774e0b0d1cf97bcbec38addf87bf575015b235ee421f40a193335c24.png JULIE

  • Julie 35 – 25 – 36
  • http://gerb-reloaded.blogspot.com Gold_Gerb

    that’s a sweet chart BUT,

    to put it in Blonde Terminology ™
    you need to switch to a bigger dress size.
    (see April low)

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=0&mn=6&dy=0&id=p82779215905

    LOL (GG ducks)

    -GG

  • HD

    Quad witch hunt manana. 🙂

  • Julie 35 – 25 – 36

    GG My clothing colors black ; grey ; blue and white. Absolutely no green ; purple ; orange ; red. I did the test to match skin tone ; hair and eyes Today wearing black
    LOL !
    JULIE

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

    useless without pics.

    Did you get burned on BAC?

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

    Interesting chart with each bar being a month. I notice that this move is stronger and more volatile. If we were going to repeat the same, then we would be mid to late 2007, which is a year before fireworks happened. I have wondered about next September/October.
    However, although the Market may rhyme, it rarely, if ever, repeats. Still it is interesting to keep in mind. Thanks for sharing.

  • Julie 35 – 25 – 36

    GG No stopped out for basically break even on the remaining 1/4 short. Made a small amount previous 3/4
    JULIE

  • Julie 35 – 25 – 36

    GG Now if she was wearing red high heels and walking the Vegas Strip ! !
    LOL !

  • Julie 35 – 25 – 36

    GG Any guy she meets will wake up in a bathtub with one kidney missing !
    LOL !
    JULIE

  • BKXtoZERO

    Mole, speaking of your post that we all wish we could see the future and trade up and retire. There is an old twilight zone episode where a 2 bit hustler guy (who loved gambling) dies. He gets to what looks like heaven…. big fat guy with mustache/grey hair grants him the ability to always win. So he goes in, and wins at craps, wins at poker, roulette etc…. all the girls are on his arm no matter what. Finally he finds that the “thrill” is gone. Now upset he approaches the fat guy at the gate who granted his wish and says “if this is heaven I want out”! “send me to the other place”! The guy laughs and says “Heaven”! “what made you think you were in heaven”!

  • Ronebadger

    SPX up nicely…VIX – virtually flat

  • Julie 35 – 25 – 36

    GG What’s for lunch today ? I am having egg salad sandwich ; yogurt ; banana and grapes. As you say six pack abs Baby ! !
    JULIE

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

    an extremely small sandwich, and some tangerines.

    Off to Lunch!!

  • HD

    FWIW I don’t think of Forcasting market levels as “predicting the future.” You either have a method that gives you an edge or you don’t. Whether you method is price action, pattern, time, or some lagging indicator, our goal is to frame PRICE so we understand and can measure some probability of our perceived edge against risk.

    If you don’t have an edge the best thing to do is dollar cost average over the years and not trade it at all.

    Just my $0.02

  • Julie 35 – 25 – 36

    Right on HD ! A trade is never wrong if you know why you made the trade. If wrong then not wrong long
    JULIE

  • Julie 35 – 25 – 36

    BAC Very strong support 31.17. Resistance 31.35. Today’s low 31.14. Watching this one Guys
    JULIE

  • HD

    BTC pierced its 2 year TL yesterday and appears sharp rejection of those lower prices. Above 6600 may get a rally going. Below 6000 could get ugly.

  • BKXtoZERO

    The old saying at the pool hall was that if you can’t cut it at the pool hall there is a bowling alley down the street lol…

  • Julie 35 – 25 – 36

    BK Have you ever heard of “Flyboy” ? Rumored he got the name as he was at one time in the Air Force A Portland pool shark who beat Minnesota Fats and Willie Mosconi years ago. I at one time played pool in college
    JULIE

  • BKXtoZERO

    Yes

  • Mark Shinnick

    Those people must be sweating bullets; imagine all the building stops.

  • HD

    Julie. Perhaps some rotation this week. Banks rallied first.

  • Julie 35 – 25 – 36

    Neato BK Also Seattle had a great light heavyweight boxer who was ranked number one for years. The champs at the time ducked him. The boxing federations ordered the champ to give him a title shot or be stripped of the crown. He got the title shot and was in his 40’s and past his prime and lost. His name Eddie Cotton one of the best boxers ever . So was Denny Moyer a middleweight champ from Portland. Moyer beat Sugar Ray Robinson and all the rest. Eddie Cotton my grandfather said he was a great guy also
    JULIE

  • Julie 35 – 25 – 36

    HD BAC mirrors the Banking Index BKX to a tee .I agree about the rotation Thanks for your input HD
    JULIE

  • BKXtoZERO

    Portland Seattle and Montana rule the universe lol

  • Mark Shinnick

    What a frigging drag-out war going on in equities.

