Time is a dimension of the physical universe where events happen in an irreversible succession. In this continued progression from the past into the present towards the future many abnormalities can be found. One of them being that when pressure comes into play time gets distorted. A meaningful aspect for traders for instance is the bodies reaction to this pressure with the fight/flight response. To clarify, blood necessary for muscles to fight or run gets drawn away from the brain. You can’t even remember your telephone number let alone trading rules you set for yourself. Instead intuitive responses kick in, the worst for a counter intuitive environment like the markets. Therefore, a well preplanned decision tree rule based execution fails and worse than random decisions are executed instead. Hence, how can you avoid stress? Time, think again.
Beginners even if aware of such facts think they outwit this obstacle by simply being aware.. Really? You want to out think a survival instinct rooted for millennia? Time, think again.
One solution to such a problem is to trade larger time frames. With very few execution points that allow for a bit more wiggle room of mistakes one can in part escape this problem. In regards to the situation the markets and the world economically finds itself, there is an anachronistic point right now. Meaning from our point of view owning physical silver is the best play for a wealth preservation and wealth speculation perspective. Little execution skills are needed since the precise execution price is not as important compared to a swing-day trading situation. We expect Silver to trade in a few years in triple digit numbers.
Another way to improve on this phenomenon that can negatively effect your results is using OCO orders. Meaning, one order cancels another order. Once set, a computer executes successive orders on your behalf and more complex exit strategies become easier to manage from a stress perspective. For example, our Quad exit strategy is a very successfully approach that makes your life easier.
Gold, Monthly Chart: A Leading Indicator
Gold in US-Dollar, monthly chart as of July 9th, 2020.
The monthly chart above shows how prices have moved through the US$1,800 resistance zone of Gold. Generally, Gold is leading Silver. This is a significant event since now 2011 highs are looming just US$80 above. It is advisable to always have an eye on the precious metal sector leader Gold to pick ones entry and exits points on Silver in alignment to this force.
Gold, Daily Chart: Partial Profit Taking
Gold in US-Dollar, daily chart as of July 8th, 2020.
The daily Gold chart above indicates our partial profit taking (red down arrow) since we are getting from a monthly perspective into the “end zone” (US$1,800 to US$1.900). This even though from a daily perspective we just broke through a distribution resistance zone.
Silver, Daily Chart: Using Liquidity
Silver in US-Dollar, daily chart as of July 8th, 2020.
The daily Silver chart has a mutual breakout scenario like the daily Gold chart. The crowd thinks “breakout”, meaning they either have entries or are chasing this trade. We took partial profits to use this liquidity for good fills. We were fading the crowd because we are thinking from a larger time frame.
Silver, Monthly Chart: Room To Catch Up! Time, Think Again
Silver in US-Dollar, monthly chart as of July 9th, 2020.
The bigger picture is unchanged. The monthly Silver chart shows how undervalued Silver indeed is. There is a lot of ground still to be covered. Silver will eventually have to catch up.
An important aspect to overcome stress, which allows for improved execution of trades is practice. First paper trading for a long time on simulators, and following real execution with extremely small positions size, is the way to go. For this you will need a lot of trades to be happening to get better in ones practice and smaller time frames are ideal for achieving these goals. Beginners often are too impatient and step into the arena at an too early time with too large position size.
Time, think again
The biggest culprit for failed trading events is trading underfunded. You are under stress if losing money you can’t afford to lose. No beginner likes to hear that fact. They want in. It was hard enough to save the initial stake and often motivation to pick up this profession is to get out from under.
They literally have no chance to win the game. To overcome such a dilemma one needs to find a market that allows one to trade that small, that the individual outcome of a single trade is absolute meaningless to ones psyche. Many markets do not fit too small account sizes due to the smallest trade able increment being too large or a commission rate basis in relationship to single execution being to expensive. They simply at the beginning need to be avoided.
Thinking in monetary terms is the wrong approach. Too many hype stories are published of how a five thousand dollar account has ended in millions. The true route to riches is to follow sound principle based advise and let time be on your side. It might take a little longer, but the heartache of multiple small accounts wiped out can be avoided if walking away from a gambling approach with a naive expectation to outwit a for millennia conditioned, deep rooted fight flight mechanism.
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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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