Tag: gold

Slow Trader Diary

Slow Trader fund up this week to + 5%.

To report the fund each week encourages trades to be cashed too early to show a profit. That is silly. Therefore, I propose that the fund be reported, whenever possible, the first Saturday of each month.

The diary of trades taken, good and bad, and those trades that are on the radar, will be discussed each week as usual.

These are considerations coming up:

Crude oil (WTI)

We have a buy signal on the daily chart shown above. A 60% probability of WTI climbing to $50. After that the price may descend into a trading range, or may continue climbing for a measured move up to about $55. Whether we hold or not at the $50 line will depend on price action and momentum when, and if, we get there. Also, the COT is in our favour for this trade.

Gold

Gold has provided a measured move up, in agreement with the COT. After a breakout on 2nd October, gold is now in a short term bull trend (a bull channel on the daily chart). It has reached a resistance level, however, and the likelihood is that price will fall back slightly (XAU USD) to $1150. Possibly forming a trading range just above its 5-year low. If this happens, we will look for a buy opportunity if price action and the COT agree.

S&P 500

The S&P 500 has broken above the resistance level that we discussed last week. The ratio has now swapped to 60% probability to the price climbing. Indeed, a new high could result in the coming weeks.

This positiveness in the S&P puts a good light on stocks within the index. We will look for opportunities to buy ‘fundamentally’ good stocks as and when they provide price action buy opportunities.

October 18, 2015
Slow Trader Diary – week 39

We remain just above even. No trades taken this week.

The week was spent trading small amounts with my personal fund (£1 per point in the currency pairings).

This gives me the chance to work through, and live trade, many of the lessons from the holiday modules with small risk.

It would be silly to just jump straight in. Trading is like any other demanding job, you need to work your way back in after a break.

Slow Trader is daily charts and therefore not day trading; however, the day trading techniques I use in my personal account are the same for slow trader with the daily charts. What I do in one day with day trading takes a week or so using daily charts. However, daily charts are more defined to my mind; and, as I trade much larger amounts through the daily’s, I need to be on my game. Daily’s are my prefered charts.

Due to the China situation, both the S&P and the FTSE have seen a large drop since August. That will be reflected in individual stocks and shares of course. I am watching the S&P for a turn.

Commodities to keep an eye on:

Coffee price is at a 10 year low. The COT report supports an increase in Coffee but it’s early days. As coffee price increases we can look to see what effect this has on coffee companies such as Green Mountain.

Gold is at the same price that it was in 2009. Gold price remains uncertain. The COT is a buy and gold shot up yesterday in reaction to the US nonfarm payroll monthly report. From our point of view, however, gold is now a wait and see.

Crude oil is, as we all know, at a significant low. The COT is at a minor buy stage. However, the trend down for crude is so strong we would need to see an established move up before considering buying. Most amateurs will buy crude thinking it can only go up…..not sure about that one. I certainly would need to see evidence first before committing. Okay, we miss the very bottom and therefore maximum gain, but to try to find the bottom is very weak in terms of probability, actually it’s foolish.

Currencies:

Those not thinking that we live in a global economy should have watched the nonfarm payroll at exactly 1.30pm yesterday. The results were not favourable to the US and most major currencies (including the S&P) moved, simultaneously, the price difference of a big trading day in less than a few seconds. Eye watering stuff.

As a trader the above shows the importance of knowing the big event news item times. I do not trade the news, for me the probability of getting it right is too low.

October 3, 2015
Slow Trader Diary – week 35

We are open with gold.

Broker charges for the week were a credit of £9.48.

Here’s our gold trade:

Our target is in the region of 1212. This is in-line with the COT and if the present Up continues it will nicely form a recent Up (or recent trend upwards). However, as we have seen this week, the market remains volatile.

Of the other trades we considered earlier in the week:

Silver moved down lower than expected, did not provide price at a level I could determine. So no trade.

