System Trading Tips & Tricks » Commodities

Why Gold Will Not Make New Highs Or Lows This Year

Administrator — Tue, 30 Mar 2010 14:25:12 +0000

Gold has had some dramatic moves in the last eighteen months and we expect it will have some equally dramatic moves in the future, but not right now.

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While I recognize that gold is one of the few commodity markets that people are really passionate about; the purpose of this article is not to take sides either with the gold bugs or those who reject the argument that gold is forever. Rather, I want to discuss my interpretation of the markets cycle.

After spot gold made an all-time high against the dollar on December 2 at $1,226.37, gold has been in retreat mode. For the for the past several months gold has been in a broad trading range, seemingly unable to move one way or another. This process has created frustration from bulls and bears alike.

Here is the dirty little secret about the gold market. It can be a horrible investment and here’s why:

Gold first started trading in the 80s while I was on the floor of the Chicago Mercantile Exchange in Chicago as a member of the International Monetary Market, (IMM) which was at that time a division of the CME now the CME Group. When gold opened up the public clamored to buy into the gold futures market and guess who sold it to them? Thats right it was the pros- the guys who made their living trading. As a result, gold hit an all-time high of around $850 an ounce back then and it took almost 25 years for gold to move over that level, at least in dollar terms. I dont know what your timeline is, but 25 to 30 years is an awful long time to get even again.

So what is really happening in this market?

Everyone is aware of the problems in Europe with Greece, Portugal and a host of yet to be named countries. We all know that the huge amount of money being printed, coupled with the bank failures abroad contribute to the dollars declining value. These events, in conjunction with the American governments actions, also contribute to the devaluation of the dollar. The government claims that this is beneficial to exports, but the bottom line is that the purchasing power of the American dollar continues to erode in world markets.

Based on the declining value of world currency against gold you might ask- why isnt gold trading at $2,000 or even $3,000 an ounce? What is wrong with this market? This is because a great deal of what goes into the gold market is psychological and reacts to cyclic trends driven by both psychological and economic factors.

So what does all this have to do with the price of gold now? It has everything to do with gold and nothing to do with gold.

Here is what I’ve been able to observe in the last several years in gold and seems to be holding true. It is something that you should pay attention to if you’re interested in the next big move in the gold market.

Before gold can move higher it needs to create what I call an “energy field”. The most recent energy fields in gold were between May 12, 2006 and September 20, 2007. This 17 month energy field saw gold prices oscillate between a broad trading range bound by $730.08 (upside) and $541.80 (downside). That energy field produced enough power to propel gold to the new high of $1,012.40 on March 17, 2008. This marked the first time gold exceeded, in dollar terms, the highs set in the early 80s mentioned earlier.

The energy fields I have observed for gold are taking somewhere between 17 and 18 months to complete. If the energy field holds, then the December 3rd 2009 high of $1,226.37 should remain in place for quite some time. If the same cycle remains true then the recent lows that we witnessed, at $1,050, should also remain intact as they represent the 15 to 16 month cycle low.

With the lows in place the next question becomes when is the next cyclical high in gold? Based on the existing cycle, we can expect the next major gold high in 2011.

To summarize: I expect gold to be locked in a broad trading range for the next 12 months bounded by the December 09 highs of 1,226.37 and the lows of $1,050.00. If the gold cycle holds true, we expect that gold tops the $1,226.37 marker by April or May of 2011.

On the on the upside we will also be looking for gold to make a nature cyclic high in October or November of 2011. It’s impossible to predict the future with any degree of accuracy; however when we look at the cycles in gold this reads as a pretty good bet.

No matter what happens we expect gold will offer some great trading opportunities that investors and traders should be able to take advantage of.

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As I always discuss- in trading one should approach gold or any other market with a game plan and proper money management stops. The key to success in this decade will be an investors willingness to move in and out of asset classes such as gold and be well diversified into more than one asset class. That way you wont be left holding the bag for the next 25 years. Our World Commodity Portfolio is a good example of this approach and one I believe will serve investors well in the coming years.

