Thursday, April 21, 2011

The elusive silver top

We stated our intention of trying to game the silver top this week in our It’s never different post.   We waited for the right opportunity and finally got involved in two short selling daytrades, on Wednesday and Thursday.   It’s safe to say that right now, it’s our obsession (even though we’ve tried to keep it out of the newsletter, which is more stock oriented and has had usual number of alerts).  We had two very good days yesterday and today by waiting for excellent set-ups and being extremely patient in our entries.   A couple of points:

1.  While we had good solid profits on these two days we would have had 10x more profits had we simply just bought the stupid metal and rode the trend.  But we simply cannot go long a chart as extended as this one, that’s not how we trade.

2. We can’t help it.   We are 97% trend-traders but once in a while we have to go for that ultimate game of trying to find the top when it’s as juicy as this one.

3.  As long as silver keeps going up WITHOUT basing we’ll be looking for short opportunities.  If it can actually base/pull-back then we’d be happy to go long.

4. It’s like picking up dimes in front of a bulldozer.  Really.     But it is a lot of fun.  And for the most part our job and the way we trade is pretty conservative.   Once in a while we need to let loose.  This is the time for us.   It’s also a very good exercise for keeping our skills sharp.  Kind of like extreme sport.  Timing has been everything, and there’s not much room for error if you want to get the trade right.   It’s not forgiving the way a break-out on a trend-day is…

5. Many traders we know are doing the exact same thing which is kind of funny. And scary.

6. On both days we didn’t cover that last contract just in case this was the one.   Our style is to move stop down aggressively and finally leave a partial position on at higher stop to give the trade some room.  On both days we were stopped out the last contract. No regrets.  Key was locking in majority of trade so that even if you’re stopped out last partial, you had a solid profit for overall trade.

7. If silver goes up on Monday, we’ll be looking for a short set-up again.  And we’ll do this every single day it goes up, covering 3/4 profits but keeping that last 1/4 just in case we hit the real “top”.  We will not swing short silver, we are only engaging in day-trades.   We’re 100% cash right now.

8.  This definitely is not for the inexperienced or faint of heart.   And it’s not even smart way to trade.    But we all have to do what we have to do.  And it’s been quite profitable the last two days and we believe will become even more profitable next week.

9.  We have a defined stop on this casino play — we’ll lose x amount and stop the game.  And it really is a game.   If you’re doing the same please treat it as such.   This is not bread and butter trading, this is not a way to last in this business and if you don’t understand good risk management it’s probably one of the fastest ways to blow up your account.  However, if you do know what you’re doing and have experience/good skill set then there are excellent opportunities.   In the other 97% of the year you’ll find HCPG to be engaging in boring and conservative trend-trading.

10.  Can’t wait for Monday. Go silver.   It’s the perfect storm as USD is in complete death spiral and silver is going for that symbolic 50 mark.   The higher it goes the more we like the trade.  A scum of 50 and reversal would be oh-so-perfect.  But then again,  many traders are looking at the  same trade which is never a good thing.

And here is the hilarious chart to look at one more time before you go for the long weekend:

Note change of angle of ascent –we’re now going vertical.   Fun times around the corner.