Friday, November 11, 2011


                                    Really? Even Me?

Well dear friends, it is once again Friday.Time for a little introspection into what you shouldn’t have done during the week.

As BFSG Algorithm traders already know, I preach about NOT putting stops where dealers, banks, and large hedge funds act like general surgeons operating on you without anesthesia. Big money loves to stop hunt your order.

Metals Dealer Badge of Honor: Check For The Decal On The Front Door

About an hour and a half after the Asian open, gold pooped its pants and dropped about $20 in just a few minutes. Having cleared out all the retail sell stops, dealers very quickly bid the market higher. If you got stopped out, and wanted to re-establish your long position, you had to pay up, and pay up quickly to get back in. A classic gold  market stop hunt.

Let’s take a peek at the charts to see what I mean.
                               XAUUSD 1 minute candlestick
The large red candlestick spike down is where the action took place, and as you can see between the red horizontal lines, the market dropped $ 8 in the 1 minute candlestick. In actuality, it took about 2 seconds. If you had your stop anywhere between 1753 and 1750, your stop got filled at 1744.

Thank you very much and please come again.

To get a better perspective from a time standpoint, here is the 15 minute candlestick. As you can see in the highlighted area, the market was in a very tight range before they took it lower.

                                XAUUSD 15 Minute Candlestick

Exposure to stop hunting is one of the biggest dangers when trading gold. You need to be very careful in placing your stops so your account isn’t “hunted”. If you buy/sell correctly, your entry point won’t need anything more than a $3 - $5 area for your protective stop-loss.

                                           This Is Important

Position entry is the most important determining factor in making a trade. If you get in badly [price], your stop will reflect this and your stop level will, by necessity, be farther away than it should be. If it gets hit, you will lose more money than necessary.

If you aren’t getting good entry points, then maybe it’s time you discovered “The Vegas BFSG Algorithm’. It’s free; what are you waiting for?

Friday’s Action & Weekly Wrap-Up

As I stated yesterday, the algorithm moved into sell mode. Therefore, today we were looking for rallies to sell when the algorithm gave the go-ahead. There were a couple of trades after the Asian open, and the net result was about a $2 - $3 / oz. profit. Once again, not a great day, but it beats losing.

Once the market started rocketing higher, all shorts had been previously covered and there was no other sell signal the rest of the day. Here are the week’s approximate results:

            Monday           + $ 30 /oz.,
            Tuesday           + $  7 /oz.,
            Wednesday      + $ 11 /oz.,
            Thursday          + $ 36 /oz., and
            Friday              + $  2 /oz.

            Total Week      + $ 86 /oz.

                     Don't Worry: Market Will Be Open Next Week

Don’t get mad that you missed it. I just want you to realize though, that if you had an approximate account balance of 10K, 5 days ago, and were trading a 1 lot [100 oz.], which is the proper leverage, you made about $8,600 for the week. FOR THE WEEK !! 86% FOR THE WEEK.

When’s the last time you made 86% in a week? Yeah, that’s what I thought. If I was you I’d be upset too.

Did we miss a nice move on the upside on Friday? Yeah, so what? It’s an opportunity cost, not a capital loss. Don’t forget the difference between the two. Remember, the primary purpose of the algorithm is to KEEP YOU OUT OF TROUBLE. After that, it makes you money.

Time to wind down and enjoy the weekend. HAVE FUN EVERYONE!!

1 comment:

  1. Sophisticated Vegas UrbaniteNovember 12, 2011 at 7:14 AM

    Pics of the chicks please?