A Quick Peek At The Crude Oil Market

Administrator — Wed, 17 Mar 2010 14:46:11 +0000

The crude oil market came under pressure on Monday and I’m disappointed that I did not have this video out to you earlier. I created the video on Sunday along with the other three videos on the S&P 500, gold, and the euro that did make it to the blog.

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Nonetheless, I think you will find this video useful as it outlines our position in this market. The video is short and to the point, nonetheless I think you’ll have a lot of good takeaway information.

As always our videos are free to watch and there are no registration requirements. I would really like to hear back from you with regards to your thoughts on this video.

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Gold Catches Traders By Surprise

Administrator — Wed, 10 Mar 2010 03:22:47 +0000

Click Here To Watch The Video

The move down in gold yesterday surprised many traders and flashed an exit signal based on MarketClub’s daily “Trade Triangle” technology. As we have mentioned before, we felt that gold was in a broad trading range and were not optimistic that it would shoot higher.

The action yesterday confirms that we have more of a two-way market. I expect we’ll see further selling on any rallies from this level.

In today’s video, I share with you some thoughts I have on gold based on one important element: how gold energy fields propel this market.

Click Here To Watch The Video

Top 8 Trading Resource Websites.

Administrator — Thu, 13 Aug 2009 04:29:55 +0000

1. meta-formula.com

If You Can Copy And Paste, Then You Have What It Takes To Quickly And Easily Master Metastock And Identify Profitable Trading Opportunities— Once You Know My Secrets.

2. ultimate-trading-systems.com

Yes You Can Design Part Time Trading Plans That Make Money!

3. trading-secrets-revealed.com

You can be wrong 50% of the time and still make loads money!

4. tradingpsychology.com

Do You Make These Mistakes In Your Trading?

5. tripletradingprofits.com

How YOU Can Increase Your Trading Profits With A System That Works In Any Market, In Any Time Frame.

6. onlinetradingmastermind.com

Become a confident, diciplined trader.

7. darvassecrets.com

Who Else Wants To Know How A Young Dancer Turned $25,000 Into 2 Million Dollars Within 18 Months?

8. forextardingstrategies.org

Want To Trade A Market That’s Open 24/7, Has High Leverage And Low Transaction Costs?

Jan 18: Experts Prove Two Out of Three Traders Commit These 4 Deadly Commodities Trading Sins

Administrator — Wed, 18 Jan 2006 06:01:06 +0000

Everyone knows the seven deadly sins: pride, envy, gluttony, lust, anger, greed, and sloth. But did you know there are commodities trading sins as well? Sins that are surprisingly similar to the seven sins, and that can be just as deadly to your commodities trading career. The commodities trading sins are: pride, envy, greed, and laziness. I`m sure there is a way to work in the other three if I really try, but let`s stick with these four, since they cause many traders a great deal of difficulty.

Where do these sins come into play? From traders` reactions to the markets, most markets have predictable trends and repeated patterns. Why? Most commodities trading movements in the markets are a result of the motivations of people in those markets. Many people say that what drives the markets are greed and fear. Greed makes people buy, and fear makes them sell. Greed and fear can benefit traders: Greed, or at least the desire to make money, is why we trade.. Fear is a healthy response that occurs when we sense danger or disaster closing in, and it motivates us to get out of a bad situation.

But when they get out of control, greed and fear are two of the basic psychological pitfalls that make traders fail.

Other pitfalls include:

1.Wanting to seem wise,
2.Not admitting to making mistakes (pride),
3.Trying to do what everyone else is doing because they seem to be doing better (envy),
4.Being unwilling to stop your commodities trading in case there is more money to be made (greed), OR
5.Being too willing to follow advice and not find out on your own when you trade (laziness).

