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Global Macro Trading Journal
- Thread starter Daal
- Start date
Gold is oversold but its not ridiculously oversold like in the last time. Anyone trying a short-term long there?
I'm tempted but at the same time I'm aware that this liquidation could get out of hand presenting an even better opportunity in a few days, so I'm not sure what to do
Maybe scale in a long?
I'm tempted but at the same time I'm aware that this liquidation could get out of hand presenting an even better opportunity in a few days, so I'm not sure what to do
Maybe scale in a long?
Quote from Daal:
Gold is oversold but its not ridiculously oversold like in the last time. Anyone trying a short-term long there?
I'm tempted but at the same time I'm aware that this liquidation could get out of hand presenting an even better opportunity in a few days, so I'm not sure what to do
Maybe scale in a long?
I'd feel better about picking a bottom here in nat gas than I would in gold. I just got long both but in a very small way. Start small and if it works add to it.
Quote from Daal:
Gold is oversold but its not ridiculously oversold like in the last time. Anyone trying a short-term long there?
I'm tempted but at the same time I'm aware that this liquidation could get out of hand presenting an even better opportunity in a few days, so I'm not sure what to do
Maybe scale in a long?
There are two good approaches for picking a oversold low. If you can detect signs of a clear capitulation climax, then don't buy anything until you see this, then get in once you see it.
If you can't time capitulations, then wait until the market seems ridiculously oversold, then buy a 1/4 position, and add 1/4 each day for the next 3 days after initial entry.
In both cases, make sure you are trading small enough that losing another 10% or so does not pressure you enough to puke out of your position.
Hold on for 3-4 weeks for the panic to end and the market to rebound, then sell on rallies into resistance, or when rallies get overbought. Scale out 1/4 at a time whenever there is a huge up close, for example.
Quote from Ghost of Cutten:
There are two good approaches for picking a oversold low. If you can detect signs of a clear capitulation climax, then don't buy anything until you see this, then get in once you see it.
If you can't time capitulations, then wait until the market seems ridiculously oversold, then buy a 1/4 position, and add 1/4 each day for the next 3 days after initial entry.
In both cases, make sure you are trading small enough that losing another 10% or so does not pressure you enough to puke out of your position.
Hold on for 3-4 weeks for the panic to end and the market to rebound, then sell on rallies into resistance, or when rallies get overbought. Scale out 1/4 at a time whenever there is a huge up close, for example.
Good advice. The issue here is not so much being able to identify "a capitulation climax", they tend to be obvious, problem is that sometimes they never come and price reverses without it. If there is some kind of QE positive news soon (like bad employment), gold might shoot up $100 really fast. There isn't a guarantee that there will be such a large inefficiency down the line so it might be better to take a smaller inefficiency on smaller size with room to add
Quote from Daal:
Good advice. The issue here is not so much being able to identify "a capitulation climax", they tend to be obvious, problem is that sometimes they never come and price reverses without it. If there is some kind of QE positive news soon (like bad employment), gold might shoot up $100 really fast. There isn't a guarantee that there will be such a large inefficiency down the line so it might be better to take a smaller inefficiency on smaller size with room to add
Yes I agree with you, for example I wanted to bottom fish the Nikkei recently once it was in the 12000s, I tried a couple of times and did catch one big up move (although gave back half of it), but didn't get the clear panic bottom then 2000 point rally I was expecting. As a result I made only a modest profit.
But, so what? Not all market moves present clear entry points with super-attractive risk reward.
What is a mistake IMO is to take a marginal trade with moderate odds in favour; especially when there is quite a good chance that it will be a huge loser if the market does in fact make a capitulation low.
If you must take those trades, then do so on the far smaller size that their grossly inferior characteristics deserve. A clear capitulation bottom is worth 5 or 10 times the size of a 'oversold but no buy signal' setup.
And alternative idea I started trying is to use some other trade vehicle, for example a bull vertical option spread - that way you have defined risk, don't tie up much margin, are not shitting your pants every time the market falls another 5%. But you won't make 5 times your risk either.
Anyway, IMO gold is not yet at a super oversold point. It is oversold but no more so than is normal during a strong downtrend. In fact I'm short still (with a trailing stop).
Just covered my shorts FWIW. If you are bullish then now may be a good buy point for a quick trade.
I don't think it's 'the bottom' either, otherwise I would have on a big long position. But I do think the recent 'easy money' downtrend is likely over. Given how far we have fallen, I think that makes it odds on to rise rather than fall further from here. But my conviction is relatively low, so take it with a pinch of salt. If we close down at 1180 or something, I will change back to bearish.