NZDUSD remains a possibility to go up briefly. But it is presently stable below its low of recent weeks. It may move up soon. However, this is an advanced trade as it is against the big trend and is without a recent Up.

GBPUSD, having been quite stable through the initial turmoil of the week, just blew down. It may turn at the 15350 region or continue down to as low as 15190. I’m less convinced of this trade. It has, for now, become choppy which always makes for a difficult read. The COT is still a buy but is weakening, we do not have a recent trend, although the mid trend remains up. Only excellent (daily) price will convince me to take GBPUSD at the moment.

EURUSD is approaching our predicted bounce point. However, the COT is about to turn and we are all aware of the volatility presently associated with the EUR. My own thought is that the bounce could happen but it will be short lived. Price may turn down again before the previous high thus establishing a recent Down (or recent down trend).

WTI, or crude oil, bounced off its lower stop this week. This move is gently supported by the COT, nothing dramatic for the time being. Too early to decide, but it is on the watch radar now.

Finally, the S&P and FTSE have moved up slightly, but the roller coaster might not be over yet.

As I’m away for a few weeks the next diary will be 26th September.

August 29, 2015
Wonderful opportunities

Difficult times in the trading business for the longer-term investor.

Wonderful opportunities for short-term swing traders, if we get it right.

I sat on the side lines as the markets slipped recently. Unable to take advantage of shorts (trading the market to go down) as it all happened so suddenly. The large dips in FX (foreign exchange pairings) occurred, in those I monitor, within a minute.

There are after shocks, so timing any recovery is interesting. Those that I will consider are:

Silver. At some point soon I consider Silver will rally, short term. However, recent Up (or recent trend) is against us so a buy to go up becomes an advanced move, meaning the buy signal needs to be clear.

NZDUSD is firmly down on the long trend. The COT is a buy, but we have to be careful with the COT signals when the COT is going against the longer trend; the COT, in this instance, still often works but can be short lived. Having said that, there is a (possible) short term buy opportunity here.

I’m looking for a buy in gold at about 1125 price with a good buy signal. Catching the signal with the correct buy: on-market, on-limit or on-stop is key.

GBPUSD has been relatively stable over the last few days. A retrace to the 21-day moving average (MA) is worthy of consideration. It may happen quickly, if at all.

EUR might strengthen again soon against the USD. Unless I get (daily, or, at a pinch, 4-hour) price action at a support level I will not take this until about the 1120 level.

Finally, the S&P 500. This, I find, is possibly the most difficult to judge. With the recent dip the S&P could provide a good gain on a bounce. A buy in the region of 1836, but could go down further to the 1770 region. Good price action, or whatever is your chosen price criteria, is important here.

Lower trade values and generous stop positions are considerations when volatility is high.

August 26, 2015
Slow Trader Diary – week 34

Here are the ups and downs of this week:

Pace PLC lose £294. AUD/JPY lose £770. Silver gain £363. USD/JPY gain £115. EUR/GBP gain £523. Broker cost was a gain of £18 (the gain was interest earned as we were up with USD/JPY for several days).

Net for the week was a lose of £45.

The (unexpected) last minute strength of JPY took away a potential two grand gain for this week. That is how it stood financially. In ‘how well we traded’ terms I was pleased with this week. We called the market correctly in everything but a late dip against JPY. That is the nature of the business.

The main area for improvement is the risk/reward amounts. We didn’t manage better than 1 to 1. To make money consistently, this needs to improve to an average of 1 to 3. Or, as we term it, 3R. That is: wins need to be, on average, three times bigger than the losses.

Take AUD/JPY above for example. Our stop was 110 points (often called pips) away. That means I felt that the trade had the possibility of going up at least 330 pips. Three times the risk. Or, 3R. If I didn’t, I more than likely would not have taken the trade. Its a necessary filter to keep the risk reward balanced in our favour.