If you want to improve as a trader, you must identify the mistakes you make consistently so that you can recognize your own stumbling blocks. Look back at the ten losing trades you`ve made in the last few weeks. Can you find any likenesses? Look closely and be honest with yourself. Part of being a good trader is being able to look at things with a clear eye and seeing what`s there, not what you wish was there.

Now this is harder: Look back at your recent successful trades and find the ones that succeeded only by luck. How would they have turned out if you hadn`t been lucky? What were your mistakes with those trades? If you`re not certain what your mistakes are, or how to correct them, read the next articles in this series. I`ll be discussing each sin separately, with tips on how to overcome them.

Your goal as a trader should not be to trade perfectly all the time, to win on every trade or to be perfect in any other way. Putting too much pressure on yourself to be perfect is one of the best ways to make many mistakes. Besides,, no one can be perfect. You don`t need to be perfect. You can make amazing amounts of money in the markets by being a good, consistent trader. As a trader, you`ll be richly rewarded if you do your job consistently and well. You`ll be doing far better than 99 percent of the other people trading stocks in the market, not to mention money managers, analysts, and other so called EXPERTS

The purpose of identifying your stumbling blocks in your commodities trading is not to make you feel like you`re a poor trader. All traders, even the best, have weaknesses, they just recognize and control those weaknesses. Instead, this process enables you to develop a realistic sense of your strengths and weaknesses so you can recognize mistakes before they happen. Being realistic, about yourself, about the market, and about the trades you make. This is the way to succeed as a trader.

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David Jenyns is recognized as the leading expert when it
comes to designing profitable Commodity trading systems.

Discover the “secret formula” of trading that anyone can use
to consistently generate BIG profits from the market by
downloading your FREE copy of David’s new Ultimate
Commodity Trading Systems course.

Click Here To Download > Stock Trading Systems
http://www.ultimate-trading-systems.com/commodities.html
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Dec 12: Day Trading, Forex or Currencies Back Testing – A Way to Improve Your Trading Score

Administrator — Mon, 12 Dec 2005 06:01:46 +0000

You can draw some useful parallels between running a business and Day Trading, Forex or Currencies trading. For instance, most successful businesses keep statistics on everything from their conversion rate, to their average dollar sale, to the number of people that come in the door. Businesses do this to keep on top of how they are doing on a day-to-day basis and businesses must first take score before begining to improve on that score. Using a Day Trading, Forex or Currencies back testing plan in your trading works exactly the same way.

Now that you`re looking at Day Trading, Forex or Currencies trading as a business, you need to learn some valuable statistics about your system so you can improve it`s performance. You would use a Day Trading, Forex or Currencies back testing method. You can`t improve your system unless you have something to measure it against. How could you expect to improve your trading unless you knew what it was you were looking to improve? You can discover these measurements and other valuable information about your trading system, by using a Day Trading, Forex or Currencies back testing plan.

There are two ways that you can use a Day Trading, Forex or Currencies back testing plan to back test a system. You can do it manually, which can be a drawn-out and labour-intensive process, or you can do it with the aid of some software packages. Unfortunately, I recommend you do it by hand when you first start out. You`ll get a much better feel for your system, and you`ll understand exactly how using a Day Trading, Forex or Currencies back testing plan works in all its intricacies. Once you have the Day Trading, Forex or Currencies back testing plan and the in-depth knowledge, you could look at finding a software package that does it for you.

There are a few major statistics on your Day Trading, Forex or Currencies back testing plan that you need that you will uncover through back testing. The first statistic you need to become familiar with is the R multiple principal. R stands for risk, the risk you take on any trade when you enter the market. The R multiple of a trade is the ratio of the profit or loss compared to the amount of money risked to make the profit or loss.

Therefore, if you risk $200 dollars in your initial purchase, and you make a profit of $1,000, you have made five times the amount you risked in the trade. You have an R multiple of five. This statistic gives you a good idea of the relative size of your profits to your losses. You can compare the average size of your winning trades with the average size of your losing trades.

