Feb 23rd 2019, Silver Chartbook

Greed never pays

In our last week´s silver chart book we suggested to rather take the gold short-term long play instead of the silver one. Both precious metals advanced as expected while silver actually outperformed Gold. Yet greed never pays!

Our call to rather take the gold play was the right one because it provided more options in regards to stop management!

Looking at the daily silver chart, buying on the 18th was equal to taking a triangle breakout play. One enters into a difficult zone with competing opinions and low liquidity. Risk is high and stops accordingly unfavorable.

Silver in US Dollar, daily chart as of February 23rd 2019

Silver in US Dollar, daily chart as of February 23rd 2019

At the same time a long entry in gold was still within the trading range. Here you could have positioned yourself into an anticipatory breakout to be followed the next day. In that case, tight stop placement was available and you would have found yourself comfortably in an established position for the following day´s breakout scenario. In silver however the entry would have been reactionary into a breakout zone and likely the stops would have been triggered.

Low risk focus over high return expectations:

Gold in US Dollar, daily chart as of February 23rd 2019

Gold in US Dollar, daily chart as of February 23rd 2019

The lower 60 min time frame illustrates that exposed to the silver position, prices initially go mainly sideways. One most likely gets stopped out the next day, price movements penetrating entry price levels.

Silver in US Dollar, 60 minute chart as of February 23rd 2019

Silver in US Dollar, 60 minute chart as of February 23rd 2019

The 60 min time frame representation in gold on the other hand shows, how this low risk continuation play provided for nice profits. Risk was extremely low and entry prices never got revisited.

Gold in US Dollar, 60 minute chart as of February 23rd 2019

Gold in US Dollar, 60 minute chart as of February 23rd 2019

In exhaustion zones it is especially important to rather focus on the low risk plays verses the ones with high expectancy. If the overall market or individual instrument already are on their way into direction, conservative positioning is imperative.

One finds oneself easily correct in perception of advancing prices. This should not conclude so, that market participation is easy.

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By | 2019-02-24T20:08:50+00:00 February 23rd, 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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