The important reason for this is simple. At 3R we can lose some 60% of the time and still take a profit. Okay, it will make it hard work, but a profit non the less. We aim to have the statistic the other way round and win 60% of the time. Importantly, however, if we are not achieving an average win of 3R – we lose longer term.

So keep an eye out in future for the ‘R’ which I will post after each actual win/loss. If you see 1R consistently on the wins you will know (nice as it is to have a win) that we are not cracking it. However, an average of 3R is plain sailing.

From this weeks charts:

We know from the COT (commitment of traders) report that gold and silver were ready to buy. We had to be careful however of the long term trend against both of these commodities. Therefore we waited until, in this instance, silver went up and retraced to provide a buy opportunity in the direction of the COT, but also with a recent Up (a recent trend up).

Very nicely done. I came out – correctly – at only 1R because the overall trend was still too strong on Silver. We may get another buy opportunity this coming week.

Gold, on the other hand, did not retrace and I was left watching it go up – even though I knew it was going up. There are strategies to jump onto the train and, influenced possibly by Silvers retracement and thinking gold will do the same, I missed one. Still watching.

There are clear buy signals above. And signals to jump on board. Hindsight remains wonderful!

Sometimes we can just plainly do better. I’m pleased with that EURGBP buy above. It was an excellent call, if I say so myself, however, I came out way too early. At only 1R. You get the picture. Why did I come out at 1R when the market for EURGBP was going so strong? that, as we have already mentioned, is the area for improvement.

I had a buy order in place with EURUSD and missed a great buy by only a few pips, the chart then zoomed up. But I’m happy with that as the trade (although missed marginally) was correct.

USDJPY above, was this sell instinct? I bought USDJPY on a retrace, from a recent Up, on the one hour chart (chart above is the daily chart to show the week). I was looking for a 3R with this one and we sat at 1R all week. I noticed the move down (unexpected strengthening of JPY) and sold with a small profit of £115 (all week the profit had been £600).

The interesting thing about trading is the necessity to detach yourself from profit. Personally (although I’m background aware, of course, of the profit) I never look at ‘up or down’ in terms of money (I don’t even have the money amount showing on my broker page) but only in terms of ‘pips’. If we’re emotionally attached to money amounts – up and down – we cannot trade emotionally detached or to the best of our abilities, consistently, over the longer period.

Worth a mention about S&P below and FTSE.

For those in traditional funds they would have taken a battering this week. The FTSE is a similar picture. I realise that those in managed funds, for the long term, then this is only a 20% blip downwards. However, I would like to take the 20% back up, without having suffered the down bit.

August 22, 2015
Slow Trader Diary – week 33

With USDJPY we are several hundred pounds up this week, and still in (but as I’ve mentioned before we cannot count these until they’re cashed). Small down of £100 with NZDUSD. Small up of £35 with DTE Energy Co. And, IG (our broker) costs for the week of £3.28.

As an aside, how this affects you (the fund investor) personally will be shown as we move into overall profit. Until then it is pointless. Your initial investment into the fund is guaranteed. Okay, it is sensible to allow a few years for a fund to grow but, like me, with patience, we are all wanting a massive gain.

This has been an exciting week for me in terms of being comfortable with goals and strategies. I am gradually completing my ‘how I trade’ page which will soon give you the strategies that I use. These strategies will seem simple to the novice trader, but execution takes time, dedication and effort to do properly and consistently.

I’ve coined the abbreviation CrUP, meaning: Conditional, recent Up and Price. Each part is equally important. Missing any one and we are at a greater risk of getting the trade wrong. Each aspect of CrUP will be covered in detail soon under ‘how I trade’.

One aspect, however, under Price, that cannot be learned is the method by which we buy or short. We have three choices: on market, on stop or on limit. Again, these will be covered in more detail in my ‘how I trade’ section, but in the mean time I will show you an example from this week. Firstly, the reason it cannot be taught is because it needs instinct, or gut feel.

