Tuesday, March 20, 2012


                                      Mrs. Smith Trades Gold

A very tough trade today; so many spikes/drops of over $3 - $4 [within seconds] that the algorithm really became useless for signals. A moment too late and a few dollars per oz. too expensive.

Until 1630 gets taken out, I think you have to pick your spots to be long; use the spikes to get out. The risk here is your stop level; no price below the market is safe from the stop hunters in this extreme chop environment. What looks safe one second gets taken out the next.

One minute it looks like gold is correlated with crude oil and some other markets, and the next moment they are diverging and racing away from each other at a very fast pace. It all makes for a very confusing environment for both long and short positions.

The algorithm is pretty good getting in, but lately it hasn’t been very good liquidating a position; the market is moving too far too fast for a signal. What you are left with is the decision to take profit on the spike; sometimes you nail it and sometimes it just keeps going. That’s the nature of today’s trading environment. Very little of the market action is trending for longer than an hour or two before reversing with a vengeance.

Have a good day everyone.


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