Pailin's Trading Corner

We all know anything can happen in all of these markets.  We might have to see one last big sell off for gold and silver. I'm hoping that's the case. Would love to see Gold in the 1500s and silver in the 20's.  Crude getting sold off to 100 or lower would be excellent as well.  I think it's a good time to be really careful as there is high risk everywhere right now.

Going to have to do more watching than trading in coming weeks.

Hope you all have a great week.

I have a good question.  Imagine you have a commodity in a very narrow range between 1 and 2.  and it sits at 1.5 you want to play the breakout.  buy above 2 or go short below 1.

right now at 1.5 the bid ask is small and you can get any price without any problem.  but on the breakout it  will be zooming fast and you can not guarantee a price.

so you have a few choices.

1. place a buy above and a sell below the narrow range and you will automatically get in the market which ever way it goes.  1 contract.

2. Another choice is to buy one in the middle at 1.5 and place an order to sell 2 below the range which would switch you to short.  

Which is the better choice.  I actually like 2.  because you get a good entry. it could be at any price you choose besides the middle.  one could buy a little lower so it it goes up the profit is bigger than the loss.

But the book all talk about 1.  they stay out until it moves.  I do not think that is the best choice.  

What say you traders.  Has anyone every tried this in experimental mode. 

The initial position could be long or short.  and placed at the best spot.  One idea is to try to determine the trend and go with the trend.  figuring that a trend continuation is more likely than a reversal.  etc.  

I hope some one else had thought about this idea.  I have never seen it discussed in the literature.  IF you have seen it discussed please let us know.

Spinny said he sold at 31.80 that is probably a little higher than the half way point of the week.  so I like his strategy.  He wants to be short so he sells up toward the top of the trading range.  very nice.  Seems better to me than using a stop below and entering when the market might be in total collapse and getting a terrible price.   Also he did not say if he was going to go long by buying 2 as it breaks out to the upside. if it did that.  

But even if he does not want to go long.  it allows him a nice entry with a possible small stop and lots of time to execute or enter his orders. 

You have followed my thinking exactly. You are right, the textbook would say "wait for the breakout." But if I have a bias why not get in at a better price, rather that set a buy stop and risk getting hit on a false breakout that sends the market charging in the complete opposite direction and me having bought at the worst price possible. Makes a lot more sense to me the way I proposed. Most pros are concerned with making the most money in the shortest time. That is the downfall of this style, you have to wait a little bit, and you might wait for nothing. The key is also setting your stop far enough away that it doesn't get hit on a head fake. 

Many people think poker is gambling but to professionals it is not. It is a game of playing the odds and betting heavy on a hand that you know statistically leans in your favor. That is what I am doing here. (There is also the psychology of knowing the opponent, managing risk, controlling emotion, the analogy can go on and on.)

I've had this trade playing out in my head for weeks so it will be very interesting to see how it plays out....

no idea how this posted twice

Yes, that's what I'm speculating on. The bullish reverse head and shoulders in Gold and Silver is tempting to contemplate, but I don't think this trade is going to be so neat. Further, the '3 stages of a bull market' as advertised on KWN is just as tempting, and could be just as easily negated: this time will not have the easy innocence of a tulip mania. Of course, if the pattern is validated I'll change my outlook, but I'm prepared for expectations and reputations on both sides to be frustrated to the point of insanity, all caught in the alternating strobe light of euphoria, boredom and capitulation. The 'dip' I foresee should only be enough (!) to cause such extremes in emotional release.

Loss of confidence in paper markets - in my opinion - should only result in ever-amplified volatility, as liquidity leaves the markets to a core that toys the price in whichever direction is most likely to rinse pockets dry, with booby-traps set for everyone from veterans to tea-boys. I believe we're seeing that now.

I do trade these markets, but I also believe that the disconnect between physical and paper/electronic price means the PM $ price is more symbolic than anything else. In others words, there is a number (that I'd don't claim to know but will speculate on) that the Euro must reach in order for the Fed to be pressured into printing. Conversely, there is a number $Gold must reach in order for most to be priced out of ever owning it.

The journey between these two mystical numbers should be something to behold.

@atlee: Keith Moon wouldn't load, but a young Salvador Dali worked first time :)

the Yen is not returning the love...traded a bunch near 81 to make up some of the damage, so overall short euro, short yen worked over the weekend...all flat now...silver catching up to copper on the downside, off 1.64% vs. off 1.74%...s&p may make a run for that as well...be careful out there

ditto. sorry.

added AGQ premarket open, 50.56 and should have waited a little longer since bid was showing 50.20 at the time. DCA now 51.35 with second load. LSO at 51.90 for green exit. Not trying to get cute with this right now, small scalps to be taken anytime green shows up. 

mental stop 48

still have JAG lotto ticket at 3.11 and will hold for a while

GLTA

Beautiful to see lower Gold & Silver prices. Think the selling should continue for weeks to come. Super excited to go long in a couple weeks/ a month's time.  Copper short doing great. Can't expect higher crude prices for now as well.

I do think we'll see 120-125 crude long term, but for now it won't go much higher.  With that said, bring on the discounts!!