KNOWING THE HOW/WHY/WHEN/WHERE TO ACT SO REALITY DOESN’T BITE YOU IN THE ASS!
I’m going to skip today’s action because I’m travelling today to another part of Paradise; I’m posting early today, so I want to highlight a key feature of the algorithm so there is no confusion among any of you. I’ll be back tomorrow after travelling to talk about the day’s action and how it played out vis-à-vis the gold volatility algorithm.
To be sure, no two or more moves are exactly the same, so trading becomes a study in “pattern recognition”. Remember this if nothing else; throughout the history of trading [any market but especially gold], the same collective group behavior among retail traders [that’s you Bunky] has/is/and always will be the same. Over the years/decades/centuries only THE NAMES CHANGE; everything else remains the same.
For you “Newbies” out there, and I know you’re sitting there wondering if you have it in you to do this, the 2 most important qualities you have to have to make consistent money trading gold is 1) discipline, and 2) patience. Both are free and you don’t need to have a PhD. to get them; what you do need is to ask yourself if trading is about “making money” or is trading something your wife wants you to do because it’s cheaper than a babysitter. Seriously, which is it?
Remember, if this was “easy”, everybody including your deadbeat cousin would be doing it; so what makes it “not easy” for Newbies? Easy Peezee; 1) lack of an algorithm that works [you got no excuse; download it now], 2) inability to take a small loss when necessary, and 3) lack of recognizing the proper patterns for a trade when they emerge and then immediately acting upon it.
Directly below is a fairly typical blast down move from 7/14/2016 which I am highlighting. First chart is the HR1 coming into the day; what we know here is that already we have a $25+ daily range and the New York day hasn’t even started yet! So, what are the probabilities this range gets expanded even larger? Short answer; NOT GOOD! History says there is less than a 2% chance it goes past $28.
Ok, so now what I’M LOOKING FOR is some kind of move down that lasts at least 8-10 minutes [and hopefully longer] that culminates in a larger than normal spike down since the inception [or start] of the move in question. When I see it, I’m now looking for the first green M1 that shows up to give me a buy signal; hint, it won’t take long for that to happen, trust me.
Ok, so now let’s move onto the M1 which is directly below with appropriate commentary.
These large spikes down, especially after a move down that has been going on at least 8-10 minutes are one of the best short term buy signals you ever get in gold; while not all the time an “exhaustion move”, they are nonetheless very good indicators of bottoms. Oh, and by the way, they are very difficult mentally to get used to buying because the overwhelming sentiment along with traditional indicators suggest continued selling and lower prices.
But, contrary to what you’re feeling in your gut that the market may never rally ever again, there is a very high probability a bottom [short term at least] is close at hand and it’s time to buy; spend some time on a demo account and see what I mean. You’ll be surprised at how fast this stuff can come off of a bottom; and of course, what that means for you is profits! Until tomorrow…
Have a great day everybody!
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