Oct 24th 2019, Silver Chartbook

Ahead of the crowd

In our last weekly chartbook we showed edges on how to trade a small range and volatility. This style of trading comes with an extra bonus. You will be ahead of the crowd when it truly matters. Small ranges, triangles and volatility nourished by crowd uncertainty about direction, eventually resolve. Meaning ranges and triangles break at some point. Once this occurs it is noticeable to the whole world. Orders get triggered, as well as trend line alarms and so forth. Eventually news tell a story. This is the time when amateurs place orders either chasing trades, or preset orders get filled on wide spreads and in an environment of high risk. Another way to participate in these lucrative breakouts is to be ahead of the crowd.

Within the three week volatile sideways range in silver we had three long entries. These entries from the 8th, 15th and 16th were all posted live in our telegram channel.

Silver in US Dollar, daily chart as of October 16th 2019, buying at the low of the  range:

Silver in US Dollar, daily chart as of October 16th 2019

Silver in US Dollar, daily chart as of October 16th 2019

The first two long entries provided range profits and were as such income producing trades but without follow through. The range held and the runners got stopped out (see our quad strategy).

Daily chart, silver in US Dollar, October 24th 2019, ahead of the crowd:

Silver in US Dollar, daily chart as of October 24th 2019

Silver in US Dollar, daily chart as of October 24th 2019

Our third entry on the 16th got financed as well and reached its first target but prices again were sent back within the range.

Three days later prices attempt again to expand the range. If not positioned like we are, one finds oneself in the dilemma of where to enter:

  • Buying at the end of a already strongly advancing day of more than 1.5% price move?
  • Trading the range breakout that has been rejected multiple times with overshoots?
  • Buying above recent highs as a confirmed price breakout?

That would be the challenging questions if trading along side the crowd. And no matter what one would pick, it wouldn’t be low risk.

October 24th 2019, gold in US Dollar, daily chart, “point of uncertainty”:

Gold in US Dollar, daily chart as of October 24th 2019

Gold in US Dollar, daily chart as of October 24th 2019

When looking at the gold market at exactly the same time, the dilemma is even more clear. With gold near its upper resistance line of a dominant triangle formation on the daily time frame, breakout traders become alert. In addition price levels are trading exactly at US$1500. A mark the media doesn’t miss. The same agonizing questions arise for gold traders and investors, of how to participate in a possible opportunity to make some money.

Entering trades ahead of the crowd allows for much less risk to participate in a possible price advancement. It effects possibly avoiding volatility, wide spreads, low risk/reward ratios and most of all participation in challenging times psychologically. In today’s chart book two ways of such anticipatory market participation versus reactionary one is pointed out (for bullish long entries):

  • Buying at the lower horizontal line of a sideways range.
  • Buying at the lower trend line of a triangle.

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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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