VIX

The market is NEVER going to make it easy for you to make money, never and when it does, beware.

The point is, it's kind of like Vegas in reverse, you are the house not the gambler. The house always wins because they know what the probabilities are, they are going to have a lot of bad days, a lot of people win, but they know at the end they'll come out on top, they aren't going to close their doors because people hit the jackpot on the $20 one arm bandit 4 days in a row.

My point being, the only thing that can allow you to "sit" is knowing you have some edge, some greater probability on your side. I've met more traders than most, either from my free website, this one, from teaching Technical Analysis for nearly 4 years and a lot of other different places and I know for a fact that most traders are constantly chasing price, price leads them around by the nose and they say, "Price is king" or "Price pays", it does, but when you have such a narrow view of what "pays" is, you don't really understand how right you are and never will because in the long run, you won't be right.

They do the same thing with trading systems, they bounce from one to another and if it's not working, they move to another or a new book comes out with a dozen cherry picked examples and they chase that, but they are always chasing, they rarely have the probabilities on their side because they don't have a true edge and most don't understand how the market works, for instance, why the Yen rallying is a bad news for the market right now.

If you don't know what your edge is, you don't have one.

I'm specifically talking about the VIX right now and I don't care if the VIX is down on Monday (although I doubt it), I care where the VIX is going. The Bollinger Band Squeeze in the VIX from mid-November gave us a very high probability clue as to where the VIX was going. The fact that the VIX wouldn't fall when the market rallied was another clue.

We just entered VXX calls about 2 hours ago right? I know our MCP calls are up over 20% right now as they rallied while the market sold-off in to the close.

 That's VXX in to the close, that's a really nice move, but think about the reason for that move.

This VIX 15 min futures has been accumulating since it was knocked down on the F_E_D / F_O_M_C knee-jerk move which I'm pretty darn well convinced was a knee-jerk with Quad Witching adding to the scenario. When you have accumulation like that, you know there's a probability, but when you know about the BB Squeeze in Spot VIX, that's an even higher probability, this is just confirmation.

The 4 hour (which I've never seen before) leading positive in VIX Futures really is the highest probability. So did we buy VXX on Wednesday afternoon or yesterday? No, we waited for the signals, we waited for the market behavior we have come to expect and we got in at just about the bottom.

Like I said at the top, the market will NEVER make it easy. I'd bet you 95% of traders who look at the 1929 crash through it's bottom would think that they'd have ridden that entire move short, but I'd be willing to be 95% of them would have been stopped out in the first two months when the first counter trend rally lifted the Dow nearly 50%, if they knew the probabilities, they could do as Jesse says and "Sit tight" without daily gyrations sending them in to emotional decisions, that's the nature of the beast.

You have to find objective (so you can trust them) probabilities and not be afraid to work them (like buying VXX at recent lows today).

I'll follow up later with whatever I find interesting, but we are really only 2 hours outside of the Quad Witching so there's not that much data, but you saw how fast 3C and then price fell apart.

Every one have a great weekend.