Tag: silver

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