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Sideways High Impulsive Tape
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Sideways High Impulsive Tape

by The MoleApril 21, 2015

It’s the worst market period of them all – sideways high impulsive tape, a.k.a. SHIT. I’m the first one to admit that the current market phase is taking its psychological toll. Which is why I am spending as little time as possible looking at my roster of charts. The short term panels seem to be running like a hare since about the time I returned from Mexico. The first few days were great but it’s been a pretty brutal grind since the second week of April and I’m very tempted to buy another flight ticket and head to a nice beach without Internet access.

2015-04-21_spoos_update

Alas I have a responsibility to steer you guys through difficult times as well, which is part and parcel of what you subs are paying me for. Which is why I hope you can forgive me if I start sounding like a damn broken record as of late. Stay the heck out, don’t touch this tape, no edge here, don’t you dare press that buy button, take small position sizes, stay nimble, extra picky, keep your powder dry – heck I’m sick of listening to myself at this point! Where’s the fun in that?

Problem is however – we’re not here to have fun really. Although I do my best to lighten things up on a daily basis trading your own money is a dead serious endeavor and it only takes a few weeks of bad decisions to wipe out a big chunk of your principal. So please take me very serious when I beseech you to not get drawn into crappy tape. There is no real reason to participate here and as soon as that changes you will be the first to know.

Repeat after me: Cash is a position!

2015-04-21_CADJPY_setup

That said – the lowly Mole knows to extract promising setups even in the most dire of times. Here’s CAD/JPY which is looking pretty promising today. We have a double IP near the 100-day SMA and means we got a binary entry opportunity. On a breach in either direction tomorrow put your stop on the inverse entry trigger and Bob’s your uncle.

A few more below the fold for my intrepid subs:

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Don’t worry folks – even this market phase shall pass. It always does and your patience will soon be rewarded once the fireworks season starts again. Just ask Captain Boom 😉

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 the usual social media waterholes.
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  • Scott Phillips

    Agree about the shit tape – steer clear

  • Scott Phillips

    Hellbent – from the previous thread

    “I’ve been ‘dabbling’ partly to alleviate boredom on night shit and partly to cement in some habits that I want to be part of my eventual coherent method. I’m working my way backwards to developing an edge which is an idea I think has some merit.. So yeah, a little bit loose with the entries. Money management however is getting much better defined. In particular, the habit of considering a large number of trades every time I modify a position. When you do a lot of that I’ve found you start to see the price action going in multiple directions, which of course it does over a number of different trades, and then it stops mattering which way the price actually goes.

    The pennies and steamroller problem is mostly addressed just by doing the maths and sticking to the rules. The real steamroller hazard for me is when you get over invested in a position and risk control goes out the window. I think that will always be a danger but one that is hopefully under control now.

    Call me Irish but the essence my approach is to learn how to capitalise on an edge, reliably, before I actually employ one… From what I’ve read a lot of people employ workable edges when they are starting out but lose faith because of poor money management. Anyway, I’m looking forward to things getting easier, profit wise. All this backing and filling is getting tedious :-)”

    1) Dabbling to relieve boredom is training a powerful habit that you can fix your emotions and have fun with trading. No No NO NO NOOOOO . Successful trading is boring, and process driven, this has to stop and stop today 🙂

    2) Work your way backwards to developing an edge NOT by trading but with a pencil and paper and calculator. There is absolutely zero chance you will make money being a “trade what I see” trader. You may as well cash in your account , and get that value worth of hookers and blow. It would actually be better

    3) I think you misunderstand “pennies in front of the steamroller”. 4 out of 5 attempted breakouts fail. 4 out of 5 counter trend moves fail to break the trend. Beginner traders are magnetically attracted to reversal trades, instead of the higher probability trend continuation trades. This is because it gives a shot in the arm of pure ego gratification when we catch a turning point. Like Denali on this site the other day, he has even labelled his setups “turning points”, which they most certainly are not. When I look at the trades you are taking, you are mostly trying to catch reversals. This low probability method is going to hurt you in the long run.

    4) Money management is getting better, sounds like you are giving yourself a passing grade in one area of trading. “Getting better” is categorically not good enough for real money trading. When and ONLY when you honestly call yourself “expert at the absolute top of his game” is the time you can trade for more than token (one share or $100 R values) money.