The next statistic you`ll find useful is your win to loss ratio. This is how many times you get a winning trade in proportion to how many times you get a losing trade. For example, if you had ten trades, four of those trades were winners, and six were losers, your win to loss ratio is simply four to six. This is your hit rate; you`ll get 40% of your trades correct.

With these two simple statistics, you can calculate the average size of your profits and of your losses, multiply these figures with your win to loss ratio, and calculate on average how much money you make with every dollar you risk.

For those of you who think this sounds like a too much work, particularly using a Day Trading, Forex or Currencies back testing plan that you need to do to uncover these statistics, consider this scenario: Imagine yourself trading a system that you knew had a win to loss ratio of 60/40. You made profit on every six trades and lost one out of every four. How do you think you would feel, where would your confidence level be, after you traded the system for a little while and you received a string of 11 losses in a row?

Now, you know that this system has a win to loss ratio of six to four. Would you have the confidence to open another trade if your system brought up another buy signal after getting 11 trades wrong?

Unless you use Day Trading, Forex or Currencies back testing plan to back tested your system, I doubt that your confidence level will remain high. That trading system may be a fantastic profitable system. However, since you didn`t use your Day Trading, Forex or Currencies back testing plan to back test it, you don`t know that historically this system received up to 13 losses in a row, but was still profitable.

Here`s another point you may not have picked up unless you used your Day Trading, Forex or Currencies back testing plan. Once you`ve set your money management rules and you begin to trade, you will likely experience a string of losses. Countless times, I`ve had clients who get disheartened by this fact because they don`t understand the nature of setting good management. If you`re adhering to the rules of cutting your losses short and letting your profits run, because you`re cutting your losses short, those trades are going to last for a shorter amount of time.

This means once you begin trading the odds of getting losses early in the game are much higher than getting a winning trade. This is particularly true when you consider that many successful trading systems run on a 40/60 win to loss ratio. However, you will never know the intricacies of your system unless you use a Day Trading, Forex or Currencies back testing plan and back test it.

Using a Day Trading, Forex or Currencies back testing plan, will help you to understand what works and what doesn`t. It will give you the statistics to gauge the effectiveness of your trades. It fills in your scorecard, and allows you to make improvements. But, you shouldn`t simply believe everything I`ve told you. Instead, you need to prove it to yourself by using some Day Trading, Forex or Currencies back testing plans and back test your system.

-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
David Jenyns is recognized as the leading expert when it
comes to designing profitable trading systems.

His most recent course Trading Secrets Revealed is a step-
by-step trading roadmap to having excellent money management.
Learn how you can become one of his students.
Click Here > http://www.trading-secrets-revealed.com

Receive David's free trading tips by signing up for his eZine
at: > http://www.trading-secrets-revealed.com/pop.html
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Oct 2: What Would You Rather Do: Read About Someone Elses Day Trading, Forex or Currencies Success or Experience Your Own

Administrator — Mon, 03 Oct 2005 04:03:07 +0000

Businesses do this to keep on top of how they are doing on a day-to-day basis and businesses must first take score before begining to improve on that score. Using a Day Trading, Forex or Currencies back testing plan in your trading works exactly the same way.

Now that you’re looking at Day Trading, Forex or Currencies trading as a business, you need to learn some valuable statistics about your system so you can improve it’s performance. You would use a Day Trading, Forex or Currencies back testing method. You can’t improve your system unless you have something to measure it against. How could you expect to improve your trading unless you knew what it was you were looking to improve? You can discover these measurements and other valuable information about your trading system, by using a Day Trading, Forex or Currencies back testing plan.

There are two ways that you can use a Day Trading, Forex or Currencies back testing plan to back test a system. You can do it manually, which can be a drawn-out and labour-intensive process, or you can do it with the aid of some software packages. Unfortunately, I recommend you do it by hand when you first start out. You’ll get a much better feel for your system, and you’ll understand exactly how using a Day Trading, Forex or Currencies back testing plan works in all its intricacies. Once you have the Day Trading, Forex or Currencies back testing plan and the in-depth knowledge, you could look at finding a software package that does it for you.

