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”?

WELCOME TO FED PIE HOLE DAY!

 

“How the financial MSM reacts to FED bullshit!”  

“Oh, won’t it be glorious”! … six [6] FED Pie Holes spewing forth bullshit 

today, so high you’ll need hip boots and a very large shovel to keep from 

drowning in the “Everything Is F-ing Awesome Baby!” pile … of course, the 

financial MSM over at shitboxes like CNBC & Bloomberg, will burn the 

airwaves assuring you to buy “MOAR” stocks cuz shut up … the purpose of 

this frenzy of faculty lounge Twits foisted on the public, is of course not to 

inform, but to assure you they know what they are doing … the fact that for 

about 116 years they’ve gotten every fucking thing wrong 100% of the time 

should not concern you … “why focus on facts when you got hopium”?

And so, like every other day, markets are relatively quiet awaiting 

instructions from the “smartest people in the room”, so HFT algos know 

which way to burn people … as I said yesterday, markets only move now on 

POL & Apparatchik bullshit … every “Hoover Dam” day it’s somebody or a 

group no-nothings holding court to direct markets for policy purposes 

… literally nothing else matters.

Overnight saw me put on a GBPJPY “overlapping” Call Spread position for 

signals subscribers, with very limited downside risk, where max theoretical 

risk was 29 PIPS, and real world risk was about 15 PIPS … it is one of my 

very favorite strategies for volatile markets, and GBPJPY is at the head of 

that list, and is an excellent strategy for either 1) low or medium volatility, 

and 2) falling volatility from high historical levels … however, having said 

that, it can also be used successfully in highly volatile market conditions as 

well, although a “ceiling to floor” and a “floor to ceiling” combination trade is 

better if priced right. But, and this is a very big “but”, the market doesn’t 

always give us decent pricing in this strategy … evidence of that can be 

readily seen in WTI Crude Oil & the stock indices, where pricing has reached 

the utterly ridiculous level.

It’s not my intention today to get into the “nitty gritty” details of the 

overlapping call spreads … much, much more detail in the tutorial coming 

Sunday night on Call Spreads … I don’t wish to be redundant, but let me just 

say, there are 2 very critical components for profitable trades from this 

strategy; 1) pricing, and 2) proper spacing … and you most definitely need 

both … we got that last night in the trade.

There are 5 NADEX markets that are very well suited for the  

“Overlapping Call Spreads” … better than the other 9 markets … in order of 

relative importance; 1) GBPJPY, 2) GBPUSD, 3) EURJPY, 4) DAX 30, 

AND 5) DOW30. The first three [3] especially, will almost always give a  

“pop & drop” during the trading day at some point, no matter the overall 

volatility environment. But, as I said, conditions have to be right or you walk 

away … much more in the upcoming tutorial.

Today’s trade sees me looking for a modest down move in GBPJPY from last 

night’s open … directly below, the trade tickets for the buy/sell sides.

 

click to enlarge All 

When GBPJPY moved lower, I rang the register, albeit a little early cuz their 

was more to the move, but as I explained to signals service subscribers after the 

trade was through, capturing that first move out of the box, early in the Asian 

session, since we were risking about 15 PIPS, it’s critical you ring the register 

at some point … it doesn’t matter if it keeps going … what matters is it doesn’t 

snap back with a vengeance and bite your donkey, which happens more 

frequently than I care to think about … “what makes pairs like GBPJPY so 

dangerous, and at the same time so potentially profitable, isn’t only their ability to 

put in ranges in all kinds of volatility conditions, it’s their ability to seriously 

“pop & drop” at a moments notice … and those moves you take advantage of 

while you can without looking back over your shoulder and playing the “what if” 

game … in a pair like GBPJPY, there is no room for hindsight”!

Well, it didn’t take long and the trade liquidation tickets directly below.

 

[The ticket on the left should be a red sell ... I changed it before I sold.]

Looking at today’s schedule from last night, it makes even more sense given 

ECB minutes in the morning and 6 FED Pie Holes lying during the NY day 

… so, even though I got out early, and I know some subscribers did better 

than me, I’ll book the 60% profit on risk capital and move on.

  

Even with today’s scheduled ECB minutes and FED Pie Holes, already we’re 

starting to see a drastic wind down of VIX, most notably in stocks, as ranges 

collapse from just days ago … “think this is a coincidence? … hardly”.

So, onto tomorrow and the end of the week … not looking for much tomorrow, 

as next week brings plenty of event risk, especially in anything Cable related 

like GBPJPY … I don’t think many people want to bite off risk on a Friday 

and head into next week … we’ll see what happens, but traders are “skittish” 

at the moment, and that should see a relatively quiet Friday session.

And with that, I’m outta here … until tomorrow mi amigos 

… Onward & Upward!!

Have a great day 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”?