GoldTrader--swingin gold the cash cow

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plyka

Hey all,

I have a few different methods of trading. I love to daytrade the CL, the spread is tight, the moves are "tight" in the sense that the choppiness relative to the directional move is low, and it is very liquid.

I love to trade other commodities and financial futures. For instance, at this moment I am long KC and am loving my trade, I am also long something that i am fundamentally extremely bearish on and that's the ZN. However, I purchased it before the employment news at 122'110 and doubled my position after the huge positive reaction at 123'230. I merely mention the prices on the ZN because it is a prime example of the types of setups i use buying my main trading vehicle, gold or the ZG.

Gold is my cash cow, it is the instrument i have used to make 85% of my profits. I basically consider silver as a corollary and consider them one and the same. The same tactics used on gold can be used on silver, although perhaps not at the exact same time. The same setups for trades work on both. I use gold more than silver because it is more liquid and solid of a trading vehicle.

In fact, the same setups should work on everything, although i've had trouble with them in the stock market and with certain instruments like ZS and ZW.

Anyways, this is medium term trading or swing trading. I find a few true setups per year that work properly and that i can pyramid on the way up for great gains. Most of the time, the setups will turn into losses or out at no gain after going up (or down) $20-$30 per ounce. The losses i take on the ones that don't work and i don't get out even, are typically extremely small relative to the potential profits. I will never take more than about a $10 loss in today's trading levels, per contract.

All in all, I would say I make about 1 gold trade per month, sometimes more sometimes less, but around that average per year.

So, basically, this is a journal, but a long term one. I will make mention of my other trades (not the CL daytrading ones, go to CL redux to see that), but the gold trades should be center stage. Since it is a low frequency journal, i figure that anyone who comes here can use this board to talk about the general direction of gold and the potential setups.

Let's begin!
 
Here is the recent chart of gold. I was all ready to make a purchase at the lows, but gold was so strong in making its bottom that it provided me ZERO opportunity in making a purchase. Usually, it gives me at least 1 setup near the lows, but this time it gave me ZERO.

This is a HUGE positive. Sometimes things are simple in this game, when an investment is so strong (or weak if we are talking about a short) it has minimal retracements or doesn't spend much time carving out a bottom, then it means, well, that it's very strong, lol. Strength brings about strength. Now you have to use your judgement. If you have a spike up off the lows, despite it being a huge spike, but then it collapses back down that's not strength. If you have a blow off top at the END of a run, that's not strength. Strength can be determined by the tightness of a move relative to its direction. Check out gold in this latest run, look at the bottom around the 4th of July. It didn't even sell off more than $4 for the first day or two off the bottom, yet it was a controlled rise, not a choppy one.

Anyways, regardless of how positive the strength was, it didn't give me a chance to buy. However, due to this strength, it did give me an opportunity to buy a little later (a situation which normally would not be an opportunity), which was the 2 day period from around the 6th-8th, the flat base. Usually i don't buy off such things and that's why i didn't buy this time either. But due to the strength shown, this typically non-opportunity was an opportunity. I was on the verge of making the buy, pointed out in the chart, but could not keep myself awake to see if it would hold up above the base low until about 4am in the morning (7am easter time). So i missed the only opportunity to buy for me on this entire run up.

Now that it has basically run up $100+ since the bottom, I must wait for a real reaction and setup before i make my purchase. I doubt it will come any time soon, due to the strength shown, I think gold will just continue to go up until it breaks out above its all time highs. After that, we may see the reaction necessary for another setup to show itself.

So for now, i'm in a holding position, watching gold climb daily...ouch, it hurts.
 
Gold continues its ridiculous strength. We see oil collapse from 98.75 to 95.60 at the current price for the AUG CL contract, we see all commodities fall off along with the stock market.

Yet what does gold do? It "collapses" from $1595 to $1582 and then quickly recovers to its current price of $1591 (Oct '11 contract). That's AFTER it has run up $100+ over 10 days, when it should be susceptible to weakness. That's just pure strength.

Now, in my opinion, this means that there will be a clear breakout to the upside, who knows how much higher it will go before a true reaction. However, it is irrelevant to me since i haven't entered a position. If i had the guts i would jump in right now, but i don't have the guts to do such a thing. Truthfully, it is not "guts" but rather that it doesn't fit my trading style.

So I'm in a holding period, waiting for a nice reaction and a great setup to enter a position. I think there is ZERO doubt any longer that this bull market is ready for its next run.
 
Nice thread! I mostly trade in the gold markets too but only utilize call options on GLD mostly. I missed the last bottom at 1480 as it caught me off gaurd on how quickly it jumped from there so I'm also looking for the next entry point. Is there a price range that you are looking to get in at or are you waiting for a pattern to transpire?
 
Quote from GammaTrader:

Nice thread! I mostly trade in the gold markets too but only utilize call options on GLD mostly. I missed the last bottom at 1480 as it caught me off gaurd on how quickly it jumped from there so I'm also looking for the next entry point. Is there a price range that you are looking to get in at or are you waiting for a pattern to transpire?
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Yeah, that bottom was very odd to me. WTF, i've rarely if ever seen such a move from downtrend to uptrend. It's like someone turned a switch and all of a sudden it was one of the strongest uptrends we've seen, $110 in 10 days!

I think the biggest key will come during the next reaction. I think it will continue higher and then give us the first reaction --if that reaction is one of those, barely budging, barely falling, barely giving you anything reactions, then there is still a long way to go with this run. If it collapses in price, then that's a different story. I think it will be the former variety.
 
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