What not to do


When reading weekly publications in the finance sector one mainly stumbles upon opinions. What to buy, when to buy, and reasons on why these recommendations make sense. A very important factor in trading and investing is to know what not to do. You might hear a phrase like “cash is king”, or “let your winners run”, but are rarely illuminated by underlying principles that would support such statements on how to truly act. What not to do could be the headline to a long list of things market participants should avoid. We want to point out one topic that would rank high on such a list.

A week ago we had a silver long entry signal filled that we had anticipated and planed on April 13th, quite a while earlier, in our chartbook release at that time.

Zone A silver entry on small exposure size

Silver in US-Dollar, daily chart as of April 26th, 2019

This trade quickly moved into our favor and we took half of the position size off and raised the stop to breakeven.

On May 1st 2019 the other half stopped out at entry levels.

Small profits on weekly silver trade attempt :

Silver in US-Dollar, daily chart as of May 1st, 2019

On the same day where we got stopped out on our first attempt to catch a weekly silver turning point, we got filled long for the Zone B entry. This trade was planed three weeks ago and executed on a full position size.

Silver Zone B entry on May 1st 2019 :

Silver in US-Dollar, daily chart as of May 2nd, 2019

Shortly thereafter initial profits were taken for a two percent return on half of the position. The stop was raised for the remainder exposed capital to entry levels.

You can find these real time entries and exits in our Telegram channel.

Low risk due to anticipated quick reversal and aggressive entries and profit taking:

Silver in US-Dollar, daily chart as of May 3rd, 2019

Here is the important fact to take away from these two long entries.

  • Both trades were planed way in advance.

  • The trades were independent with individual reasoning and edges.

  • Each position size was calculated based on risk reward ratio factors. Sensible money management based on these risk reward factors was applied.

  • Both trades were executed with utmost discipline as planed.

  • Zone A trade was closed out before Zone B trade was entered.

In short these trades are unrelated and the Zone B trade could just as well have been triggered weeks later or not at all.

We point this out since at first glance it could be interpreted to be a martingale strategy approach (averaging down). We strongly belief that only Anti-Martingale strategies are to be used for viable systems. So when we spoke of what not to do, we were referring to not use a Martingale strategy approach. These trades are very emotionally and in a loss scenario very hard to recover from. Furthermore they can be severely damaging to the psychology of an investor’s or trader´s mind. They also do not provide a solid mathematical edge to rely on for consistent returns in the markets.

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All published information represents the opinion and analysis of Mr Korbinian Koller & his partners, based on data available to him, at the time of writing. Mr. Koller’s opinions are his own and are not a recommendation or an offer to buy or sell securities. Mr. Koller is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations. As trading and investing in any financial markets may involve serious risk of loss, Mr. Koller recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Although a qualified and experienced stock market analyst, Korbinian Koller is not a Registered Securities Advisor. Therefore Mr. Koller’s opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction. Past results are not necessarily indicative of future results. The passing on and reproduction of this report, analysis or information within the membership area is only legal with a written permission of the author.

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