  • wandering196

    keep your arms inside the bus, but I do like your forex set ups

  • HeadNShoulder

    For a moment, at a split second this afternoon, I thought my trading system was on fire or something as I took 4 entrys following the signals since morning and only 1 of them made the money to cover the minor losses on the others. Literally just up +$5k. Glad I am not alone. Thanks Sir Mole, this post, is gold. “Cash is a position! Cash is a position! Cash is a position!”

  • hellbent

    I’m just going stick my bottom lip out for awhile, in silence.

  • ridingwaves

    RNF is going to break one way…I like it long….especially if NG stays currently in same range as it’s a huge component of fertilizer…yep that’s right Potash….has small yield…50pps to 9pps over 2 years, think it might have found it legs with 25,50,100sma below it on daily…weekly moved over 50sma first time since 5/13…

    some poster mentioned this last year around this same area and then it went much lower….

    easy move is over….what say you…

    http://s29.postimg.org/aqte65xzr/RNF_about_to_break_some_way.jpg

  • mugabe

    I personally would wait till it resolves

  • mugabe

    yes — not enjoying swing trading this. longer term accounts doing fine though (thank you, Asia and low euro)

  • Scott Phillips

    Looks good, buying pressure building in a trading range

  • Scott Phillips

    You have 6 months worth of hard work, trading right now is pretending to work, but really avoiding the hard work that needs to be done.

    Get to it 🙂

  • Scott Phillips

    I’m seeing a potential resolution in FX across the board today, time to pay attention rats

  • ridingwaves

    for shits and giggles, I like the pps volume getting bigger as it moves north, needs just a little kick, the 50 rising into that long term support is good for bulls…or will some shares just be trapped up there forever……glad I’m not an owner in the 50’s..picked up a little earlier at 14.89, hoping to get more around 14.40 area
    http://s2.postimg.org/qib50tx21/rnf_pnf.jpg

  • ridingwaves

    I took small entry, building a campaign…might need some time to resolve but has more positives than negatives right now…

  • hellbent

    1) Point taken.
    2) Yes, getting on to that is priority No1 when I get back to my own desk. You’re right and I’ll knock trading on the head until that bears fruit. Also, I’ll empty my account into managed funds until further notice. I don’t need to pay for chicks and hoovering it all up my nose is a really, really bad idea. I’m guessing your Australian 😉
    3) Shitloads of people never turn a profit for those reasons I’m sure and I do take the point. Certainly I’ve had that bias too.
    4) Kiwis tend to be understated. If I get to be ‘quite good’ I’ll be shouting the fighter jets at the Christmas party. ‘Getting better’ is pretty effing good where I come from 😉

    My turn to stick it to you lot:

    Do the rats adjust their stop loss to breakeven according to their system? If so has the level you adjust it at been back tested and optimised? And at what point do you move it up from there…I noticed myself leaving it there longer than a normal stop because “it’s risk free” – right? Seems to me it could be open to bias and worth fleshing out – probability wise.

    I’ll be back

  • Scott Phillips

    Good man.

    To answer your question about stops that is one of the biggest differences to make to system performance, and a real mistake is moving stops to breakeven too early.

    This is HIGHLY system specific. For trend following systems around 1.2R or 1.3R tends to be optimal. For scalping systems and other edges slightly less. Your average winning trade in R is a good guide, if it is higher, you should be moving stop to breakeven later.

    The classic mistake is to make stops too tight at the start and too loose at the end. You should be tightening stops when you have a big win in hand. This is highly system specific.

  • http://greenlander1.blogspot.com/ greenlander1

    This is pretty good short set up right now for equities. Sitting short from open in SPY. Easy fold if we breach above previous highs which would allow a very tight stop above. QQQ looks good too with an exhaustion candle printed at top of range. Also a clear fold if trendline is breached.

  • Scott Phillips

    It’s a good spot for a short trade because the reward is higher than the risk. Odds of it resolving are still 50/50

  • Scott Phillips

    And yes this has been extensively backtested by myself and Mole. I can’t speak for anyone else

  • Scott Phillips

    Have you considered that, just like driving (where 80% of people consider themselves above average drivers) – we tend to overstate our abilities in trading?

    Honestly I haven’t seen the evidence yet that you would be successful as a professional trader without more study and work 🙂

    What I suggest is the Van Tharp approach.

    1) Stop trading until you have a system.
    2) When you have a system trade it at the smallest possible size until you can trade it less than 1 mistake in 20 trades.
    3) Raise position size slowly, monitoring for increases in mistake rate (like walking on a plank on the ground, then walking on that plank between two tables, then walking on that plank between two buildings), only increasing position size when your mistake rate stays acceptable.

