This has got to stop

Now that is a lie. I make the same mistake much more than that. And still I manage to be profitable. So what is the mistake that has got to stop? Being too early and not following my rules of trading which are to only enter a stock for one of three reasons: 

1, The chart is in a blow off top.

2. The chart is in a test of resistance

3. Strong fundamentals

Since I am 95% about technical trading I rarely use #3 but I keep the option open.

So lets look at some recent examples. The following is a little toppy chart of YINN but for sure not a blow off top but the trigger for these mistakes are 1. Being highly liquid and wanting to find trades and 2. Lack of patience.

So three days later it evolves to a pretty good top pattern but now I entered too early and my average is somewhere in the large gap up when it could have been close to the top, if this turns out to be the top. This was an extra bad decision since shorting Bull ETFs requires extra cation. 

My shorting of XIV was even worse. Again the trigger is high liquidity and impatience. I'm not sure what I see here except for wishful thinking. There's no point of resistance being reached here and there's no top, only a decent advance since the last low but that should certainly not be enough for an entry.

A few days later it starts to look ok for a small entry.

The only thing I did right was that I kept the initial position size small. If I had shown more patience I would have gotten a better trade on both of these charts. It only took about three days to have better setups materialize. It would have been well worth the wait.

Biotech top approaching

As can be seen on the chart below Biotech is ready to top. It looks like it will start today with a gap up above 185. This is a level where I start to accumulate shorts.

Here's my entire portfolio right now: Short DSLV, EUO, DGAZ, DWTI, Long NGE and YCS.

A few charts

Inverse Gold ETF is getting in to spiky territory.

And then offcourse so is silver...

Another one is EUO

It is still early but these charts demand close observation and a light accumulation may be started.

New checklist for trading

I'm stating some strict rules for entries that I have to check before taking a position.

1. At least one of the following criterias must apply.

A, Chart is in a blow off top
B, Chart is in a test of resistance
C, A very strong fundamental case for entry exists

2. Manage bet size. A 3X leveraged chart must be able to withstand 700% from bottom to top.

3. When exiting shorts do not re-enter them when the chart goes back up. See point 1.

4. Tests of resistance should be bet very carefully from low positions.

5. Limit the total number of trades. Really good setups do not come that often.

Gallery of tops

RUSS

RUSS just had a 700% climb and blow off top. Amazing stuff. I haven't played it nearly as well as I wanted but I didn't loose money and it is not over yet. But at the top a had still managed to blow a third of my account only to gain most of it back.

The lessons are two:

1. At extreme tops it's better to go long the long ETF. (Which I did)
2. Do not short inverse ETFs if there is not a clear peak pattern. (Which I didn't)

Nigeria

Nigeria is not really taking off as I expected. Still I don't think we have to wait much longer. I see two main alternatives

(My analysis will be on the upside down chart since I analyze peaks. A crash is a peak upside down.) 1. Either we shoot higher buidling a second peak. The second peak gets momentum from the fallback of the previous peak. Or 2. The chart falls back right away. 

I have a good degree of liquidity in the portfolio so if scenario 1 will happen it's an excellent opportunity to accumulate.

Things feel so easy lately and profits are coming steady. Maintaning a good position of liquidity is key to to good portfolio management. I always want to be in a position where if the price goes against me it's just a chance to accumulate and if it goes with me it's a profit and a chance to add liquidity to the portfolio.

Time to remind me of what the market is teaching me

Always think of what you can loose. Not what you can win.

Do not act on dull markets, be patient.

When no opportunity exists, park money in ETF pairs but manage risk.

When no opportunity exists, raise liquidity

When no opportunity exists put in the work to look for charts that might have opportunity

A peak can climb very high for a long time, avoid accumulating on a short trade without signs that the top is near. Whatever the amount you are currently in it could double or triple unless the top is near.

When accumulating a position leave a small amount of that position for trading smaller movements and for taking risk of the table should the trade go against you.

Goin long is ultimatly more profitable, look for good entry points in markets with long term fundamental potential.

Think defensively and manage risk.

Huge day again

A great day on the markets with some of my biggest one day profits so far. Miners, silver and gas.

Looking forward to see if Nigeria is up next.

Chaos is a ladder

It's been eventfull days. I prematurely declared victory on the silver, gold and miners play. First I got smacked back down and then today I got back up again. In order to minimize risk I sold off most of everything else I had in the portfolio. I took a lot of profit on the short DGAZ play which I've held for months and just when I needed some extra cash it turned well into the green. I now have a decent margin for losses should the gold trade turn against me again. But I think we've seen the worst for this time and I'm positioned for a good profit if the miners continue to climb back some.

So what's next? I'm already in Nigera ETF NGE thanks to this chart:

I turned it upside down just to make it prettier.

There's a stampede towards the exit going on so that's the cue to enter. It's funny how exponential charts loves company. First nothing happens for months and then this chart happens right after the gold chaos.

Let's end this post with some wisdoms from Littlefinger:

Dear readers

I told you so! If you were reading this blog you would have had the opportunity to accumulate a very profitable position right at the right time. Five of my twelve ETF positions made over 10% today. All in all the portfolio made 5% on one single day. A fantasic result. I expect the miners to continue to advance, or at the very least I expect my short positions in the reverse leveraged mining ETFs to continue to be profitable.

Cheers!

Full blown gold/silver crisatunity

This post is going to have a lot of charts because of the ongoing events in the gold and silver market.

What's interesting about these charts are that they are recovering from previous peaky, volatile chart patterns and are building large spikes again. It is unusual for spikes to be this large so long after the main spikes.

The miners look like an incredible shorting opportunity from here.

If we look at the inverted USLV chart it looks like the main spike could build one day or two higher but after that it should be topping out.

This is one of those rare occasions where I will commit most of my portfolio. If the fall continues for one more day or two I will keep adding to the trade by allocation a few reserve resources that are currently elsewhere and by increasing the amount of longs in 3X ETFs and decreasing the amount of shorts in the inverse 3X ETFs.

DUST and JDST

I started shorting them. I don't have time to post a chart right now. Will accumulate larger position from here should they keep going up.

Is the Yen forming a triangle again?

Gold

The inverse Gold ETF DGLD is showing typical behaviour for volatile periods in inverse leveraged  ETFs. What comes after a period like this is a move significantly lower. A short position will be highly profitable when that happens. The only problem is to know when we are ready for that move lower. There are several possible trendlines that could act as a ceiling. Many times the last peak in a chain of peaks do not bounce of a trendline but fails before that level.

I'm already about 30% invested in DGLD and DSLV shorts.