Usually when I write something with much emotion attached to it I call a top or a bottom, but I can’t resist to document further this moment as I too have found myself getting excited these last couple days with gold- the trend is lower.
Im hoping my patience hasn’t overstayed its welcome as Im embarking on a moment in my trading that is somewhat unfamiliar emotionally.
What does it mean when your conviction in a long standing position now becomes mainstream opinion?
When professionals and talking heads are the new “experts” on your trade, does that mean the trade is over?
If I put on X amount of risk, why shouldn’t I sit on my hands for my X amount of reward regardless of sentiment?
I established a thesis in December 2012. It wasn’t perfect I was bearish the market actually, but I got past that. I haven’t taken an economics course since high school and it really has nothing to do with my trades. I like patterns and Im learning to see the field better each day. Call me an idiot like the 2004 RedSox-its wins and losses that count.
I have only once before held a position for longer than a few months. It was a position based on an Elliott Wave pattern in MPEL. Holding from an average of 4.15 and selling around 7 -my target- it was the best position trade I had ever made, but MPEL trades well north of 20 today.
Now Im holding another long term position based on price action and thesis of American recovery. Short gold.
I’ve held since late August into early September 2012. I was early and it hurt. Almost as much as it hurts to hold a profit through the recent volatility.
Still, my risk reward parameters have paid off greatly. Ive sold 1/3 of my position, a little sooner than I would have liked to in hindsight, but its allowed me to take other positions in the market and stay “distracted” to an extent. Admittedly, my position was too large even though my risk parameter was never exceeded- if that even makes sense.
I have never sat on my hands more than I have the last month- up 38% on average at todays open. I constantly find myself thinking about needing to buy a proverbial “pair of shoes” but to this point have redirected my thoughts from my profits back to my risk reward.
Right or wrong Im not going to hold a position for months then get out because of intraday volatility. I sometimes look at my old charts, but more often search for new charts and bullish ones at that. At the end of each day, I take the most honest look I can at my position.
As well, Im not taking a bow of accomplishment here. I did not officially disclose opening the position and though I did enough squawking and hinting along the way, this stream of consciousness is being written to reinforce that the trade is not over and to evaluate that vs my emotions. I haven’t gained anything of the 38% I talk of. These emotions are worth recording, reflecting on them will truly be another lesson to learn from.
Prior, I found an opportunity to reflect on a great write up at Trader Planet. Needless to say I’ve been looking for an outlet.
“Visitor – SSTtrader: Comment…Price judges character- Strong hands “… generally don’t sell when the price goes up, nor do they sell in a panic when the price drops”. There is a trend involved that fosters those actions, reflections of beliefs for gold more than strategy imo and yet justly so as time and price has been on the side of bulls. However, though the price of gold has been like time itself, linear in its rise, we should acknowledge that linearity doesn’t exist in price motion indefinitely. Strong hands are patient hands, but I garner from price that their beliefs could be asked to bear more value than what they hold for some time.”
Did what I say make sense? I was preaching my position but Im here to learn as well.
There has been nothing about the way that gold has acted in the past that is playing out in the present. There are countless examples of why gold goes higher and those examples will likely not be exhausted anytime soon as it heads lower.
Short gold fits perfectly into one facet of what society needs right now- let go of fear. Hold a USD in your hand and be proud that your hard work is paying you more today than it did yesterday.
Yes, I have a bias of gold regardless of the price. I think its a commodity, not a currency.
In my opinion the most recent lows in gold (May20) are cause to evaluate a double bottom, but were powered by the AUDUSD bounce at 97 which may continue to rise. 97 is a very important weekly close level for the AUD.
Yet, and this is huge in my mind, the story that few have accepted is the USD rise. The dollar should flag at its current breakout and continue to rise, and thats bullish for stocks, bullish for America and bearish for gold until its not. Period. Don’t “correlate” that, just trade it.
Get short the boundaries of whats possible. Recognize the moment and be objective, as it is the only way you will know that this moment is gone.
I encourage you to shut your TVs off. Two years and counting for me. Look at the next blue sky day and think of America. Be proud, be smart and be safe.