“Motivating people about math … just think GBPJPY!”
Yes, the majority of people in this world, when it comes to math, are dumber
than a bag of rocks … that doesn’t mean you have to be one of ‘em … cuz
understanding even the simplest math concepts can make you a shipload of
money, and isn’t that what everybody says they want?
Let’s take a peek under the hood, of my favorite NADEX market, which is
GBPJPY … you could take any FX cross, that isn’t US Dollar dominated, but
NADEX only offers [so far] four FX crosses; 1) GBPJPY, 2) EURJPY,
AUDJPY, & 4) EURGBP … cuz I want consistently high daily ranges &
volatility, only the first 2 make the grade, and Cable is better than the Euro in
the volatility department.
Obviously, there’s a numerator [GBPUSD] and a denominator [USDJPY] for
GBPJPY, but the secret to its intraday volatility lies in fractions. For example,
if I take 4 and divide by 2, that = 2 … now add 2 to each, both the numerator
and denominator … 6 / 4 = 1 ½ . So, if both GBP & JPY both rallied by the
same amount, the cross would move lower by 25%!… if they went in different
directions, the move would be faster and greater still … and this IS the power
behind trading FX crosses when you want & demand volatility … simply put,
they give consistently greater moves than other FX pairs or markets … and
greater moves means more profits when you’re on the winning side of the
trading equation.
Up ‘till now, though, you’re only hope of making any sense of the
“Dragon Trade” was using a cash options platform, like in use at Saxo Bank,
but still there are/were logistical problems, not the least of which is they don’t
like clients trading the last couple of days to an expiration … “well, enter
NADEX, and its problem solved”!
“Give me a month inside a grade school math class where kids are learning
fractions, and after I explain GBPJPY and why they should “give a shit”, and by
the end of the month they’re trading “Volatility Call Spread Strategies” in
GBPJPY at NADEX, making more than their parents bring home from jobs”!
We start the week a little after last night’s open … I entered a LONG
GBPJPY “synthetic straddle”, with a pair of “Call Spreads” sharing a “floor
& ceiling” strike price … filled at 63. Directly below, the trade tickets for the
opening position.
click to enlarge ALL
Japan closed for Holiday last night, and not much in China going on … some
light downward pressure on the cross in late Asia, and that got us to the
European open, where the daily range got to just below 100 PIPS before
stalling out. First rule of trading volatility; “when it stalls out, no matter up or
down, AFTER A MOVE, take the money and run like hell! … don’t look back,
don’t start the “what if” game, just take the money and come back later
… maybe”! The liquidation trade tickets directly below.
Ok, so we’re in at 63 and out at 81 … after commissions we’re up slightly
more than 20% on risked capital in the trade … probability theory predicted,
based on recent market behavior, that the probability of profit on this trade
was extremely high … it doesn’t tell us how much, that’s left up to us, but what
it does say, is that “yea, your chances of making money on this trade are awfully
“Hoover Dam” good” … and of course, being a “volatility trade”, nobody cares
which way it goes … Dragon, do your thing … scumbag LP banks, go rip
others to pieces and run stops to your heart’s content, “cuz now you work for
me”!
And, if you don’t have the slightest idea what I’m talking about, then go read
the latest tutorial I posted yesterday on NADEX CALL SPREADS over in
“Download Links” … “I don’t care who you are, don’t be the kid who sits there
and simply throws his/her hands up and says I don’t understand … you want
money? … this is money, and quite frankly a far superior way to trade than
anything you’ve ever seen up to now … so, dive in, the water is warm”!
Today’s trade on the low end of expectations … not everyday is Christmas,
quite often returns are much, much higher … tomorrow and Wednesday sees
a shipload of political turmoil coming out of Britain via the “shitshow circus”
known as “Brexit”, so it doesn’t surprise me to see a somewhat subdued
market here on Monday. Nevertheless, do the math … a year’s worth of
today = a return of $3,600 on risk capital of $63 … “Wait … Wut!?” … try
and get that out of Turnkey, or any other traditional offshore brokerage house
anytime soon … good luck.
What you always have to remember about ranges and volatility, is that they
quite often don’t pan out according to the script that sees you “backing the
Brink’s truck up to haul away the money” … quite often, the ubiquitous
“Flying Wedge of Death” [FWD] shows up, and while the range gets extended
a bit, it gets extended NOT in a way that is helpful to profits … first a high,
then a new low, then back to another new high, etc. … rinse, repeat, and watch
volatility premiums melt away in the process, with finally a trip back to the
middle that sees almost everyone get their “big girl panties” bunched up. “Sure,
it would be nice if it always moved one way for the day … unfortunately it doesn’t,
so when we get moves that make us money in either direction, we got to “ring the
register”, if it backs off … it doesn’t matter what you think, it’s what you gotta do
… why are you here? … to make money … Ok Skippy, it’s sitting there so pick
it up already and move on”!
Here, late morning in New York, as if I scripted it, but didn’t, now GBPJPY
rallying back over 139.00 and threatening new highs for the day … which it
just did, going over 140.00 on some fresh rumors RE “Brexit”… the FWD not
helping volatility premium, cuz as time dwindles away to expiration, the
premiums are being wrung out of the “Call Spreads”, where they went down
in the 30’s, before recovering some on that new high. As I said, it’s great to let
the pony run, but when the pony don’t want to run, you got to pull the plug on
the trade, take the money, and move on … there’s plenty more where this came
tomorrow and into the future … overplay your hand, and pretend like you
know where any of this shit is headed, and they will hand you your donkey on
a silver platter … simple as that. You’re trading volatility “on the come”, NOT
price!
I’m hoping that with 1) the Call Spread tutorial posted, and 2) an
understanding on your part of how this drastically reduces risk in trading,
that you’ll come to understand why Call Spreads are my favorite way to trade
volatile markets … 1) let volatility work for you not against you, 2) let the
scumbag LP banks do whatever they want to do to a market, cuz it helps you
make money, 3) don’t worry where price is headed cuz it doesn’t matter … let
others fret over that, 4) sit back and wait for any move up or down … you
know it’s gonna happen so just be patient, and most importantly 5) pick the
“Hoover Dam” money up when it’s laying in front of you and come back
later!
Onto tomorrow, where won’t this be fun! … I’m outta here … until tomorrow
mi amigos … Onward & Upward!!
-vegas
OUR NADEX SIGNALS SERVICE IS UP & RUNNING … DAILY
WTI CRUDE OIL SIGNALS & “VOLATILITY” STRATEGIES
IN 20 OTHER MARKETS, INCLUDING COMMODITIES, FX,
& STOCK INDICES! … “what on earth are you waiting for”?
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