Gold... short for the pull back.

I am not a gold bug by any stretch of the imagination. I know I used to do some day trading off of the gold indices some time back, and had fun with that, but I would take the long and short with equal ease.

Today I closed a gold short that I entered and managed by using a newsletter service that I started earlier in the month.

This is not a typical hyped newsletter or trading service. It's inexpensive, informative, membership is small and is based on personal trades made by the newsletter author. The only reason I am doing this is I have followed this fellow for some time now and have seen his ideas play out well. Also I was on his mailing list when it came time for him to actually monetize his ideas. Based on his fee and number of readers he is not doing this for the money.

That is the good side, the not so good side is that he bases his trades on futures contracts, CFDs (Contracts For Difference... which I have to research more to really understand), FX and commodities. These are all less familiar to me than typical stocks and options.... but that is half the fun.

The last trade was a short gold play to take advantage of the counter trend move as gold pulls back (my style of trade in the first place). He based the trade on CFDs that are worth $10 for every $1 (research needed here). Not only do I not have access to these I doubt that my broker has them anyway and there are restrictions that do not allow US citizens to even trade these... not that I am American but it just makes them likely harder to get into.

In order to be able to trade in my current arena I need to convert everything over to ETFs... which was easy enough as I just plotted the Gold March contract prices (highs and lows over 6 months) compared to the corresponding ETF highs and lows (DGZ for short and IAU for long), calculated the current price correlation and the current ratios, plugged in the target entry, exit and stops and VOILA! ETF conversion.

My entry was bang on and my exit was 5 cents lower than the exit target... but that is due to me not being able to trade ETFs afterhours as futures and CFDs are, so I took a 5 cent loss of potential to ensure a pre-market exit. It turns out I could have nailed the target, but that is the nature of trading.

DGZ entry at $15.73 jan 18th (short Gold ETF)
DGZ exit at $16.30 jan 28th (today)
3.6% gain in 10 days. a 100 share trade pays for the annual membership to the newsletter. Nice start.

I played it small in order to be able to not be concerned about how much I had in the trade and to ensure that I could take part in other trades that may come up. We had a S&P500 trade that I lost a few pennies on but it was opened and closed as a daytrade and I had to wait until the next day to close mine out... obviously a hinderence being restricted to typical stock trading hours.

Jeff.