This post is not a trading recommendation. And, my calls tend to not work just enough to be painful to your equity. Therefore I must advise you now to not follow any trading 'calls' in this post and/or thread. There are no trading recommendations here, merely ideas for informational purposes. It looks like Silver (symbol /SI in TOS) could be at or near resistance, currently. This is a counter trend trade, not particularly high probability, thus a small 'test the waters' position size seems most appropriate. Currently /SI front month is trading at 24.645/24.655. Short now with a tight stop.
Based on current standard margins in TOS for /SI, you will need $15k per contract to meet the initial overnight margin requirement. I recommend allocating approximately $80k per contract to trade such a beast. Good trading to all.
Why not just wait for the pull back and buy SI? I don't disagree that this might be a decent spot to get short, I just sold almost all of a long GC position I had on from around 1285 today, but I don't think stepping in front of a market that has moved the way silver has over the last month is very prudent. It is very overbought but you are coming up on some pretty good months seasonally for SI and GC and you are going to step in front of a freight train and fade them? What is your target and plan? You have maybe 22 or 21.5 on the downside at the most. What if this Syrian thing blows sky high and gold trades like $1500 in two days? I think that's unlikely, obviously as I cutback on my longs, but SI trades like 27 if that happens and your head will spin faster than anything you have ever seen. Good Luck.
Good points. This doesn't look particularly high probability. Yes, 22.5 or so would be a short term target. However, in terms of target, my plan (generally) is to monitor a winning trade to determine (based on the price action) if there is a good place to reverse a winner to long (or simply to cover). Emergency stop above 25 but monitor and exit at a loss or scratch manually well beforehand. And, yes, thank you for pointing out some fundamental considerations, as well as presenting some of the risks in terms of a possible upside explosive move. All great reasons to not take such a trade.
Im not saying that these are reasons to not take the trade. I would say the trade is probably a little bit better than marginal, but why take marginal trades when you have millions of possibilities to pick from. Many of those possibilities would be better than marginal. Food for thought.
==================== Murri ,,i like your nickname . Other reasons not to take the trade; 20 day or 50 day highs, on ever increasing buy volume, on one year candle chart,, + higher donchian channel . Silver is such a roller coaster Wisdom is profitable to direct. murray
This is the part of my trading that I need to improve. Entry and risk management are dependent on the analysis (in this case, "at or near resistance") and being a trader is a completely separate thing altogether. Trading with a style that has discretionary components with regard to trade management also could be dependent on the analysis (e.g. has key resistance been violated? Should I still be in this trade?), but my shortcoming here was in not setting up a trading plan for this kind of trade that was properly coupled to the analysis. Specifically, in this case, I failed to trust and/or refine my analysis to see that resistance was actually a 'range' of 24.5 to about 25.0 or low 25's. Doing so would have given a more appropriate vision for how to tackle this kind of trade. This means that a stop loss of up to 0.75 points or so, or better yet, waiting for the final push within hours to 25.x (along with a tighter stop of 0.25 - 0.5), would have been the most appropriate. I have tried to use the quick fire approach but this seems to not work well for my personality. As an example of my failed attempts at using the quick-stop approach, I got chopped repeatedly on an awesome, clean trade idea recently that would have been a huge winner.. I kept getting stopped out at what was a similar or even progressively worse entry price, whereas the total retracement from my first attempt was *less* than the total of all stop losses.. the only advantage afforded by that approach was that my exposure was reduced in the sense that I avoided being in the trade at the maximum possible worst retracement point, but had I simply used a much wider stop on a *single* attempt, the net risk in terms of points would have been less than the sum of the stops that I *did* take, and the trade would have worked. Again, this is just what is appropriate for my personality. For me, for my style/analysis, thinking about freight trains or days of new highs simply do not work, nor do they necessarily matter. They might be good things to at least consider or second-guess a particular trade idea in some circumstances, but ultimately my analysis over the years has never depended on such things. Anyway, the input from az54 and murray is greatly appreciated. However, I firmly believe now after experimenting with various trading styles this year that every trader needs to develop their own style. Thus, one must be careful to understand that any advice they receive needs to be adapted to one's own personality and personal trading method. Hope the rambling helps someone.. it's helpful for me to put these candid thoughts down here on ET. Good trading to all.
============= Good points,murri. New highs can be a good uptrend,,real good uptrend but when silver get a round [new HI]$50/+;; i suggest a real tight stop,+ get ready to sell. Not a prediction.Silver is a roller coaster. Wisdom is profitable to direct.
Murray, Thanks for sharing your bullish outlook. Any entry or stop loss strategy associated with the target of 50?
Thread was started 8/27. Was one day early. Looks like a buy spot for Silver. Everyone crying for more downside in precious metals, thus expecting a rally from here. Small little triangle here. Big honking bar above 19.75 for Silver (symbol /SI in TOS) will be expected if the move up towards primary downtrend resistance is solid. Could try buying above 19.75 but I dislike breakout plays, personally. Could try buying around 19.30 with a fairly tight stop, but currently we are at 19.60, and no assurance we will get there (i.e. swing bottom might be in). This is not a trading recommendation, just for info and discussion. I am not responsible for your decisions, etc. Happy holidays.