Thursday, February 2, 2012


                              The Slowest Traders Get Eaten First

We have seen a noticeable yet subtle shift in gold trading these last few weeks. Gone like a distant memory are the $25 - $35 daily ranges with subsequent intra day volatility. It feels like we are at the zoo and the lions are free to roam amongst the crowd.

“Errrr honey, be careful when, where and how you walk; let’s not attract attention to ourselves lest we be the ones that………… Ahhhhhhhh, RUN!”

One of the “fingerprints” of low volatility trading are the spikes and beatdowns that come out of nowhere; convincing you along the way that something “significant” has just happened and deserves a position of some sort.

What takes the market 4 hours to rally $3 / oz., takes about 90 seconds to unravel and convince you we are headed south in a big way. “Uhhhhhh, no.”

A stop hunt commences on the upside, we rally $5 / oz. in 90 seconds and you are convinced we are going up $20 / oz. in the next 30 minutes. “Uhhhhhhh, no.”

Welcome to low volatility trading; account erosion starts in 5…4…3…

Far more “professional” traders get killed in a tight daily range trade environment than they ever do when the daily ranges are $50 / oz. Constantly going orbital and then subsequently diving bring about swift account erosion and pain.

“Honey, I got bad news.”

“Why whatever could have happened dear; I checked CNBC and gold was up $0.75 today. What possibly could go wrong?”

                              Illusion? Nahhhh, It's Real Baby!!

Amazing how he can pull that Queen of Hearts out of nowhere. Amazing how you can get shellacked and the market goes absolutely nowhere! And the worst part: lack of a daily range means that when you get hit like this, you can’t recover because there is no volatility to help whatever position you take. You are reduced to scalping for ticks.

The only thing you can do is reduce, not increase, position size and be one of the first out on any move.

Just because you can’t see the lion, doesn’t mean he isn’t in the bushes thinking about you for lunch.

When does it end? “When it does.”

Have a great day everyone. Comments on today’s action at


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