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.If other investments are heading south, they put their money ingold for safekeeping.Gold is also very sensitive to inflation fears becauseit is an international currency that is deemed by investors to hold its value.Investors put their money here in an attempt to preserve the value of theirassets.In 2003, gold was trading around $280 an ounce.At the time of this writ-ing, gold is trading around $940 an ounce and is in a consolidation mode.It has been as high as $1016 an ounce.In late March 2008, it made a newhigh and immediately corrected to $876 an ounce.Since that tumble, it hasgained some ground.Geof position trades gold.That is, he enjoys swing trading and holdinghis trades for days, weeks, or even months if he is getting paid.Here isP1: JYSc14 JWBT016-Busby September 30, 2008 14:30 Printer: TBDGoing for the Gold 141how Geof does it.First, he identifies important key numbers.Gold, justlike other trading products, has important support and resistance levels.Begin by studying charts and locating the levels of support and resistancenear the current trading price.Study monthly, weekly, and daily charts.Once you have a feel for how gold likes to move and know support andresistance levels, you may want to begin dabbling.It is probably a good ideato try simulations first, and it is always recommended that before tradingyou study, learn, and observe.Geof looks for breakouts and buys pullbacks.He trades gold futures.Electronically traded gold futures open at 6:16 PM.Geof generally makeshis move between 6:30 and 9:30 PM.Note the opening price and watchmovement in relation to that price.If there is a new high, he puts in a buyorder at the open.Many times, there is a pullback to the opening priceand his order is elected.After returning to the open, prices often con-tinue the original path back up.He follows the same steps for shortinggold.At the time of this writing, mini gold moves an average of 24 points ina session, which translates into a value of $800 per contract.Always knowthe average true range (ATR) of anything that you are trading.In that wayyou are better able to keep expectations in line and identify profit targetsand stop/loss placement.Because Geof swing trades gold, he gives it room to move without hit-ting his stop with every bobble.If he is long, he puts his initial stop be-low the previous day s low.If he is short, he puts it above the previousday s high.That means that he is risking about $800 to $1000 per con-tract.If Geof wants to stay in the trade for a longer period of time, he mayuse the weekly support and resistance levels for stop placement.That is, ifhe is long, he may put his stop below the weekly low, and if he is short, thestop/loss order may go above the weekly high.In all markets prices bobbleup and down.If you want to stay with a trade for a longer period of time,it is essential to give the market room to move.A brief dip down will occureven in the strongest bull markets, and vice versa.If stops are too tight,money will be lost even if the analysis was right on the money.Once Geofis making money and prices are going his way, he adjusts the stop to lockin profits and reduce risk.Risk is a very personal issue.For some traders, the risk that Geof takesis too big to take.If they are wrong in their analysis or the market is mis-behaving, the stop gets hit and the money is lost.For other folks, that stopis well within their risk tolerance.Remember that risk is personal.Do nottake risks that you cannot afford.If there is too much risk involved in atrade, let that trade go.There are many things to trade stocks, options,commodities, futures find trades that you can afford and stay away fromthose that are too rich for your trading pockets.P1: JYSc14 JWBT016-Busby September 30, 2008 14:30 Printer: TBD142 STRATEGIES TO WINAs noted earlier, gold is highly news sensitive.It is especially vulnera-ble to Fed news.Therefore, if you are holding a gold position on Fed Day,I suggest you do as Geof does and tighten your stop just before the newsannouncement.He moves much closer to the current prices, and if long, heputs his stop just below the daily low; if short the stop is placed just abovethe daily high.If the stop is hit, he is removed from the market, moves tothe sidelines, and reevaluates.Fed news is so powerful it can shift the di-rection of the market for a day, a week, a month, or longer.Therefore, if heis long and there is a new daily low after the news, he wants to be out ofthe action.There is no need to stay with a trade that is not working [ Pobierz całość w formacie PDF ]