Sep 14th 2019, Silver Chartbook

Low risk, low risk, low risk

That is our mantra. It is large draw downs that kill most equity curves and can quite frankly wipe out performance and a trading account. More over it leaves emotional dents in investors that most don’t even recover from. Last weeks silver long entry, posted live in our telegram channel provides for a good example to what extreme we manage risk. Add a good hit rate (see our silver chart book from September 1st 2019) and a proper risk reward ratio plus money management, and you are halfway to success.  Low risk, low risk, low risk.

Daily chart, silver/US Dollar 9/3/2019, “action versus reaction”:

Silver in US-Dollar, daily chart as of Sep 9th, 2019

Silver in US-Dollar, daily chart as of Sep 9th, 2019

On September 9th 2019 we aggressively entered a long position due to multiple edges. The main goal is to get quickly out of the entry zone to not expose capital to risk. This with the aim to take partial profits fairly quickly. The main edge to achieve such a low risk entry is to buy into a strongly selling market. The “action/reaction” principle is one of the main facilitators of reaching such a goal.

Silver, sixty minute chart, 9/10/2019, “Baldwin exit”:

Silver in US-Dollar, 60 minute chart as of Sep 10th, 2019

Silver in US-Dollar, 60 minute chart as of Sep 10th, 2019

The next day prices stretch even further against us. We were in too early. Discipline requires to get out. We employ an advanced strategy, the “Baldwin exit”. This strategy makes use of a high likelihood of even further stretched prices to bounce. We scratch the trade exiting at original entry levels for a break even scenario. Emotionally, you find yourself in a situation of hope since a possible reversal is now more likely for prices going up. However, strict risk rules warrant for a disciplined exit strategy instead. You were wrong with entry timing, therefore get out!

Daily chart, silver in US Dollar – September 11th 2019, “you can always go back in”:

Silver in US-Dollar, daily chart as of Sep 11th, 2019

Silver in US-Dollar, daily chart as of Sep 11th, 2019

On September 11th, with only timid price advancements and a slightly bearish candlestick wick to the upside, reentries did not look tempting. Following ones intuition, guided by hope, would again lead to wrong trading behavior. Instead we follow strict entry and risk rules to abstain from sub par entries.

Daily chart, silver in US Dollar – September 12 2019, “clear weakness”:

Silver in US-Dollar, daily chart as of Sep 12th, 2019

Silver in US-Dollar, daily chart as of Sep 12th, 2019

The following day the market shows its true hand. The choice of having scratched the trade was the correct one.

September 13 2019, daily chart, silver in US Dollar – “emotional reward”:

Silver in US-Dollar, daily chart as of Sep 13th, 2019

Silver in US-Dollar, daily chart as of Sep 13th, 2019

Finally on Friday the 13th of September we get emotionally rewarded. This for the disciplined behavior of not risking money in less than ideal circumstances. The market was printing new intermediate lows and we would have been stopped out on a large stop loss if we would have held on to this trade for too long.

It is not important if this particular trade turned out to be a winner or a looser after we exited it. What is meaningful is that only an extremely low risk approach applied over and over gain will result in statistical probabilities that lead to consistent results of extracting capital from the market more often than not. This discipline based on strict rules followed, allows to overwrite emotions triggered by the market and follows a path of principles.

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By | 2019-09-14T12:59:56+00:00 September 13th, 2019|Tags: , , , , , , |0 Comments

About the Author:

Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent.Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.

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