Global Macro Trading Journal
- Thread starter Daal
- Start date
The problem with silver is that it has a significant industrial demand component and it therefore trades more like a regular commodity metal. This can be easily seen from the 2008 price action where silver crashed far more than gold on a percentage basis from the highs, and longs got squeezed to a far greater degree. Gold for instance never even made it below the August 2007 breakout point while silver blew through this level and fell an additional 25% or so.
As far as the monetary/reservation demand and its influence on the silver price, they call silver the 'poor man's gold' - which makes gold the rich man's gold. Do you want to follow the poor man or the rich man?
I'll start paying more attention to silver once all the QE2 rally is fully retraced (around 18 bucks), but if China stumbles there's no reason it can't revisit the 2008 crash lows. IMO silver is one of those things you look to scoop up just before the CBs start really gunning inflation expectations, which could be years away.
As far as the monetary/reservation demand and its influence on the silver price, they call silver the 'poor man's gold' - which makes gold the rich man's gold. Do you want to follow the poor man or the rich man?
I'll start paying more attention to silver once all the QE2 rally is fully retraced (around 18 bucks), but if China stumbles there's no reason it can't revisit the 2008 crash lows. IMO silver is one of those things you look to scoop up just before the CBs start really gunning inflation expectations, which could be years away.
Aha - the legendary 'hoodoo' indicator. Damn, that one is usually extremely reliable, I may have to reconsider.
Also, I was checking over lots of past reversal days last night, and yesterday was not a particularly strong one, because although there was a large rebound from the lows, there was not a significant up close. And in gold, the market actually closed lower from the previous day's close. So I suspect I may have screwed up with that call, and am going to put back on my original position now.
I will like to contribute a gem that I have learnt from painful experience for everyone's benefit.
When I started trading, I never kept any records for first 2.5 years. I have started maintaining daily,weekly and monthly records in a spreadsheet from September of this year and I regard this habit as the single most important tool for successful trading - higher than insightful market analysis and great risk management. Keeping daily records and doing a daily MTM in a spreadsheet and drawing forward the PL graph daily by 1 point daily really helps a lot in making one deeply aware of one's performance. It re-enforces the learnings and lessons learnt from the mistakes. I highly recommend to make this a daily practice. Just doing a little analysis daily will add more than a few percentage points to anyone's annual performance.
I will strongly encourage everyone reading this to start this process today. It will help a lot, irrespective of the fact whether your horizon is intra-day or you keep trades for months!
It really depends how you trade. I have found such focus on day-to-day performance to be profoundly negative for my results over the years.
On my twitter stream today, I couldn't believe all the chatter about the "move in the euro", "the short squeeze in the euro", ... what have you. The fucking thing was up a handful of pips and just took back some silly zero volume action from the last couple days of the year. Nothing more than a random wiggle from where I sit, and folks couldn't stop talking about it.
"You never count your money while you're sittin at the table, there'll be time enough for countin', when the dealing's done."
Some macro plays I'm toying with to start off the year. Broad thesis is a recurrence of the 2008 bear trends:
- Short SPX. In my opinion the SPX is still long term overvalued while we're seeing the last gasp of positive economic reports here before things turn down, led by the recession in Europe and stumbles in Asia. Profit margins should get squeezed as businesses do not enjoy the same freedom to slash costs as in 2008, retailers are already discounting heavily, etc. QE3 is coming but not before stocks take a dive and things deteriorate markedly. Will be looking to put the shorts on above 1200 (preferably above 1250) and exit sub-1000, or once the Fed starts signalling QE3.
- Long Gold. Still my favorite position, short term it's a hedge in case the deflation/liquidation thesis does not play out, but should still do better than e.g. stocks in deflation, longer term the money spigots are still flowing and I expect the several-years-out crisis endgame to be all about inflation. Will look to accumulate lower.
- Short Silver. If commodities liquidate silver should be hit hard, I think it has room to head to 20 or below on the chart. Should significantly outperform gold on the downside.
- Short AUD/USD. A few different storms on the horizon here. Drivers could be weakness in commodities in general, weakness in China in particular, a generalized flight-to-safety strengthening of USD, and RBA easing measures should Australian housing really start to deflate.
I've been long gold for a while now and I've put feelers on for some of these positions (SPX and AUD).
- Short SPX. In my opinion the SPX is still long term overvalued while we're seeing the last gasp of positive economic reports here before things turn down, led by the recession in Europe and stumbles in Asia. Profit margins should get squeezed as businesses do not enjoy the same freedom to slash costs as in 2008, retailers are already discounting heavily, etc. QE3 is coming but not before stocks take a dive and things deteriorate markedly. Will be looking to put the shorts on above 1200 (preferably above 1250) and exit sub-1000, or once the Fed starts signalling QE3.
- Long Gold. Still my favorite position, short term it's a hedge in case the deflation/liquidation thesis does not play out, but should still do better than e.g. stocks in deflation, longer term the money spigots are still flowing and I expect the several-years-out crisis endgame to be all about inflation. Will look to accumulate lower.
- Short Silver. If commodities liquidate silver should be hit hard, I think it has room to head to 20 or below on the chart. Should significantly outperform gold on the downside.
- Short AUD/USD. A few different storms on the horizon here. Drivers could be weakness in commodities in general, weakness in China in particular, a generalized flight-to-safety strengthening of USD, and RBA easing measures should Australian housing really start to deflate.
I've been long gold for a while now and I've put feelers on for some of these positions (SPX and AUD).
Interesting to hear a different perspective. As you said, I think the reason this practice has been profoundly negative for your account vis-avis profoundly positive for my account is primarily due to differences in our holding period and leverage.
I am highly leveraged and have holding period intra-day. Do multiple trades per day. On average, I go up/down 5-8% daily. So its extremely important for me to keep track of my performance real time. I actually update my performance sheet after closing every trade, just to see how many %ages I am down/up for the day. But I can realize if you primarily swing with 1-8 weeks holding period than yes probably keeping weekly records will do for you.