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Frizzers

Gold - Is The Correction Over?

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Has the correction run its course?

Or is this just a bounce before more falls into the spring?

I have some tentative, long open positions from last week.

But I'm not convinced it won't correct further before its next ascent.

Thoughts anyone?

Edited by Frizzers

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I've only just started looking at gold in great detail, but I generally run a fairly tight trailing stop-loss and as such would have been stopped-out by the recent pullback if I'd been long on gold. I would now be waiting for another buy signal.

I would buy on a combination of the 13 day EMA turning up again and an uptick of MACD histogram. The MACD uptick appears to be there today though the 13 day EMA is just levelling out so another 'up' day would be needed to create the 'buy' signal I'm looking for. The suggestion that it's heading that way would, in my mind, indicate that anyone currently long on gold should remain so but maybe consider putting a stop just below the last few days' support area.

Also, of course, keep an eye on the fundamentals. The dollar has gained value over the last few weeks and this is likely to be at least partly responsible for gold's pullback, gold being valued in dollars. If the dollar starts to fall again the gold price will start to climb as the dollar loses its buying power.

Here's the chart I'm using... Clicky

Edited by Bingley Bloke

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I've only just started looking at gold in great detail, but I generally run a fairly tight trailing stop-loss and as such would have been stopped-out by the recent pullback if I'd been long on gold. I would now be waiting for another buy signal.

I would buy on a combination of the 13 day EMA turning up again and an uptick of MACD histogram. The MACD uptick appears to be there today though the 13 day EMA is just levelling out so another 'up' day would be needed to create the 'buy' signal I'm looking for. The suggestion that it's heading that way would, in my mind, indicate that anyone currently long on gold should remain so but maybe consider putting a stop just below the last few days' support area.

Also, of course, keep an eye on the fundamentals. The dollar has gained value over the last few weeks and this is likely to be at least partly responsible for gold's pullback, gold being valued in dollars. If the dollar starts to fall again the gold price will start to climb as the dollar loses its buying power.

Here's the chart I'm using... Clicky

Sound thinking, BB. The problem with using stops in gold is that there is so much fluctuation in the price, even intraday, that your stop can get hit, then it bounces up again and you miss a run up as well as losing out on the down turn.

A tactic I've employd with success, albeit a risky one, is to just buy and hold. When you get a correction, you just have to absorb it and wait for the next upturn. And they seem to come back pretty quickly. But that absorbtion can put a strain on your margins ...

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The problem with using stops in gold is that there is so much fluctuation in the price, even intraday, that your stop can get hit, then it bounces up again and you miss a run up as well as losing out on the down turn.

Absolutely. It pays to learn how the thing you're trading behaves and place stops accordingly. I generally run a trailing stop-loss that provides enough room to contain intra-day fluctuations but is tight enough to prevent excessive losses of profit when there's a pullback that's big enough to provide an opportunity to take profit and to re-enter when it sets off up again. I haven't traded gold yet and have been studying it for some time. If Monday's session closes up creating the upturn on the 13 day EMA which I require I should be buying on Tuesday with my stop placed about $10 below Monday's low. As long as I trail my stop $10 below the previous day's low it should be more than enough to contain the 'noise' while getting me out on the next pullback with a healthy profit - of course it may need finetuning! I'm quite happy to be in and out like this because every time I'm stopped out I bank a load of profit which gives me larger stakes to play with on the next trade. I can grow my capital faster this way.

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Is it possible to make a living from doing this kind of stuff ..... or is it more of a hobby which might pay for a few Christmas presents ??

Keep getting spam emails about how easy "trading for a living is" - it can't be true .... can it .... ?

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Is it possible to make a living from doing this kind of stuff?

Yes Definitely. You need a system that works and immense discipline and money management skills though. Run your profits and cut your losses. I've been doing it for 18 months and have made 605% profit. I only had a tiny amount to start with so even though I've grown it by 605% I still have a relatively small amount of money. In another three years I'll probably be able to make more than enough to live off, all from humble beginnings. It's all about economies of scale - if something works when you risk £100 then it'll work when you risk £10,000. Of course you need to take small risks with small capital because there are occasional losses and you don't want to be wiped-out by them and small amounts of money mean stuff like the S&P500 and Crude Oil are out of bounds. I started with the Nasdaq and the FTSE 100.

I'd be inclined to ignore flashy e-mails promising riches in return for your £3,000 fee for a one day course. Try reading 'Trading for a Living' and 'Come Into My Trading Room' both by Dr Alexander Elder. He doesn't tell you what to do but he arms you with the tools to work it out for yourself while teaching you some very important things about psychology, discipline and money management. It's also worth buying the 'Workbook for Come Into My Trading Room' as this enables you to test yourself on what you've learned.

Finally, set up an account with a spread-betting company that allows you a virtual trading account. I got £20,000 of virtual money to practice with. You can re-set it to £20,000 at any time you want so you can start again. I did this for 18 months before I even started with real money. I blew a fortune many times over but finally settled on a system that worked and made £20,000 into £50,000 in less than three months. Then I knew it was time to put some real money in.

The final piece of advice... Don't invest your life savings. If your system is so good that it's worth risking your life savings on then it's likely to be good enought to turn a modest amount of money into something much mroe impressive fairly quickly, so just invest what you can afford to lose.

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Sounds a good approach BB you always read that one should spend say a year "virtually" trading etc first, I suppose if you can do that wihtout being tempted to have a little play with real money you must have the right discipline when it comes to the real deal!

I will look out for those books

CHeers

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BB, you've got it nailed.

I think I'm more of a rookie than you are, but what strikes me is that two of the most essential qualities in a trader are discipline and patience. You hear a lot of people talking about instinct. Sometimes that's an excuse for laziness.

