New funds to trade

All traders look for an edge, an ideal way to enter, manage and exit a trade. New funds.

It is crucial that a chosen edge suits us individually too.

The time-critical stress of the day traders world is probably not for everyone. Nor, for others, the weeks or months of being out of the money, as in the longer time frame deals.

However, if we have the time, the knowledge and the inclination we might be comfortable trading in both disciplines.

More than this, one helps to condition the other. In day trading we have learnt the art of the identification of a likely trade. In longer-term trades, we appreciate the need for trade management and a requirement to ignore emotion and the uncanny ability to hit targets when we are not necessarily observing the trade moment to moment.

A big supporter of the commitments of Traders (COT) report, not everyone is as it is infrequent in its signals and notoriously broad in its message. However, with longer bets, as a ‘conditional’ trader, the COT provides arguably the only edge that is not in itself related directly from the price.

Day trading has provided us with skills that can be coupled very well with the longer term charts and this, in conjunction with the COT, offers an exciting way forward.

With additional funds coming in to trade, we looked at what would complement our day trades but not emotionally or otherwise interfere.

Significant commodities and a selection of currencies traded from weekly charts in unison with the COT is our chosen direction.

Gold and Silver finish week on a high

Silver finished the week with a strong move up. Silver is at, or slightly above, a three-year trend line. The COT shows the net position of commercials at multiple year lows; meaning the majority of commercials (the big buyers and sellers) have short positions on silver. As do we. Difficult to hold through, but that is the strategy.

Gold provides, as it so often does, a similar picture to Silver.

Crude oil ventures up towards the position suggested on my charts last week. A possible short on crude may present itself this coming week.

USD CAD had little movement in weekly chart terms.

Copper dipped early in the week and gave us a reasonable out position. Copper reversed back up by the end of the week as anticipated.

The strategy on commodities is to go long or short reasonably early based primarily on commitments of traders (COT) information and supported by analysis of weekly charts. We use weekly charts as that corresponds to the weekly COT release. The COT is released UK time late Friday evening and is based on the previous Tuesdays collation of information by the CFTC.

This strategy often calls for a significant period, several weeks or even months, where the trade is out of the money. Treat the COT as turning a giant tanker ship analogy – it isn’t quick!

To balance this ‘slow’ strategy we’ve decided to include a portion of the Slow Trader fund in our intraday trading. In our case 1, 2, 15 and 60-minute charts.

In this instance, we take as many as 9 to 15 trades a day and regularly complete all trades before the end of the day. I’ll discuss our strategies for intraday trading in next week’s blog.