  • Julie 35 – 25 – 36

    BK LOL !
    JULIE

  • Julie 35 – 25 – 36

    Mark Unreal if there was an island reversal SPX
    JULIE

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

    Just one more trade Lord, help me get one more
    😉

    https://www.youtube.com/watch?v=s2-1hz1juBI

  • Julie 35 – 25 – 36

    MNKD Closing stop on remaining 1/4 long 1.71 At close below 1.71 will be out 1.58 very strong support
    JULIE

  • https://evilspeculator.com Sir Mole III

    HA – I actually remember that episode. Great writing – they don’t make shows like that anymore.

  • https://evilspeculator.com Sir Mole III

    Nice outfit.

  • https://evilspeculator.com Sir Mole III

    LOL

  • https://evilspeculator.com Sir Mole III
  • BKXtoZERO

    I have seen a lot of Hindenburg omens recently. Even today NYSE highs to lows was within 10

  • Julie 35 – 25 – 36

    Hi Chief. Glad you are feeling better after your MRI Thanks for the chart Chief
    JULIE

  • https://evilspeculator.com Sir Mole III

    Admittedly those are tough to read. My guide in situations like these is the VWAP – which clearly never gets touched.

  • Mark Shinnick

    Yeah…I’d say throw out all the bromides, norms and rules of thumb. Have utmost respect for what pricing actually is against one’s own models no matter its seeming structure.

  • https://evilspeculator.com Sir Mole III

    That MRI was two weeks ago, darling. I’m getting better but it’s been a rough year for me health wise. Guess things are catching up to me – years of stress 🙁

  • Mark Shinnick

    yes…so have all the bots who’ve calculated you saw that.

  • Julie 35 – 25 – 36

    One day at a time Chief. My husband is a Mason . A Masonic tenet “This too shall pass” A great stress reliever for me is the gym
    JULIE

  • HD

    Good thing all the FANGs making new ath’s too….

  • Julie 35 – 25 – 36

    MNKD Bear flag my stop (closing) 1.71 will close below 1.71 Now out of remaining 1/4 long Bought at 1.57
    JULIE

  • BKXtoZERO

    Do you always have to be prescient reasonable and spot on?

  • Julie 35 – 25 – 36

    HD FB Facebook ?
    JULIE

  • BKXtoZERO

    Stress can’t be from trading…. You have been doing well no matter what.

  • System Trader

    Mole, looks like we got a resolution on the I/HS on the Eur/Usd. Maybe some of us system traders can have a decent 4th quarter. 2018 has been tough.

  • BKXtoZERO

    Mole. How is Scott since that serious episode he had? I hope he fully recovered.

  • Julie 35 – 25 – 36

    BAC Love those black candles at a resistance. 31 .17 is a support Today failed at 31.35 resistance Tomorrow will possibly nail the short on the 60 min chart JULIE https://uploads.disquscdn.com/images/406032e015e6a2bc8b3ef508e33311757a3a98a2b9d871e1a080735cf089c308.png

  • randomuser6789

    I am long TVIX. Lamenting how VIX closed up 1.5% and TVIX down 3.5%. 5% differential means it is not tracking well to say the least.

  • randomuser6789

    AMZN’s ATH was 9/4 – 2 weeks ago! It is 5% down from there at close today.

  • HD

    Correct. tvIx does not track the VIX.

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

    After months of crooking my neck, I too have decided to surrender,
    and just turn my monitor.

    If your monitor is fixed, I am offering a ‘chart normalization’ service!

    It’s a real winner, buy the low line, sell the higher line(s). eazy peazy!

    https://uploads.disquscdn.com/images/2fa8a84dfafd281d0af1f002e1120834d6fd48b8920c0bfbc0f537a83f183ee6.png

  • Julie 35 – 25 – 36

    GG I just stand on my head …. Works great ! LOL !
    JULIE

  • BKXtoZERO

    You hipped me to that a few months ago. TVIX is in a stealth bull mkt but only people smart enough to tilt their monitors have a clue.

  • Mark Shinnick

    Its you working with lasers who has to be friggin spot-on.

  • ridingwaves

    mid term equity love affairs are potent…melt ups too….
    this year has been awesome on the markets…..

  • https://evilspeculator.com Sir Mole III

    Mmmh, that trick may work well for perma-bears.