Summer of ’17

Monitoring financial markets in the summertime season…

Recent past stock-index futures have been 95% sideways chop with +/-5% spurts of directional surge moves. In all my years of trading I have never found any way to consistently profit from all chop => no directional movement. More on that thought to follow in a bit.





Illiquid sessions look like those above. Constant, relentless back-chop. Red-green-red-green-green-red-red-green… every single move is countered by an opposing move, all day & night. That is the visual footprint of algos deliberately hunting open orders, right there in front of your eyes. Fewer and fewer open orders each day, as fewer traders return to the fray.

That relentless algo chop is impossible to consistently profit from. Regardless whether you trade pullbacks, breakouts or both (there is no other macro style) you experience the same results. Take a trade long or short, watch it move in favor for a tiny bit unrealized gain, then against your position for equal or greater unrealized loss. Then back to entry-par, then tiny gain, then greater loss. Over and over and over again.

Seldom do you have the chance to close out for modest to large profit. Constantly you deal with decisions to close out at small to modest loss or risk each loss to increase. Increase to unknown degree and size. You find yourself trading out of a hole every single day. Small losses all added up or one big loss if you’re still stupid enough to use large stops against small targets.

I’d like to think all traders in today’s modern world are fully aware that net-loss MUST be smaller than net-gain on average in order to succeed. Nobody in the history of ever in the trading world sustains a win/loss avg greater than maybe 60% at most. At most. More like 50% or less win-loss averages over time is realistic. Anything you hear or read otherwise is complete and utter bullshit.

Crude Oil futures for the most part, identical. Brief directional spurts and bursts, endless hours of no-range chop.


Now just this week, for the first time in weeks we see rather normal price behavior relative to historical past. Price starts off one direction, fails to follow-thru, reverses course and trends directionally the other way. Classic failed one way = successful the opposite way tech analysis behavior. BTW… technical analysis really works inside ANY normal market movement. NOTHING works inside any no-range, dead-chop HFT pins. Make sure you keep that distinction fresh in your mind.

As for me? I’m on the proverbial sidelines, waiting to see days like the past two return to common behavior for weeks on end. If you find it possible to make intraday trading actual $$ returns worth your time spent sitting in front of screens, that is great. When I see sustained, constant market conditions that make my time vs $$ worthwhile, I will do the same 🙂

See You Inside
Austin

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