Silver let it ride

Time relativity errors occur typically after long established sideways ranges. Meaning you get out to early of your trade. You waited a long time to finally be in your desired trade and even though everything goes perfect you want out really badly. The main cause is you are wired to behave this way. A bird fly’s hundreds of time to its food source to each time just grab one seed. A protective mechanism to not be sitting duck for the cat. As humans we are wired from times when living in caves and saber tooth tigers sitting right out front, not much different. Unfortunately this intuitive behavior wont bring profits in trading. Silver let it ride.

Solutions:

  • our advanced Quad Exit strategy, pairing out of positions allows for the needed degree of mental freedom

  • trading multiple time frame trades at the same time

Multiple time frame approach:
Silver, Monthly Chart: Set Your Targets

Silver in US-Dollar, monthly chart as of June 25th, 2020.

The approximate long term channel range from US$14.00 to $19.00 in Silver from a monthly trading perspective is a good example on how long a trader might have to wait for a successful range break. In this case already close to five years (2015 to 2020). It is logical once you find yourself in a winning trade on this time horizon you do not want to give up early established profits. This doesn’t allow for true trade development and truly great risk reward ratios, that can be expected in this case. Sitting through larger retracement is necessary. A feat impossible if not counteracted by a smart strategy. Plan the trade and let it work itself out. Set the target(s) diligently and adhere to them (do not change/adjust them once in the trade). Drop down to the lower weekly time frame to help support Your emotions.

Weekly Chart, Silver: Low Risk, Earlier Profit Taking

Silver in US-Dollar, weekly chart as of June 25th, 2020.

On the weekly chart a range can be found from US$16.50 to US$18.50. This range being tighter than the one on the monthly chart will make your risk smaller since typically the stop is below the range. You can afford taking an earlier target since you still will come out with a good risk reward ratio. Trading on a lower time frame allows from a time perspective to expect exits to occur earlier. It is easier to trade since you have less long to wait for your reward.

Silver, Daily Chart: Taking Profits Feels Good

Silver in US-Dollar, daily chart as of June 25th, 2020.

A daily time frame is useful for swing trades to satisfy this ongoing need to make oneself feel like a winning trader. Buying dips (green arrows) in a directional market (purple channels) is low risk and provides additional income flow to the long term holdings. Most of all working the market like this satisfies this deeply rooted urge of consistent profit taking (red arrows). From a money management perspective these positions should be small in size. One keeps a steady hand on the market to feel if everything is right. Consequently the satisfaction gained allows for letting the larger time frame trades ride themselves out.

Silver let it ride

It matters little, which approach you use to compensate for the urge of early profit taking. What matters is that you are aware of the dilemma and acknowledge the need of a remedy. Rest assured that the mere awareness of the problem will not solve it. You do need a practical methodology to help overwrite a very strong impulse. Should you choose to ignore such an implementation you will find yourself more often than not violating your best intentions of discipline. Old habits die hard and these responses are reflexes as ancient as time. Taking a quick profit might bring the comfort of an assured small winning trade. It destroys system performance. Moreover watching Silver prices to advance much further is agony once being on the sidelines.

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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.

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