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Thursday, October 26, 2006

GOLD

Here is the completion of the gold trade. The remaining contracts were stopped out today at 598 for a .50/ounce gain, essentially just covering the commissions. Remember that more than 1/2 of the contracts were taken of at 597 for a large gain on that portion of the trade.

This is part of money management. When confronted with a large quick gain on a postion, I suggest taking 1/2 or more or your position off for a profit, and stopping the rest at breakeven. This way you have the potential for a windfall on the rest, but are protected in case something like this happens.

NEVER allow a huge gain to become a loss EVER!!!!!!

2 comments:

wister said...

Chris, gold looks like it's forming a reverse head and shoulders and if it breaks the neckline we could run to 650. What do you think? Also, the recent bounce in bonds from the oversold condition looks like a shorting opportunity. It seems to me that the lending practices are still too soft and that the fed is going to have to tighten again at some point thus reducing bond prices.

Chris Johnston said...

I have noticed that H&S pattern in GOLD even though I do not use those types of patterns for trades. It kind of jumps out at you when viewing the chart. This market does appear to be building a base for a possible up move.

I agree with you about lending practices, it does not seem that anything has changed there to me so far. I am of the opinion that the next fed move will be a drop to try and save what I think is going to be a train wreck in housing next year.I have been looking to short bonds on this bounce, but the gaps have eliminated many of my trades. Fading gaps like this is not generally a good idea. I am hoping for some sell patterns to emerge here.