The next statistic you’ll find useful is your win to loss ratio. This is how many times you get a winning trade in proportion to how many times you get a losing trade. For example, if you had ten trades, four of those trades were winners, and six were losers, your win to loss ratio is simply four to six. This is your hit rate; you’ll get 40% of your trades correct.

Now, you know that this system has a win to loss ratio of six to four. Would you have the confidence to open another trade if your system brought up another buy signal after getting 11 trades wrong?

Unless you use Day Trading, Forex or Currencies back testing plan to back tested your system, I doubt that your confidence level will remain high. That trading system may be a fantastic profitable system. However, since you didn’t use your Day Trading, Forex or Currencies back testing plan to back test it, you don’t know that historically this system received up to 13 losses in a row, but was still profitable.

Here’s another point you may not have picked up unless you used your Day Trading, Forex or Currencies back testing plan. Once you’ve set your money management rules and you begin to trade, you will likely experience a string of losses. Countless times, I’ve had clients who get disheartened by this fact because they don’t understand the nature of setting good management. If you’re adhering to the rules of cutting your losses short and letting your profits run, because you’re cutting your losses short, those trades are going to last for a shorter amount of time.

Using a Day Trading, Forex or Currencies back testing plan, will help you to understand what works and what doesn’t. It will give you the statistics to gauge the effectiveness of your trades. It fills in your scorecard, and allows you to make improvements. But, you shouldn’t simply believe everything I’ve told you. Instead, you need to prove it to yourself by using some Day Trading, Forex or Currencies back testing plans and back test your system.

-=-=-==-=-=-=-==-=-=-=-=-=-=-=-=-=-=-=-
David Jenyns is recognized as the leading expert when it
comes to designing profitable Stock trading systems.

Discover the “secret formula” of trading that anyone can use
to consistently generate BIG profits from the market by
downloading your FREE copy of David’s new Ultimate
Stock Trading Systems course.

Click Here To Download > Stock Trading Systems
http://www.ultimate-trading-systems.com
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** Attn Ezine editors / Site owners **

Feel free to reprint this article in your investment
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Sept 27: How To Win As a Commodity Trader With This Simple Tactic

Administrator — Wed, 28 Sep 2005 02:59:31 +0000

Surprisingly, many profitable speculators have success rates between 30% and 50%. Commodity traders are not successful because they predict prices well. They`re winning because their profitable trades far exceed their losses. The truth of the matter is all Commodity systems win and lose.

Psychologically, this can make following a system difficult. Commodity trader professionals achieve success in this environment by controlling risk with money management rules. But, controlling risk goes against our natural tendencies. Most Commodity traders don`t want to manage risk, they want to be right. Despite the proven fact that money management is so important, when Commodity traders first come to me, many of my clients focus their time looking for the perfect entry. It`s their search for the Holy Grail. They want a perfect Commodity indicator.

Not only is this Commodity indicator going to get them in right at the bottom of the trend, but it`s also going to tell them at the exact point at the top of the trend when to get out. Here`s the best part and about this indicator: apparently, it can guarantee success and it`s never, ever wrong.

Unfortunately, though I don`t like to disappoint my clients, I need to let them know the hard truth. It does not matter whether you are trading in the Commodity or any other market, the simple fact is this; there is no perfect indicator. Instead, there are carefully set money management rules that will place you in control. With this control, you`ll be able to follow the two cardinal rules in your Commodity trading – you`ll be able to let your profits run and cut your losses short.

Once these money management rules are in place your system can be set on autopilot. You won`t need to worry…

`Should I be holding this stock?`

`Shouldn`t I be holding that type of stock?`

This uncertainty is what people are confronted with when they don`t have their rules set for the Commodity market. The end result is that small losses end up being big losses.