Above is GBPUSD, which I narrowly missed. You may recall that we caught the last swing up of GBPUSD the previous week. Looking at a chart in hindsight makes it seem obvious. To get the trade right, however, takes understanding (instinct) of ‘how to buy’, i.e. on market, on stop or on limit. My buy was on-limit, at the exact lower pin position (the arrow marked ‘buy point’ shows this). However, the spread is a couple of pips (these are points up or down measured by the right hand axis, the spread is the brokers profit and if we don’t allow for it then we don’t get in). In my case I had allowed for the spread, so it was my buy position, my instinct, that was out). Having missed this, the following day provided an equally, arguably better, buy opportunity with a retrace down from the previous days close.

I appreciate that those not familiar with this form of trading then the explanation is double dutch. However, it is a diary for me as much as for you so you will have to allow me this one.

I have a couple of other examples from this week where, similarly, the buy was either too ambitious (in the case of GBPUSD) or not ambitious enough – hence the £100 loss in NZDUSD.

But as I said at the start, noticing this outcome and being able to gain from the experience is what counts for the future. And the future is this week coming with great opportunities looming.

I mentioned a watchful eye on gold. Both gold and silver have climbed against the long term trend as indicated by the COT report. I’m waiting for a retrace of the price before buying. Also, NZDUSD could be in for a move upwards. Sharpen the instinct!

August 15, 2015
Slow Trader Diary – week 31

Here are our cashed-in trades for week 31: Healthcare Partners Inc + £89, GBP/USD + £687

IG is our broker, costs for the week were – £25.17

Lets take a look at GBP/USD.

Conditional: this is a graphed COT (commitment of traders) report giving us a buy condition.

This graph represents several months so gives us the condition only, important as that is. From left to right, the first arrow is against the trend. Therefore we would not take that as a positive buy opportunity. However, the second arrow, and second buy indication, is good as it is with the recent trend. The buy condition should remain if the blue line on the chart continues to descend to a new low.

The COT report is completed for the previous week on the following Tuesday and is published on Friday. It is therefore about two weeks old by the time we get it. However, it is like the oil tanker analogy where you move the rudder but it takes several miles to turn. Often that is the case with the COT. Even though it is old information it gives us a solid hint at the conditional.

Once we have the conditional we need a matching recent trend. I’ll talk more on the (elusive) trend in follow up blogs.

After trend we concentrate on price – in other words a buy signal. Here is our buy signal for GBP/USD this week. The first graph is in daily bars and the second is the same trade from bottom to top but in 4-hour bars. The second chart gives us a different view as to the dynamic of the trade.

Moving on. You may have noticed the S&P. Here it is today:

Knowing what the S&P is doing is not a trading conditional for individual stocks (or shares in the case of the FTSE). That would be too broad a statement. Interestingly, the movement however of the S&P was more or less mirrored by the stocks on my short list. Even being confident of the future movement of my selected stocks I still missed most of them. ‘How is this possible, B’? I hear you say.

This is an example of what happened.

This is Boeing, We notice by the date that the bottom (blue arrow) coincides with the predicted bottom of the S&P. This pin, at a 50% retrace, is a great buy signal. (Again, we will cover price in more detail in future blogs for those that are interested).

If we choose to: buy on market, that is buy now at current price – or buy on stop, that is buy at a higher future price – or buy on limit, that is wait and buy at a lower price – is a judgment call. And one, on this occasion, I got wrong. You will notice that the bounce was so hard that after the pin the next days opening price gapped up. Only a buy on market would have worked. I went for buy on limit and missed it. “C’est la vie.”

This was the same this week for four trades that I set.

For the coming week we are keeping a sharp eye on gold. The commercials (that is the COT report) are warming up nicely to a buy signal. Beware of the trend however and remember, as well as recent trend, we also need price or more accurately price action. But more on this later.

August 1, 2015