Monday, June 24, 2013

Another Gold Trade

This is a discretionary trade that I took recently. I am sharing it for discussion and learning. I entered the position using the slanting line joining the troughs in the chart. I did that instead of using the horizontal line because I see that should the slanting line be broken, it is high probability for the horizontal line next to be broken.

Why? Because, the market for Gold has been quiet , so it is high probability that should the slanting line be broken, traders will react more strongly to it, simply because it has been quiet for too long (1 month?). It will either give me a quick decisive loss, or a strong start to a new move. The market is cyclical in this way, pretty much like how the waves retreat to attack the shore once again.

As a bonus, entering before the horizontal breaks gives me a more substantial position (i.e instead of 1 unit of gold, I can enter 2 units of gold), and still bear the same 1% risk. How? If you can answer this question correctly, I congratulate you. For then, you should already be a mature risk-management professional. Or you have been following and understanding my blog line by line.

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