July 27th 2019, Silver Chartbook

Leverage – more bang for the buck

Most of the time leveraging up is the last thing one wants to do in trading and investing. The goal in any market play is to get consistent. After that either trade frequency or trading size (amount of exposed capital) will take care of the rest. There are some sophisticated ways of pyramiding in strong directional moves that allow for low risk models. Most of everything else is not low risk principle based.
Focus at all times needs to be risk control. To be alive another day to participate and this ideally on a smooth equity curve, should be the prudent market player´s goal. That being said there are ways to get ones edge a bit widened. Leverage – more bang for the buck.

The following is presuming that there is an edge, meaning this is for astute market players who are well versed within their market niche. It is not wise to up ones game on leverage, if one still needs to hone ones game.
Illustrating on the silver market one such way to get more bang for the buck is to get beta by looking for leverage within the sector.
We have spoken about our quad exit strategy in the past, or how to use the concept of leading and lagging instruments within a sector; picking entries and exits from a precious metal related to Silver, like gold for example, if an additional edge warrants for such action.

In today’s chartbook we want to show how related instruments like silver mining stocks can be a true gem to leverage up.

Here are examples in regards to the last steep daily up leg of silver:

Daily chart of silver 7/26/2019, steep move up:

Silver in US-Dollar, daily chart as of July 26th, 2019

Silver in US-Dollar, daily chart as of July 26th, 2019

Silver versus the dollar – tricky to get into this second leg.

Avino Silver & Gold Mines – July 26th 2019, daily chart, good risk reward:

Avino Silver & Gold Mines, daily chart as of July 26th, 2019

Avino Silver & Gold Mines, daily chart as of July 26th, 2019

Avis Silver & Gold Mines (ASM). If you were late in the game but wanted in, the not yet completely filled gap (1) and the above “air hole” leaving room to the next resistance /distribution zone (2), allowed for a low risk entry (3). No other instrument gave such late entries in this bull run at this low risk. A true leverage point.

7/26/2019, First Majestic Silver Corp, buying dips:

First Majestic Silver Corp, daily chart as of July 26th, 2019. Leverage - more bang for the buck

First Majestic Silver Corp, daily chart as of July 26th, 2019

First Majestic Silver (AG). If you didn’t quite get on board at the lows of this daily bull run, this silver stock provided for a low risk second leg entry. The retest of a break away gap (1), and even the anticipated breakout play (2) gave the astute trader such an opportunity.

Endeavour Silver Corp, daily chart – July 26th 2019; amazing returns on low risk:

Endeavour Silver Corp, daily chart as of July 26th, 2019, Leverage - more bang for the buck

Endeavour Silver Corp, daily chart as of July 26th, 2019

Endeavour Silver (EDR). The true gem! While getting into silver (XAGUSD) as a second leg entry was no easy feat, executing on a solid triple bottom in Endeavour Silver Corp, made this a preferred trade. Not only was risk in check but the returns quite stunning. Why? Well, let us compare:

July 26th 2019, silver- not easy to catch this leg:

Silver in US-Dollar, daily chart as of July 26th, 2019 b

Silver in US-Dollar, daily chart as of July 26th, 2019 b

A similar entry on XAGUSD got one in at around US$15.40 for a dollar or so profit. A US$2.30 entry on EDR would have provided mutually for a one dollar return. We don’t have to point out so that this means a difference of ones money exposed on XAGUSD returning a 6.5% profit, versus a profit of 43.5% on EDR. We consider the additional risk quite in balance to a return difference of this magnitude which can be further balanced with proper money management (= smaller position size).

When there is clarity about a move of an instrument that you find confident trading, it is worth while to think outside the box. Looking for neighboring opportunities to create that extra edge can pay off handsomely. 

In the field of Silver and the stock market some of your choices are:

Endeavour Silver (EDR)
Fortuna Silver (FSM)
Hecla Mining (HL)
First Majestic Silver (AG)
Avino Silver and Gold (ASM)
PanAmerican Silver (PAAS)
Wheaton Precious Metals (WPM)
SSR Mining (SSRM)
MAG Silver (MAG)
Global Silvers Miners ETF (SIL)

This shouldn’t limit your horizon in there being a vast array of tradable objects from ETFs to options, forex to physical delivery to only name a few.

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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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