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Final Hurdle
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Final Hurdle

by The MoleApril 24, 2013

In my morning briefing I proposed that the current up swing needed to start kicking things into fourth gear at this point. The fact that I continue to see sideways tape and the possibility of distribution suggests that we may (just may) get another shake out before continuing higher. Let’s line up the usual suspects:

The NQ has yet to push above its daily NLBL at 2834.25 – that one is valid for one more day. This means that price needs to reverse by tomorrow or we’ll probably see continuation higher. A lack of context usually means that the prevailing trend leads forward (bullish up and bearish down).

The S&P futures are sitting above the daily NLBL at 1570.75 – that’s positive and as long as we remain here until tomorrow evening we should be good shape. A drop back below could drag us back to the NLSL at 1535.25. A drop from here would rattle some of the late chasers and thus could easily accelerate. That’s why I’m putting it on the map – it’s one of those low probability but high velocity moves that you often don’t see coming. I would give the bearish scenario about a 35% chance right now – if it is to happen then it needs to happen pretty soon.

Here’s a juicy setup courtesy of the Convict (i.e. Scott): The USD/JPY is painting a Retest Sell setup and the short trigger would be a breach below that hammer. I wrote shooting star on it as it’s usually what the entry rules demand. I would however still take that one, especially given that those NLBLs were on our setup list two days ago. But if you think that one is good let me raise the stakes a little:

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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 the usual social media waterholes.
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  • convictscott

    Nice photo Mole! At it happens I often get compared to that guy, as we were both imprisoned for the same thing, torturing and robbing drug dealers 😀

    Couple of minor points. Several of the setups posted are inside days, but *also* retest/retest variation sells. Statistics (again) prove they become higher reliability. cadusd is a retest variation sell, double inside day at the upper bollinger, and the last 3 days price action every day has been a failed attempt to go up. Gold/Silver are retest variation sells as well as inside periods, after the severity of the downmove, anything that looks like setting off another leg down is going to have gold bulls running for the exits. All of those are *outstanding* trades

  • convictscott

    Oh I will be attending this workshop in Germany in September. I’m a huge fan of Van Tharp and do a lot of his internal work. They are teaching a system with SQN of 4, which is dramatically higher than anything I have ever designed. Should be interesting

    http://www.vantharp.com/workshops/forex.asp

  • Rightside_ot_trade

    taking an /ES scalp on the red candle, the earlier one worked, Blue are getting washed out today

  • badflightrisk

    Shorts getting dusted in the miners

  • Joe_Jones

    very happy of my silver trade today. Took partial profit

  • AmazingLarry

    Saw that. HUI had a nice bounce. Bottom picking, been there done that. I’d like to bank coin, not donate it. NUGT should be fun, though.

  • strider

    Could be spring cleaning

  • Talon_III

    Thanks Scott and Mole. That USD/CAD setup is AWESOME!!! I am all over it.

  • https://evilspeculator.com molecool

    Way to quiet here – where’s everyone?

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

    (here!)

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

    you realize silver dances with the BPGDM?
    I don’t want remorse at 90 level, he he.
    (congrats)

  • Ivan

    Nice to see full disclosure and detail appearing in the naming the setups.

  • SirDagonet

    I have one of his books on my shelf, but haven’t visited his website in years… hmmm… $35k tuition for the super trader program? Oh, now I understand – it’s $120k worth of training!!

  • Ivan

    Doing their back apps …

  • convictscott

    All his super trader graduates are long term profitable professional traders trading strict rule based systems. Every single one. I spent way more than 35K learning how to be a losing trader by “trading” and I had to unlearn a lot of stuff when I started working with Ivan again. FYI everything that his super trader graduates do is in his book, you can get it all for under $100 total. Very few people have the discipline to do the sort of work he advocates to become a professional (myself I have extreme resistence to fully rule based systems) This year I started on his process, and I am finding it extremely beneficial (and I already am a long term profitable trader) with access to high level mentoring (from Ivan) and access to good traders like Mole to bounce ideas off. I’ve enjoyed the process advocated in his books enough that I gave them $6200 yesterday so I can do 2 of their workshops and visit Mole in September. In an industry filled to the brim with scammers, liars, and those who teach but cannot do, Van Tharp and Ivan are, in my opinion, the real deal.

  • convictscott

    HA!

  • Joe_Jones

    we may see a retest of the acceleration line tomorrow, at which I probably load up some more… unless for whatever reasons Silver decide to flush bottom pickers once more overnight.

  • Peter Levchenko

    I’ll be honest with you. The best ppl I’ve seen in biz don’t so workshops on trading. They are too busy trading making money. There are only a few exceptions where traders got so good that they went into educational side of things and the only two I know of are Reminiscinces of a Stock Operator, the bible, and Soros’ books.

    And also the very best that I have seen are truly special due to their gut instinct, which comes either from carefully learning from past experiences or just sensing the pain and the positioning in the market, or a combination of both – and inevitably ruthless discipline.