The biggest danger for a trader, in my lmited experience, is emotion. You have to suppress it. When theprice is going up you have to suppress the exhileration. And when it's going down, you have to suppress the panic. It's as much about not acting as it is about acting.

I like your system for gold stops. But I'm not sure about $10 below the previous day's low. It might be that the figure needs to be higher.

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and small amounts of money mean stuff like the S&P500 and Crude Oil are out of bounds. I started with the Nasdaq and the FTSE 100.

Very interesting post BB. Could you elaborate on why the S&P500 and Crude were out of bounds but the Nasdaq and the FTSE weren't?

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Yes Definitely. You need a system that works and immense discipline and money management skills though. Run your profits and cut your losses. I've been doing it for 18 months and have made 605% profit. I only had a tiny amount to start with so even though I've grown it by 605% I still have a relatively small amount of money. In another three years I'll probably be able to make more than enough to live off, all from humble beginnings. It's all about economies of scale - if something works when you risk £100 then it'll work when you risk £10,000. Of course you need to take small risks with small capital because there are occasional losses and you don't want to be wiped-out by them and small amounts of money mean stuff like the S&P500 and Crude Oil are out of bounds. I started with the Nasdaq and the FTSE 100.

I'd be inclined to ignore flashy e-mails promising riches in return for your £3,000 fee for a one day course. Try reading 'Trading for a Living' and 'Come Into My Trading Room' both by Dr Alexander Elder. He doesn't tell you what to do but he arms you with the tools to work it out for yourself while teaching you some very important things about psychology, discipline and money management. It's also worth buying the 'Workbook for Come Into My Trading Room' as this enables you to test yourself on what you've learned.

Finally, set up an account with a spread-betting company that allows you a virtual trading account. I got £20,000 of virtual money to practice with. You can re-set it to £20,000 at any time you want so you can start again. I did this for 18 months before I even started with real money. I blew a fortune many times over but finally settled on a system that worked and made £20,000 into £50,000 in less than three months. Then I knew it was time to put some real money in.

The final piece of advice... Don't invest your life savings. If your system is so good that it's worth risking your life savings on then it's likely to be good enought to turn a modest amount of money into something much mroe impressive fairly quickly, so just invest what you can afford to lose.

Love this post. Very helpfull. Is there one trading strategy that works for everyone?

Also, I struggle to understand fundamentals. Any tips please?

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Yes Definitely. You need a system that works and immense discipline and money management skills though. Run your profits and cut your losses. I've been doing it for 18 months and have made 605% profit. I only had a tiny amount to start with so even though I've grown it by 605% I still have a relatively small amount of money. In another three years I'll probably be able to make more than enough to live off, all from humble beginnings. It's all about economies of scale - if something works when you risk £100 then it'll work when you risk £10,000. Of course you need to take small risks with small capital because there are occasional losses and you don't want to be wiped-out by them and small amounts of money mean stuff like the S&P500 and Crude Oil are out of bounds. I started with the Nasdaq and the FTSE 100.

I'd be inclined to ignore flashy e-mails promising riches in return for your £3,000 fee for a one day course. Try reading 'Trading for a Living' and 'Come Into My Trading Room' both by Dr Alexander Elder. He doesn't tell you what to do but he arms you with the tools to work it out for yourself while teaching you some very important things about psychology, discipline and money management. It's also worth buying the 'Workbook for Come Into My Trading Room' as this enables you to test yourself on what you've learned.

Finally, set up an account with a spread-betting company that allows you a virtual trading account. I got £20,000 of virtual money to practice with. You can re-set it to £20,000 at any time you want so you can start again. I did this for 18 months before I even started with real money. I blew a fortune many times over but finally settled on a system that worked and made £20,000 into £50,000 in less than three months. Then I knew it was time to put some real money in.

The final piece of advice... Don't invest your life savings. If your system is so good that it's worth risking your life savings on then it's likely to be good enought to turn a modest amount of money into something much mroe impressive fairly quickly, so just invest what you can afford to lose.

Sweet Advice ... and music to my ears :D

Do you have to, as it were, trade full-time ..... or can you hold down a normal 9-5 job and still be able to make money ??

How much time do you devote to your trading on a daily/weekly basis ..... does more time input = better quality trades = more profit ..... ??

Also, if you can do it and maybe (a couple of years from now) I can do it ..... why isn't everybody doing it ?? !!

Everybody and his uncle has heard of the stockmarket and city whizzkids earning fortunes just by looking at numbers on a screen and calling buy and sell at the right time ..... surely this would be a perfect lifestyle for anyone .....

I can't shake the feeling that trading is just glamourised gambling ..... makes profit for the few from the losses of the many !!

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Markets have risen over the last few years pretty much universally, though some more than others. This means most rank amateurs will have made gains and may psychologically associate these gains were with their discipline, patience and intelligence rather than an overall bull market with lots of liquidity sloshing around in which most players are winners.

I hope your systems can cope with a bear market, and not just minor pullbacks.

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I hope your systems can cope with a bear market, and not just minor pullbacks.

Yeah. Stay out.

Like we're doing with the property market. :lol:

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A nice and encouraging post by BB. One hiccup you may find is that psychologically it may well be different trading a practice account to a real one and the thing about a system is that you have to develop one that is good for you.

This is old hat but have you read Market Wizards? Great book, because you'll be amazed that some of the worlds best traders consistently wiped out for years before getting it right. Even if you're not into finacial markets I would recommend you read this book, the human stories are immense.

Good luck.

Edited by Golden Shower

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  • 301 Brexit, House prices and Summer 2020

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      • down 5% +
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      • up 5%



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