To make matters worse, a few of these big losses strung together can have a detrimental effect on your Commodity trading capital. Unfortunately, it`s much more difficult to trade to gain back money you have lost then it is to trade with profits that you already have in hand. If things go to the absolute extreme, you run the risk of wiping out your entire Commodity trading float, as many traders do when they first get started. But, with your money management rules in place, you can ride out the ups and downs of every Commodity trader has a trading system and succeed where many fail.

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Sept 25: Are These Simple Trading Mistakes Costing You Money In The Commodity Market

Administrator — Mon, 26 Sep 2005 00:59:45 +0000

The 2% rule is a powerful tool in Commodity trading. By adopting this rule you’re using a strategy that decreases the size of your losses during losing streaks, an important consideration.

There is, however one small caveat that you need to be aware of when using the 2% rule to calculate how many Commodity shares you are going to buy. As you know, the number of shares you can purchase is determined by your maximum loss and the size of your stop. This means that by increasing your risk, you can also increase the dollar value of the position you open. By simply shrinking your stop size, that is by setting a tighter stop loss, you can increase the dollar value of the position you open.

To avoid a situation where you could end up with excessively large positions that may put your Commodity trading float at risk, you can choose to introduce an extra rule. This rule would limit the dollar value of a position to be no more than a set percentage of your entire Commodity trading float.

For example, you might decide that you’ll never open a position that has a dollar value of more than 25% of your entire Commodity trading float. This rule would only be executed if, after calculating the formula that determines how many shares you buy, you find the dollar value of that position would greater than 25% of your float. If this happened, you would scale down the position to make sure it did not exceed that 25%.

The percentage that you decide upon will depend on the type of system you’re trading, the size of your float, and your personal tolerance for risk. Generally, smaller Commodity trading floats might use 25%, and larger Commodity trading floats might use as little as 10% or even 5%. There are no definitive numbers, and the percentage that you choose will depend on your personal circumstances.

Once this tendency is corrected for you will have all your money management rules in place, ready to control your risk in the Commodity market. Now you need to take the next step. Test your system to find out which of the variables best suit you, remembering always that position sizing is the most significant part of any system design. It is the lynchpin of money management. Once you’ve tested your system, and fine-tuned your rules, you will be well on your way to becoming a successful Commodity trader.

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July 23: Picking A Stock Trading Entry & Exit System – Starting With The Perfect Entry – Part 9

Administrator — Sun, 24 Jul 2005 02:13:58 +0000

Welcome back to the 9th part of the Ultimate Trading Systems article series. In this lesson, we`re going to discuss: How to pick a stock trading entry & exit system. In this 9th part of this Ultimate Trading Systems article series, we will focus more on the perfect entry. Read the perfect exit in the Part 11 article series.

Picking a stock trading entry & exit plan, starts with a universe of securities from which you can make your selection. It’s often easy to pick the universe of securities you are going to trade in but harder to know that you`re picking the right stock trading entry & exit…more.

System Trading Tips & Tricks » Commodities

Why Gold Will Not Make New Highs Or Lows This Year

Related Posts:

A Quick Peek At The Crude Oil Market

Related Posts:

Gold Catches Traders By Surprise

Related Posts:

Top 8 Trading Resource Websites.

Related Posts:

Jan 18: Experts Prove Two Out of Three Traders Commit These 4 Deadly Commodities Trading Sins

Related Posts:

Dec 12: Day Trading, Forex or Currencies Back Testing – A Way to Improve Your Trading Score

Related Posts:

Oct 2: What Would You Rather Do: Read About Someone Elses Day Trading, Forex or Currencies Success or Experience Your Own

Related Posts:

Sept 27: How To Win As a Commodity Trader With This Simple Tactic

Related Posts:

Sept 25: Are These Simple Trading Mistakes Costing You Money In The Commodity Market

Related Posts:

July 23: Picking A Stock Trading Entry & Exit System – Starting With The Perfect Entry – Part 9

Related Posts: