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Saturday, February 20, 2010

HIATUS
I had to take a couple of days off from posting due to some other things in my life both personal and business. This has probably been the most stressful month of my life, and it has effected my trading. I am still ahead in all of my accounts, but I have made just a ton of mistakes. I am now embroiled in a battle with Tradestation over some orders that vanished in their system. I have proof in my log they were placed, they say they weren't. Such is the life of a trader. Politicians will become honest men before a broker ever admits to a mistake. So be it, they are going to say goodbye to a substantial amount of money I have in various accounts with them over this BS, when I transfer it all away soon. This has angered me so much that I took a day off from the markets Friday.

Below is one market that is just a wonderful setup for a trade right now, albeit against the current trend, the EURO.


Just look at the commercial buying and small spec selling going on in this market. What this tells us is the big boys are heavily long and the small fries are heavily short. The problem of course with this scenario is that these types of situations do not always turn markets on a dime. We saw in Gold it took 3 months before this condition finally resulted in a top being made. However, for me this is just such a unusual situation that I have to pay attention here. For you Fibonacci players, we are in retracement zones right here. I personally think those numbers mean nothing. As Larry Williams once said, if you draw enough lines on a chart something will happen at one of them. That is the case with Gann and Fibonacci analysis. You overlay a spider web of lines on something. A price stops at one after ignoring 30 others, and bingo they say see how well this predicted the next move.

The whole business of living is based on all of us trying to figure out what the future will be before it happens. There is just too much random activity in our world. The best thing we can do is try and figure out what causes things to happen in general. Once we figure that out we look for another type of occurence of a "cause" then we try and conclude that was it has preceeded previously will occur again. At times it does, other times it does not. It is an odds game. If we can find things that give us an edge, that generally precede a certain event, that is all we can ask for. Once we see them we place our trades and see what happens.

Commercial activity is such a cause. It will drive market moves in general. It is not always accurate, and at times dead wrong. However, I would ask you, what is perfect? If you find it you had better keep it a secret. This cause and effect with commercial activity is the best big picture cause I have ever learned about, so that is why I often cite it in my market analysis. It gets me looking a certain direction. Here it has me looking for a reason for a rally. It does not tell my to just blindly buy, we are going straight down right now.

The next chart does however give me reason to look right now for a buy.



The one thing that just jumps off the page at me here is all the divergence in the momentum oscillators. All 3 of these show price above their trendlines meaning up trend in momentum. This is against a very steady downtrend in price. This type of divergence typically produces at the very least a good sized counter trend rally, and often a trend change. I know alot of people use the MACD and other oscillators. I always felt many moons ago when I used to use those, that the 3 point divergences were the best, and we have that here in the first oscillator.

You can see the trendline on the chart above. If we get above that we could see a quick move up here which would also mean a dollar decline. The DX chart is very close to the inverse of this one.

2 comments:

robert said...

Sorry to hear about the missing trades with TradeStation.

Back in the telephone ordering and pre-electronic days, Joe Ross always advised traders to tape-record all orders to prevent this type of problem from happening.

There's no way to protect yourself with electronic orders?

Chris Johnston said...

I have a fairly detailed way of tracking everything I do in my daily trading diary. I have good records of what happened here, their records do not agree and brokers never give em.

F em, I have hundreds of thousands of dollars in accounts there that we leave and they can kiss my ass! There are plenty of other brokers out there, they need me more than I need them.

I disputed/aired my case with them and we came to no resolution. I am too busy to waste time dealing with somebody who takes this position. Since I had the exact same orders and trades on with another firm at the time that were recorded in my log and executed correctly, they get the windfall of all my accounts.

The one complication I have is that I have terrible internet on my ranch and tradestation seems to maintain the most consistent connection with poor speed so I have to test out this other firm and a few others before moving the money.

Once I find a place, I will send them a "nice" exit letter. I have been with them since they began, asta la vista baby. They think they have won a dodged making somebody whole on something. I have to get a computer geek to figure out exactly how what happened did, then I will go back at them for the money plus interest and go to court/arbitration if necessary.

This ain't over, the more prominent I become the more I will hurt them on this. As Harrison Ford said in Patriot Games, " I will make it my mission in life....."

The lesson to be learned is if for some reason you ever use Tradestation never assume an electronic order even though you have submitted it, is actually in. You must check, re-check, re-check then re-check. Then upon fill check and check and check again. You have to babysit the orders with them as it you are executing them yourself.

I have never had this happen before in 25 years of trading, electronic or non electronic, not one single time.