Wednesday, April 4, 2012


                         When It Comes Down It Won’t Be Pretty

If you are a relatively new trader to gold, you now know the consequences of being wrong. In addition to the “take no prisoners” approach, going down is multiple times faster than going up.

No charge for this advice kid, as your tuition has been paid.”

I want to use today’s post to announce major changes to my algorithm. This isn’t a minor cosmetic change, it is a major fundamental and philosophical change to how market dynamics are calculated and applied to the taking of positions. This is really the first major change since 2001.

Since the electronic age [around 2001 – 2002] came into dominance in trading, gold specifically has not seen what I would consider a protracted “bear” market. What is a bear market? I define it as prices losing more than 12% from a high water mark. Using this as a basis, you can make the claim that gold has been in a bear market since August 2011.

This year, so far, has been a choppy “elevator up, elevator down” kind of affair. In 2011 we had, IMHO, a major paradigm shift in the way precious metals are traded. In order to take this new environment into account, changes have to be made. Going into the future, rallies and breaks are going to be more vicious than you have ever seen them. This is going to make trading more difficult, but alas also more profitable.

I’ll have more details in the next few days, with the goal of entire documentation available by Monday’s trading. As always, our first priority is the preservation of capital; so when we are wrong it maybe costs us a percent or two.

As a professional trader, it’s always been about the “Benji’s”. I never stop learning, and I never rule out looking at the market from different perspectives. I know from experience that when I have periods [multiple months] when I don’t make much money something is wrong. It isn’t the market that has the problem it is me and the algorithm. It has always been this way and will always be this way too.

So, while the action over the last few months has not been kind to ole vegas here, I am more than happy to trade the money I should have made for the information I have now. Defeat promotes learning, not suffering.

Have a good day everyone.


No comments:

Post a Comment