Positioning and Time


We often get asked in which direction prices will head. Yes it is helpful to know if markets trade up, sideways or down. What is often overlooked so is the fact, that without proper entry timing one still can find oneself in a series of loosing trades, even so having identified direction correctly.

This problem can have multiple causes. One of them is a time relativity error. Others are misaligned risk/ reward ratios. And there are many more.

This weeks Silver chartbook illustrates such a scenario. The purple line shows clearly temporary overhead resistance. This was the reason for our partial profit taking in our last weeks chartbook.

Nevertheless the overall consensus is bullish in nature

The weekly chart shows even more clearly why an instant push through $16.15 zone wasn’t likely.

As much as we have from a top down approach in time frame a bullish picture with only a brief resistance, initiating trades here on support on the daily chart is not to be advised.

If one has a main position and wants to reload, money management allows for such a strategy. Starting out with a new position here so provides non favorable risk reward ratios.

It is imperative to see through time to evaluate position taking or not. A simple evaluation of likelihood of price behavior is not enough to consistently extract profits out of the market.

The four hour chart illustrates in its representation of market profile, how overhead minimizes reward expectations on the short/long term

Patience, and picking ones entry spots wisely, is the solution to this often overlooked problem of position entry. Only by looking at the market from various angels and various time frames provides a risk profile that is sustainable.

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