    This is the lethal combo and even though I have been profitable in all except my first year of trading and my sharpe ratio is good, I am trying to get to the “truly special” stage next. Takes some time but comes from painstakingly analysing every trade and mistake, distinguishing “good losses” from bad losses. And last but not least knowing exactly when to throw the usual rulebook out of the window and adopting different rules – what I call knowing what type of market it is. That’s what it’s about in my view. Trading is what I do for my career and I am still relatively young compared
    To the big boys out there. Just a point of view…

  • amokta

    Scratch (short) trade today – should have just gone fishing 🙂

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

    Bullish Percent (hypersensitive) signal.

    http://stockcharts.com/h-sc/ui?s=$BPSPX&p=D&yr=0&mn=2&dy=0&id=p40001069395

    Refer to April 9th. could be the beginning of a bull leg, or a wiggle, and down some more, next week.
    -DG

  • Peter Levchenko

    And re usdjpy setup I like it. I have been bullish for a while and whilst I have longer term long positions on via call spreads I think in the short term 100 is becoming a key inflection point, especially with BoJ coming up on Friday. They won’t deliver anytjing knew but the market knows it so what’s interesting is how it will react on the announcement. If it smashes 100 on it, it will wipe out all the retail dumbos and some 5min macros that got sucked into fading this move. We had one bear trap already this week to 98.50. Equally though, a push below there and there will be some big boys puking longs. Cash is the best way to play this I feel.
    Also reason why there’s been ALOT of offers ahead of 100 is option related as every mup bot either a 100 digital or a one touch start of the year. A few billion notional of those strikes are rolling off on Friday after BoJ which means spot is more likely to breach as it becomes more beneficial in the interest of both the sellers and the buyers of the 100 strike to exercise as expiry approaches. Should be some fun and games this week for sure… Watch this space.

    I have also been long EURCHF last few days. Yesterday it had its most bullish close in weeks through 100 day MA. I must say I entered initially purely for tech reasons, but there maybe a theme developing with the market dumping save Hafen ccys:
    1) gold – yours
    2) JPY – yours
    3) now CHF – yours
    Not to mention aud has been sold too…

    It’s interesting indeed especially since Gold crumbled as Japan announced biggest monetary easing ever.
    The market is now thinking that anaemic growth is a perfect environment where you just buy anything with yield, anything web any yield left. Hence why EU periphery bonds are being hoovered and US junk fixed income is having the best time in years…

    Why should I it stop? Which comes back to the point of why I never believed in gold rally. IT HAS ZERO YIELD. It’s just a piece of metal with the genuine need for production being like less than 10% of the overall market holdings. It’s purely speculative. And it’s not a currency cuz if I hold Swiss francs I can buy a nestle chocolate with them regardless of what foreign investors think it’s worth. With gold, there is purely price risk. It’s not
    An investment asset, it is a pure lottery,

  • amokta

    Many high betas up. Is the gold rush beginning, or is the party finishing?

  • convictscott

    You are exactly right, the best people will never do workshops, they make too much money trading. And I *love* reminiscences, and think Soros’s theory of reflexivity is the touchstone of the boom/bust cycle. It is also a very different thing psychologically trading for a large investment bank trying to get a big bonus (or a decent sharpe ratio) to trading your own account.

  • Thunder44

    Looks like the usd/cad could have broke. Good battle at the line.

  • convictscott

    Always an interesting perspective Peter, I appreciate your thoughts 🙂

  • http://ibergamot.blogspot.com/ i Bergamot

    1950
    Fill up a tank of family sedan for 2 silver morgan dollars
    2013
    Doing the same, just have to exchange them for $46 cash

    Speculation?
    Price risk?
    Lottery?

  • convictscott

    Seeing it has broken low, shorts *will* be accumulating, and the most obvious place for them to place their stops is the daily high. It is reasonable to assume that a break above the highs will be a bear trap. Therefore even though it is correct to be short, I would be prepared to reverse and go long if the highs are breached.

  • convictscott

    I’m not from the “professional” world.. I’m interested, what would be considered a reasonable return in % terms for a trader in his first few years of trading? What sort of capital controls would be on a guy in his first few years?

  • Ivan

    I suggest repeating the following mantra: This is merely 1 of the next 1,000 campaigns … therefore this has zero significance … else trading can become a real roller coaster ride … with flow-ons in other aspects of your life!

  • convictscott

    It is way too early to say but this smells a little like the start of a multi day move in eurusd

  • convictscott

    fuck balls! biased again!

  • convictscott

    Yes it has broken and if you missed it there are a few options. You could trade 30 min or 60 min setups. After a squeeze like that I suggest that inside bars and shooting star (breaks of their lows) would be extremely high probability for the next 12 hours or so. Anyone who wants to put the work in and watch CAD all day there is definitely money waiting there today

  • Ivan

    ‘Luckily’ my setups are black and white … hence bias can be sorted with open mind.

