Monday, February 13, 2012


                                     Right Market, Wrong Day

Often times we get focused on the wrong thing when looking at the bigger picture; gold trading is about intra day volatility and NOT prices. It makes no difference to me whether gold is at $300 or 3,000 per oz.; what matters is the intra day play of delta [price change].

As I write today’s post, we have a $17 range for the day. Even that came on a group of mystery ticks when the $13 range got taken out at 1720.

“I got filled where on my 1720 stop?”

I have repeatedly tried to focus your attention over the last weeks and months on the limitations of your algorithm. If you ignore this vital area, you are missing a key component of making money trading. Knowing how to prepare, and then implement key strategies is imperative if you want to be consistently profitable.

I know when volatility is below normal, I can expect lower viable signals and more false positives. My attention is more focused on the daily range than the actual buy/sell signal. I am also much more trigger happy than usual because given the nature of the beast, i.e., choppy trading with spikes/drops, I’m trying to find the profitability I want relative to my goals.

What makes it work for me is that I know my algorithm, and I know its limitations inside and out. I spend 99% of my trading time worrying about losses and the ‘what if” scenarios that could cost me money. Any chimp can handle winning.

What this means is that when the market gets a little abnormal [gold or any other], I have to be especially vigilant against market spikes/drops that can hurt me. The market isn’t going to give me a second chance, through intra day volatility, to make the money back if I take a “normal” hit. Some days making a $1.98 is a pure victory.

Have a great day everyone!


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