Target accuracy versus support and resistance stops
Silver is trading sideways. Time to evaluate stops and targets. When the mind is overwhelmed due to data overload or too many variables in a probable outcome, it likes to simplify. In its extreme, it resorts to intuitive responses like fight-flight. What is overwhelm? In most cases, it is an emotional response to an unsolved problem. For trading, this means a data stream evaluation that accumulates to too many questions and results in a desire for simplicity. In the case of exits, most beginning and intermediate traders resort to a support and resistance stop. But that is a very simple way to get taken out of the market. Target accuracy versus support and resistance stops.
It is foolish to find a rigid module like a line in the sand (a single price level) in a game with a high degree of variables. Variables that are in constant flux in a dynamic model. Driven by collective psychology, even irrational at times. It would be best if you had real likelihoods based on movement in price, volume and time (at a minimum).
If you learn how to drive a car, the dynamics aren’t just pushing the various pedals at the appropriate time. After years of experience, you find the deciding value of surviving this game to be all surrounding factors. For example, slowing down when you see children playing near the street or in heavy rain on the freeway. You create more distance between the car in front of you if its driver is swerving and you suspect a drunk driver. You can feel if something is wrong, but it isn’t an intuitive response due to feeling overwhelmed. It is a subconscious filled with many rules that you have over time hip pocketed that in their sum alarm you to slow down or even stop.
Silver, Daily Chart, Stacking Odds:
Silver in US Dollar, daily chart as of January 13th, 2021.
A traffic route needs readjustments in the event of a new force affecting traffic. Trading targets are affected by real-time factors, as well. Aspects like new data releases, momentum, volume, and price behavior as a whole. This, in alignment with the time component, weakens a static approach that tries to insist on a simple number of a support resistance price level. To get to a more accurate probability prediction, one needs first to widen a single target number to a target zone (A,B). A zone that is more in alignment with a distribution zone based on prior fractals.
Most importantly, look at the way of how prices move towards such zones. An action-reaction principle comes into play if prices moved fast towards a distribution zone (C). In turn, this increases the likelihood of a bounce. On the other side of the spectrum, a slow directional creep of prices much more easily can penetrate a support/resistance price zone.
Silver, Weekly Chart, Exit management:
Silver in US Dollar, weekly chart as of January 13th, 2021.
Proper exit management requires a similar complex strategy mixed of experience and a clearly defined approach of targets versus a flawed system of a support and resistance trailing stop.
In the weekly chart above, you can see an example of how targets and stop levels change throughout time. Directional support resistance lines update with each candle printing. Standard deviation bands, which work great for the Silver market, are moving along with price behavior. They also work as flexible target and stop levels.
Silver, Monthly Chart, Target accuracy versus support and resistance stops:
Silver in US Dollar, monthly chart as of January 14th, 2021.
Right now, Silver is trading sideways. It is important to know when to get out with our established positions. We post those in real time in our free Telegram channel.
Entries are exits, and exits are entries. In principle, your entry system can be applied for your partial profit-taking as well. It is futile to try to pick tops and bottoms; resorting to an inadequate support resistance approach isn’t a lucrative solution.
You want to stack odds in your favor. Also, a core element is a multi exit approach. It provides choices widening one’s possibility to catch larger moves (see our quad exit strategy). Certainly, counter signals at the same time frame are an excellent way to take some profits off the table.
When prices trade in regions that it has traded in before, you might consider tools like fractal analysis, linear regression channels (A), and fixed range volume analysis (B). These, amongst others, to identify high probability supply and demand distribution zones.
Should prices trade at all-time highs, the main focus needs to be on momentum analysis, counter signals on the same and higher time frames as the entry and signal time frame, and tools like Fibonacci extensions. Volume analysis is a precious component to determine where it is wise to lighten up the load. Novices predict price level. For instance, an analysis where one expects a high probability in time when price changes direction, is more valuable in opposition to a fixed price zone.
Target accuracy versus support and resistance stops
Exits are the holy grail of trading. In alignment with risk control, they determine the level of profitability. For most, it is here where the rubber meets the road. Above all, exits are the deciding factor if a system is consistent (winning) or an endless string of losers. Here, an advanced system approach that takes many analysis factors into account brings actual value to your trading results.
Targets are changing quite substantially through time. The market is in motion, and as such, forces in play need constant reevaluation to be genuinely accurate in their probabilities. Just like driving a car, you can’t just expect to reach your destination each time to work the same way. It would be best if you considered all factors. From the health of the driver to the mechanical condition of the car. From traffic and weather conditions to any unexpected influencing factors of each ride.
Join our free Telegram Group :https://t.me/joinchat/HGe22hDDEEl0LvFGAgEZ9g
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.
RISK DISCLAIMER: All forms of trading carry a high level of risk so you should only speculate with money you can afford to lose. You can lose more than your initial deposit and stake. Please ensure your chosen method matches your investment objectives, familiarize yourself with the risks involved and if necessary seek independent advice.
U.S. Government Required Disclaimer - Commodity Futures Trading Commission. Trading financial instruments of any kind including options, futures and securities have large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the options, futures and stock markets. Don't trade with money you can't afford to lose.
NFA and CTFC Required Disclaimers: Trading in the Foreign Exchange market is a challenging opportunity where above average returns are available for educated and experienced investors who are willing to take above average risk. However, before deciding to participate in Foreign Exchange (FX) trading, you should carefully consider your investment objectives, level of experience and risk appetite. Do not invest money you cannot afford to lose.
EARNINGS DISCLAIMER: EVERY EFFORT HAS BEEN MADE TO ACCURATELY REPRESENT THIS PRODUCT AND ITS POTENTIAL. THERE IS NO GUARANTEE THAT YOU WILL EARN ANY MONEY USING THE TECHNIQUES, IDEAS OR PRODUCTS PRESENTED. EXAMPLES PRESENTED ARE NOT TO BE INTERPRETED AS A PROMISE OR GUARANTEE OF EARNINGS.
CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAN ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.
All information presented or any product purchased from this website is for educational and research purposes only and is not intended to provide financial advice. Any statement about profits or income, expressed or implied, does not represent a guarantee. This presentation is neither a solicitation nor an offer to Buy/Sell options, futures stocks or securities. No representation is being made that any information you receive will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results. Please use common sense. Get the advice of a competent financial advisor before investing your money in any financial instrument.