  • Thunder44

    No,I did not miss, was in well before,good call.just wondering if i should hold overnight,

  • Joe_Jones

    Either something really nasty is gonna happen very soon or bucky and bonds are about to experience the full force of gravity.

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

    check it. would love your input.

    Many offenders also have impairments in their autonomic nervous system, the system responsible for the edgy, nervous feeling that can come with emotional arousal. This leads to a fearless, risk-taking personality, perhaps to compensate for chronic under-arousal.

    http://www.newscientist.com/blogs/culturelab/2013/04/anatomy-violence-raine.html

  • Joe_Jones

    forgot the pic
    25 & 100 d BB

  • AmazingLarry

    Exactly. Monthly /DX since 1993. Narrowest range I can see since ’97 right before it launched hard. Plus a nice volume hole right below. I suppose if it goes down, it will fall right through it just like the metals did. I got my popcorn ready cause this shit is about to get real.

  • Joe_Jones

    LMAO!

  • jmoney3000

    Amen

  • Careus

    like a watching Agatha Christie movie with you guys…and you are trying to name the killer from start of movie…just watch the movie,eat popcorn,and enjoy yourself,it is not your job to find a killer…your rules will do that…btw. that kind of bias is coming from……fear of missing a big move…move of week,month,year,decade…lifetime…and guess what.. at the end you will miss it

  • Careus

    Best people in biz are hardly best…maybe as traders…but not as people…reasons why they don’t share/sell knowledge…there are plenty. Ego for start, fear that someone will do better than them…
    or,maybe they are just focused and doing their own thing in which they are good/best

  • Hungry_Joe

    I don’t know about the best traders, but it would be remiss of me if I don’t mention that Scott has always been generous in sharing what he knows about this craft. Whatever little that I think that I understand actually started from his posts. Thanks for that.

  • Careus

    My view was on “professional” world traders. I am also thankful to Scott, made me learn new things.

  • convictscott

    My sister is a forensic psychiatrist who specialises in violent criminals (she works with the criminally insane in hospital/prison) she thinks this is all very plausible

  • convictscott

    What do you RULES tell you to do? If you have no rules, then by definition everything you do is a mistake from here 🙂 Whatever you do your stop should be one tick above the daily high, at 1.02852. Subtract your entry price from this stop and that value is your R-Value, your RISK. In this instance it should be 36.3 pips (if your stop is not resting in the marketplace you are exposed to literally unlimited risk, so you MUST exit the trade immediately, never for 5 minutes should you have a position without a stop EVER)

    Here are several different options for managing the trade. You could use several of these in combination (I do) You need to find one that suits your personality. The point is not to find the best one, just pick one, and use it. That way you have rules and you have stuck to them.

    1) When the trade moves 1R in your favor either intraday or at close (my preference for sanity sake is to only adjust daily trades once a day, to avoid the anxiety of screenwatching) move your stop to breakeven.
    2) You could (not necessarily should) trade for a target. Taking partial profits at the moving average zone (whatever moving average you use, a 20 SMA would be adequate in this situation) would be sensible and depending on your risk profile either trailing a stop for the remainder or going for a target somewhere around the old spike lows 1.00823 (this would be overly ambitious in my view)

    3) Have an order resting in the market that if it hits your stop you reverse and go long, with a stop at your short entry price

    4) Use Ivan’s Protect-R modified trailing stop, which is what I use (previously discussed)

    6) Time based stop loss – if the trade has not made 1R by the close of the 3rd day you are in the trade, exit win lose or draw

    7) Mathematically a good compromise in this situation for this particular setup (retest variation sell has a larger number of outlier wins) is to wait until you have a close more than 1R from your entry price, then trail a stop at the high of each bar, walking the stop down to the next day’s high as long as you make a series of lower highs.

    Write your trade plan out on paper (a mental plan isn’t worth the paper its written on) stick it on your monitor. Your job at this point is not to have a winning trade, but to follow your rules. That is your only priority, and you will see it is surprisingly hard. If you are emotionally resistant to writing those rules, you need to ask yourself why.

  • convictscott

    I strongly suggest not fucking with it until after the close. Think about it, even though the setup looks great, its odds are 60:40 at BEST. Therefore if you get out of winning trades for a small win, you are trading a negative traders equation. If you take this trade 10 times, getting out for a small win (.25R) each time, then you will have 6 wins for a total of 1.5R less 4 losses for a total of -4R, giving you a net loss of -2.5R. Your BREAKEVEN point for this trade if it is a 60% win rate is .66R (6 x .66R = 4 x -1R)

  • https://evilspeculator.com molecool

    I’m a bit mixed on the subject. There definitely has been significant effort to stomp it back down. I’m surprised it’s been holding as it has given Bernanke’s QE machinations.

  • https://evilspeculator.com molecool

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