I am not one to trade on news but the opening markets on the other side are a very good indicator for the morning bias, especially when the news is "bad". So, even though I had decided to not trade I did keep one of my charts up to see what was happening while I did the mundane regular work that I am required to do.
Global Gold Index. This is the morning activity. As usual red arrows are for short (buying HGD bear fund) and green are for long (HGU bull fund).
I may change one of my rules to allow for more trend following trades rather than playing in the chop. Usually one or two days a week exhibit a really good initial trend and that can be traded far more profitably than trying to get in on the chop.
Today was a nice example of one of those days. Even though the first trade setup was minutes into the morning I would have jumped on as the price peaked and passed 1/2 R1. For reference the HGD entry price was about $8.65 (playing 5 cents higher than my likely entry). The price dropped so cleanly through the primary pivot point (PP in blue) that there was no way I would have bailed on this trade. The price dropped to just below the 50sma, a decision moment as it hovered between the 50 and the 200smas..."Asian markets are taking a hit", the bias is still down for me. There was no rally back above the 50 and that was the sell point for me at this point.
Gap down under the 200sma, now breaking above the 200 would be my sell point. It held and plummeted yet again clean through the 1/2 S1, no sell trigger here either. The price bounced off of the S1 and I would most likely have sold here...but...I held a strong bias to the downside and I had $260 unrealized gain so far...I could afford to hold through and I may have with a very firm mental stop...with this much of a paper profit I probably would have placed a stop order to secure $200 and it would not get hit as it turned out. This is a good application of a VTSO of about 15 cents...that is hindsight though. I would ratchet this manually at 10 cent increments once the price has moved 20 cents away from my stop, raise it 10 cents. Should I want I can just keep moving the stop tighter to secure more profits or cancel the stop and place a market to exit.
I would use the stop moving only after a decent profit is already built in and I had a good feeling about the move. This method this morning would have captured me $1.25 per share...at 400 shares that is a nice $500. I used a trial forex account last evening to practise my stop moving as I have not used stops in a while. Made a decent chunk of virtual change for my playing too. It appears that pivot points have their place in forex just as in stocks...and 24 hour trading.
On the flip side the price followed a very similar pattern back up. The first trade, using the profit stop at 10 cent increments would have kept me in until the time at the 200sma when I would have exited anyway. Getting back in would have been clean right after passing the S1 line on the upside. Nice couple or few trades there as well but I didn't calculate the profits, about 70 cents possible capture though.
All in all a good day had I been in the market. If this follows true to form what will happen is that I will decide to trade tomorrow and the day will be flat and I will have to fight for pennies again. This will just point out that my idea of having to be in the market every day in order to capture the larger moves is better than trying to pick the day that a large move may occur.
Jeff.
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