    That way, when you trade your full size, you ABSOLUTELY know you will be successful.

    There is zero doubt in my mind I will be profitable this year, next year, every year. This is not blind misplaced confidence, but the result of careful monitoring of both my systems and the monkey executing my systems (me). I have a business plan that tells me I must stop when my mistake rate rises, or when my systems stop working. As long as I keep monitoring and executing, I literally cannot fail.

    Talk to Bobby, who in my opinion is the best trader here (including me). If you want a guy who has done the hard work to emulate, he is your man 🙂

  • https://evilspeculator.com molecool

    Great if you were able to catch it – well done.

  • https://evilspeculator.com molecool

    Agreed – Thor is flagging a lot tonight, especially on the futures front.

  • https://evilspeculator.com molecool

    Most people prefer trending systems so I think it’s not bad as a thumb by phi rule.

  • https://evilspeculator.com molecool

    I can vouch for that. When i developed Thor.0 I shoehorned 80% of the Thor campaign rules and it worked beautifully. I think for trending systems our current approach is optimal. The alternative is to shoot for a 2R – 3R target without partial profits. I’ll actually be testing some of that in the coming weeks.

  • https://evilspeculator.com molecool

    Have you guys noticed that GG is curiously absent since we gave him shit about not developing a system?

  • M E

    Why would you be short here? There is no indication for this trade unless a black swan descends upon us.

  • https://evilspeculator.com molecool

    He grabbed a short early today near the upper threshold – that’s how I understood it at least.

  • https://evilspeculator.com molecool

    Meh, you’re Spanish – you guys *always* complain 😉

  • BKXtoZERO

    I did….. funny how that works? Has anyone noticed that BKXto zero has also been quiet?

  • Scott Phillips

    Maybe you both have been hard at work on your systems 😉

  • Scott Phillips

    It’s not about predicting direction but about risk to reward. If he caught the top of the trading range that’s outstanding trading. Lower probability, high $$ win. Take that trade 1000 times you would end up well in front

  • BKXtoZERO

    My work is done: Buy Low, sell high!

  • Bill

    Speaking of systems… the Crazy Ivan cheat sheet is a great resource but I am interested in looking at something more in depth than that. Do you have any books or links you can recommend that go into detail on candle setups? After lurking here for a long time I have finally decided I need to stop the non-sense and do the work. I think the work you, and Scott, do here is tremendous. It just takes a long time for the truth to sink in and defeat the little gambler running around in most people’s brains. Thanks.

  • Scott Phillips

    To be honest if you set your mind to it you can come up with better setups, and both Mole and I have since we borrowed them from Ivan (with much respect to Ivan for trailblazing the way).

    Read Van Tharps super trader and trading beyond the matrix, and the series of posts I did on building trading systems (the first one is called “arisen”, the rest are called “building a trading system parts 1-4)

  • BobbyLow

    Thank you for your vote of confidence Scott. I’m a long way from being the best trader here but it sure is something to work toward. 🙂

    I remember your “walking the plank” metaphor from last year and it is certainly true. Thanks to your direction, I did and still do put in a lot of “hard work” but I really can’t call something that I love to do “work”. After many years of doing this stuff, I was still an emotional, and very undisciplined trader. This resulted in my becoming locked into a total survivor mode that allowed me to trade but with way too much fear.

    It’s taken many months to resolve but fear is no longer in control and neither is greed. Thanks to your pointing out where the keys are, I’ve managed to unlock and deal with many of the things that have been detrimental to my trading going back to day one.

    All of my trades including Forex are now designed to be trend trades. And finally this month I’ve been able to trade at 2% R in Forex (with confidence). It has taken me 18 Months to get here. I’m barely at 1% R trades in my other account but my goal is to get to 2% in this account as well.

    It’s kind of late here so my mind is getting a little soft this time of night but I’ll close by saying that I hope people pay attention to what You and Mole say. It’s amazing the amount of free, accurate, and helpful information that flows through ES.

    I’m one of the lucky ones who has managed to survive over 16 years of shitty trading in this business and still have some seed money left. Most don’t survive.

    Thank you and I hope you’re having a good day mate. 🙂

  • ridingwaves

    your only fly in ointment is the bottom CCI indicator still doesn’t look overbought…. great entry… good luck…

  • mugabe

    it’s good to see that someone else (of your calibre) is getting whipsawed / frustrated – thanks for admitting it.

