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Friday, January 11, 2019

WHEN THE AIR GOES OUT OF THE BALLOON

“What the game looks like when volatility decides to leave!”  

Mostly a completely dead Friday, except anything Cable related, as the  
“shitshow circus” known as GBPUSD, currently in its 29th consecutive month 
of “feed the mistress funds” via “Brexit” rumors, goes into full retard mode 
right before the weeknd … “somewhere, you just know a buxom young lass will 
walk into a Mercedes dealership and pay cash for a pretty red one”.

Which is why dear amigos, 1) I absolutely love NADEX derivative products, 
especially “Call Spreads”, and 2) no matter where VIX is in any market or all 
markets, the “pop & drop” signature characteristics of the “Dragon Trade”, 
a/k/a GBPJPY, pretty much assures something happening somewhere in the 
trade during the trading day, that allows a low risk trade to make money 
… today no exception, as Cable screams higher 100 PIPS in 2 minutes on more 
“Brexit” hopium & bullshit.

About three or four years ago, I published a piece about what market pairs 
will ALWAYS allow you to make money, simply cuz the volatility in them made 
it “Hoover Dam” near impossible for the market to sit … at that time, the 
markets were GBPNZD & GBPAUD … I excluded GBPJPY, for the simple 
reason Yen has a tendency to sit for long periods and do Mr. Jack Squat 
“well now, we got “Brexit”, and oh how the world changes quickly!” …  and 
since all of this was well before NADEX Call Spreads, the only thing you could 
do was try and find an offshore brokerage house that 1) wasn’t a scam, and 
2) had a relatively low spread that made trading them a possibility … that led 
me to ASSETS FX [Finland], where since then they’ve decided any and all U.S. 
accounts are verboten.

NADEX doesn’t support either GBPNZD or GBPAUD, but that doesn’t 
matter cuz we now have the ability, which wasn’t there before, to drastically 
cut risk … even if potential profits from GBPJPY are somewhat lower, it 
doesn’t matter cuz are potential gains are made higher by cutting risk 
exposure.

My point here is simple: “we now have the best of both worlds, which is 
consistently high [relative to other markets] daily volatility, combined with 
cutting risk exposure to acceptable levels in GBPJPY … overall, through thick 
and thin, it will outperform every other market on the board hands down … cuz 
I got news for the stock indices traders and oil traders, and that news is that 
those markets go “boom & bust” quite often … sure, if VIX stayed high all the 
time, they are great … unfortunately, they don’t, and both suffer long periods 
where Mr. Jack Squat is in full control … check out again the 2018 20 Day 
Range MA’s in both, and tell me what you do for the months when both are 
dead? … this doesn’t happen in GBPJPY, and with the “Brexit” bullshit far 
from over, and looking everyday like the idiotic Pols will stretch this puppy into 
the future as far as the eye can see, the uncertainty & chaos in this pair will be 
with us for a good long while at a minimum … that spells even higher relative 
volatility versus historical norms well into the future … it’s like trading Soybeans 
in late Spring, and everyday there’s drought conditions & rumors of no rain, and 
the crop is gonna get destroyed”! As a trader, you couldn’t ask [nor get] for 
anything better … well guess what? … we got it.

Which is why GBPJPY is easily my favorite market on NADEX, and the 
market I check first from the open every night … yes, other markets come and 
go and present us with favorable conditions & trades, as recent December 
trades showed in RUT2000 & WTI Crude Oil … and if they’re there, we’ll 
take ‘em! … they come just as quickly as they go … but over time, nothing 
will beat GBPJPY on a consistent basis … nothing.

It’s unfortunate today’s price explosion in Cable came when it did … pricing 
was OK, but “spacing” wasn’t … “spacing”?“yes, the difference between 
where the overlapping call spread is trading, and where it has to go to make up 
the premium that is built into the pricing … if it has to travel too far to get to that 
price, in what I consider too short of a time frame that has a high probability of 
success, then it isn’t a good trade, no matter how low the pricing is … it isn’t 
gonna work”. And the call spread pairs put out around 8 AM EST, with new 
bands for floors & ceilings weren’t much better.

Another reason I like the three [3] volatile FX pairs [choose from GBPJPY, 
GBPUSD, and/or EURJPY for your own trading account if you so desire], is 
that they start the week at 6 PM EST on Sunday night, giving us a full 5 day 
week … Crude oil, stock indices, and others [excluding other FX] start the 
week at 3 AM EST on Monday morning, losing all of the Monday Asian 
session and a tiny bit of the pre-European open … some days it doesn’t 
matter, but for too many days it does.

This week, we’ve seen the air come out of the volatility balloons in other 
markets, even though price premiums are still high … that makes these 
markets even tougher to trade, cuz you aren’t gonna get the moves necessary 
to make up for the premiums you pay for volatility and still get a profit 
… meanwhile, you still got the risk, and watching premiums evaporate when 
the market doesn’t move is torture … the vast majority of the time, this isn’t 
going to happen in those 3 FX pairs.

Without that 2 minute “Brexit” rumor that turned trading into a complete 
stop hunt and “shitshow circus” for 100 PIPS, we’d be lucky to have a 60 PIP 
range today in GBPJPY. I don’t have a clue what the rest of New York 
trading has in store for our markets, but pricing and spacing doesn’t look 
very good at the moment … “I just don’t see anything with enough potential 
reward for risk … so, I’m outta here early today … be back Sunday night". 
No trades recommended today in the signals service for subscribers.

Sunday night sees the release of the tutorial on “NADEX Call Spreads” 
… anybody has any questions / comments, just drop me a line via email … I 
think all of my readers will learn something from my insights, and at the very 
least pinpoint great trading strategies maybe they hadn’t given much thought 
towards.

Have a great weekend everybody!

-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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