Monday, May 9, 2011

Will the price of Silver go test last week's high ?

I don't see why not ... In the mean time, I keep buying the dips. I never shorted Silver, guess I probably should have, last week. But I'll say it again, the lower it gets, the more buyers will jump in and therefore make the price go even higher. At the moment, buying Silver at 37.36 is considered a bargain.

Thursday, May 5, 2011

Silver retracing downward

At this point in time, I have a trade running that I opened at 39.09 a couple hours earlier. With a stop loss at 38.04 I'm minimizing my risk to 105 pips just below the R1 level and hoping for a profit of 121.50$

** 5 Minutes later as I'm writing this, my trade is up even furether to 39.48 so I'm eliminating the risk by moving my stop loss higher than the initial entry. Therefore if my trade reverses, the worst case scenario is that I will end up with a profit of 10 pips or 15$.

But it's looking good, as I'm writing this, it just keeps going up, it's now at 39.52. I could close this trade right now and bank a a quick 64.50$ but trading is a game of patience, method and discipline (not to confuse with fear, greed and chaos). However a good description of trading I've read in "FX Bootcamp : Strategic and Tactical Forex Trading by Wayne MacDonell" (which is the book I pulled out this strategy from) implies that trading is "Applying fractal geometry and chaos theory to profit from the currency market".

If you want to know what all these fancy colored lines means, you should definitely read this book, available in the Suggested Books page. Basically what we're looking at is an excellent strategy that can bring you tons of money if you can master it and be consistent with it.

Now the price is crisscrossing above and below the 39.50 level because round numbers tend to be psychological resistances and support. It's in human nature, it's just in the way traders tend to act, and that's the way price is driven. You will notice that tendency in many cases, not only on the Silver, but in every currency pair, commodities and indexes. Just look at how the Dow Jones Industrial average bounce back and fourth around the 10 000 Level...

So a little update on the trade, I had to close it, look at this chart, I'll explain why:

You see the pink and the light blue lines, they are moving averages (more details on this in the book) but basically when they cross, it's a sign that the trade will reverse. And furthermore, once the price crossed downward below 39.50, that level at this point is acting as a Resistance, the price momentarily pierced through, but it failed to break it. There wasn't enough momentum to bring it higher and therefore invert the role of the Resistance and make it a Support level. So the safe thing to do was to take profit, and close the trade. That strategy clearly indicated the entry point of the trade, to move stop loss to protect profit, and then close the trade before the reversal. It doesn't get any better. A quick and simple profit of 36 pips.

Tuesday, May 3, 2011

Is Silver Overbought ?

Good question.

I know I said earlier that I was expecting it to close above the 50$ mark this week, and it is now trading just above 41.00. Anyone can be wrong, but on the long term, my bias is still unchanged. I'm not shorting the silver any time soon. I keep buying dips and it seemed to work pretty good for me. It's only a matter of timing, and knowing how to read the charts. I trade when the charts are telling me it's time to pull the trigger. If the charts are lying to me, I can't blame myself.

Right now, it seems like the market has settled at a "fair" price and there's not much action.
Today's Pivot point is at 42.50 and the First Support (S1) is just below 40.00 (39.57 to be precise)
So the price is hovering right around the MR1 level. at 41.26.

I'm tempted to buy right now, but I'm pretty sure it might drop to 40 or even go tickle that S1 level before going back up, so I'll be patient and wait for the bounce before entering a trade.

We'll see what happens in the European session and I'll get back to my charts in the morning.

Monday, May 2, 2011

Excellent day after all !

Do the math, 108+34+21+26+11 = 200 pips ... X 1.5$ My target for the day. 300$

Plus a couple trades on the EUR/USD and Oil as well ... Now I can take a break.

The sharp drop in the price of Silver explained

On my last post I stated that the sharp drop in the price of Silver was related to everybody taking profit off the table and Selling the Silver. But, I didn't make the link until now while looking at the news. It all makes sense now, Bin Laden has been killed! That's what's creating such uncertainty in the price of commodities. Not only did the price of Silver drop, but also the Gold, and all commodities related currencies, such as the Australian Dollar. But it's all good, the trend is still strong, and I see this drop in price as an opportunity to jump in at a lower cost.

Sunday, May 1, 2011

Never get tired of making money!

So here's my latest trade on the Silver (XAG/USD)
After a sharp drop, probably from everyone taking profit after the long hike, the Silver Spot started to back up. So I'm jumping in again with a buy trade, this time at 1.50$ per pip. I'm hoping for the price to go test that resistance and possibly break it. In which case I will move my stop loss to breakeven or perhaps protect some profit, and ride the trend for what its worth. I'm pretty sure a lot of traders are going to feel the same way and jump in after this sharp drop, therefore making the price go further up. My personal guess is that Silver will close above 50 this week. So let's keep a close eye on this trade and hope for the best.

Thursday, April 28, 2011

Silver is on a hike!

The best way to profit from the rising price of silver is to trade it in a FOREX account. There's no need to buy stocks from a mining company or to buy physical silver bullions or coins. And there couldn't be any better time than now to trade it. Just take a look at this picture. It shows my last 3 trades on the silver spot. First one was a 91 pips win, second 10 pips, and last but not least, a whooping 223 pips. For a total of 324 pips. Let me be clear about this, for those who are unaware of what this means. A pip (Percentage In Point) is the smallest variation point in the price of a currency pair, or commodity. In this case, a pip corresponds to one cent in the price of silver. The pip value is then multiplied by the lot size. It can go anywhere from 1 cent to 100$. I executed those trade at 1$ per pip, so I made a total of 324$ that day. Not too shabby for a few clicks.

The word on the street is that silver may rise up to 80$ in the upcoming months. So don't miss the boat!

Click here to open a FOREX account and start trading today