  • mugabe

    btw Bobby, also seeing several swing trade shorts on the energy front appearing on scan – but earnings are too close to start trades on individual names

  • Scott Phillips

    Sell Mortimer, SELL!

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

    Or buy high and sell higher / sell low and buy back lower … there are many valid roads to (fill in your own blank).

  • Scott Phillips

    You ARE the best trader here mate 🙂

    You have a good system that suits your personality
    You turn up to work every day grateful for the opportunity
    You own your results, both good and bad
    You spend time examining your system and personal performance to keep getting better.
    You continue to iteratively optimize your systems.

    That is literally ALL THERE IS! At that point, the best trader is the one who makes the least mistakes.

    I made an execution mistake today, the 4th for the year (in 140 trades) – other mistakes in image.

  • Scott Phillips

    The point is to come up with a trade setup that suits your personality. Ivan’s are heavily optimized for his rather unique perspective

  • Scott Phillips

    And I’d encourage everyone reading this to note that NOWHERE in that list of what a good trader is, is “he reads the tape like a boss”

    Tape reading is the most overrated skill in trading. At the end of that road is Tim Knight – absolutely the best chartist and one of the the worst traders I know. If you want to be that guy, steel yourself for perpetual emotional pain and a decimated account 😉

  • https://evilspeculator.com molecool

    Hey Bill – the cheat sheet is just a list of entries as used by CrazyIvan. Only a tiny aspect of what you should be focusing on. I suggest you go and read some of this:

    https://evilspeculator.com/tools/favorite_posts/

    I’ve also posted this for everyone:

    https://evilspeculator.com/stuff/Van%20Tharp%20&%20Henry%20Pruden%20-%20The%20Ten%20Tasks%20of%20Top%20Trading.pdf

    Dig through all that and participate for a few weeks. Then we’ll chat.

  • https://evilspeculator.com molecool

    Ivan – how’s tricks?

  • https://evilspeculator.com molecool

    Turn those machines back on!

  • https://evilspeculator.com molecool

    Or buy high and sell low (ask any trend trader).

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

    If only there were ‘tricks’ … an exercise in re-realising how fragile one’s existence can be versus Nature … far worse for the locals here … hence I am doing as much as I can delivering water, firewood, water purifiers and medicines to local families … whilst Aid is making headlines … on the ground the needs are far more personal.

    I would not wish this experience on my worst enemy !

    EDIT: The roar of the winds were out of this world … well almost as I am still here.

  • Bill

    Thank you.

  • Scott Phillips

    I remember a cat 3 as a child it scared the shit out of me, I still remember the noise, like nothing I’ve ever heard.

    I can only imagine how much worse a cat 5 is than that

  • Bill

    I remember reading those articles before but I was not ready. I will re-read now and check out Van Tharp. Thanks.

  • Scott Phillips

    Start by listing all your market beliefs, and the things you use on charts or use for technicals. Examine all of them and throw away the unhelpful ones.

    Build a set of charts “simple enough but not too simple”

    Think about whether you want to be a trend trader, or a range trader, or a volatility breakout trader (these are the three most common profitable methods, and the three easiest strategies to build a system around). There are a thousand different edges (including seasonality, breadth, IV etc), but those three (trends, ranges, volatility) are highly robust, exist across all different markets, and won’t just up and die on you one day.

    Let’s say you decided you were a range trader. Throw some envelopes/keltners/bollingers of your own choosing on charts and start looking for what is the IDEAL range trading play. Is it when the ranges are close together or far away? Is it when the higher timeframe is clearly trending or inconclusive? Is it close to the start of the range, or do breakouts happen more often after the top and bottom have been tested several times?

    With a little work you could find the IDEAL range trade, with visual markers to identify it, and filters to exclude it. The rest would just be mechanics, finding an ideal stop loss and working out an exit algo.

    Building a trend following or breakout system is just as mechanical.

  • BKXtoZERO

    kidding again of course…… It will take a year or more of only spare time effort and I assure you my wife is already tired of me at the computer. Her seeing stock charts with bollinger bands would not help things around here. I didn’t expect so many responses. Face it, you guys LOVE me!

  • https://evilspeculator.com molecool

    _____ ____ ____ ____ ___.__. _____ ____ ____ ____ ___.__.
    / / _ / _/ __ < | | / / _ / _/ __ < | |
    | Y Y ( ) | ___/___ | | Y Y ( ) | ___/___ |
    |__|_| /____/|___| /___ > ____| |__|_| /____/|___| /___ > ____|
    / / // / / //