NoiseTrader's "Let Profits Run" Series: Long GOLD (GLD)

Discussion in 'Metal Futures' started by NoiseTrader, Apr 3, 2006.

  1. Managing a longer term position (maximizing profits) is one of the most difficult challenges and a skill I'm constantly trying to get better at.

    In this thread I’m going to document some of the thought processes involved in trying to let profits run in a long GLD (GOLD ETF) position.

    The initial entry was near the close on 3/23. I took the 2nd partial profit at the top of the trading range, not knowing if it would exit the range or not.

    Now comes the difficult part....

    Price has not spent much time above the Feb highs so price can easily retrace back into the trading range. I am still working a loose stop above my original entry just under 55.

    A loose stop to me is outside of the control of liquidity -- I anticipate getting out way before that price would actually get hit, but its a fail-safe stop nevertheless.

    I expect a rotation back toward 57 to attract new bids because Gold was so tight moving up. If a bottom develops around 57, that would then provide a price level to pull the stop up against. In fact, it may be a trade location for an new add, because as a meaningful risk (stop point) develops, small risk tends to attract large size.

    The difficult part is if 57 does not hold as expected, then the position is exposed to a deeper retracement as far back as 55 and that in itself does not necessarily undermine the bullish price structure.

    To be continued...