Precious metals and Stock market – A Correlation

Hi friends,

As I posted my bearish views on the precious metals before the week started; and so did the metals fell – or was I just lucky with the timing, God knows!

But, people familiar with markets would definitely agree on this fact that whenever the prices rise or drop in metals, opposite effect is seen in the equities market – if not always, certainly most of the times. Many times I have met people who would buy or invest money in metals and as prices would fall they would buy stocks; in an expectation to have minimal impact on the net portfolio of assets. This is good practice at times, but not all times.

Sometimes correlations work and sometimes they just don’t. People who don’t argue with the market movement and adjust their trades accordingly, are certainly on fair side of value comparing to people who would argue with the market at any given time.

Knowing correlations should only be as a swiss army knife. Use it to enhance or protect your investments. By saying this I mean, assuming we have certain positions long in the metals market and there is a sudden fall in stocks. Now, this time should be taken to analyse and add up your positions to have a better value of winning. Contrary to this, lets say stocks start to rise and rally drastically; then this is the time when we must look to size our positions and adjust the risk value accordingly and wait to build up the positions as conditions look favourable overtime.

Nothing is untimely where markets are concerned. We can trade any time and win any time – we just need to know the way to do things at “that time” and make it “Right time”.

-TD

PS: Friends, I may not be updating the blog every day; due to lack of time, but I try to be connected to twitter @wizajitmc most of the time. For any queries feel free to contact me :https://wizajitmc.wordpress.com/about/

Wizajitmc – My trading strategy

Hi friends,

Many times I have been asked from several people about the way I trade and the way I decide on some entry points and exit points, the way I choose my stop loss and profit targets, etc. To all of them, I wish to answer that it all depends on the time and priority of my decisions. There is no hard and fast rules to my way of trading.

When I trade #Forex instruments using the most trusted, my own brainchild “The BPL/BPS strategy” (you may find it here: http://wp.me/p1Zsuc-1k ), I know that the risk is limited to the reward that I am expecting. And, when I trade other instruments like the $SI_F and $GC_F (Silver and Gold) the risk is quite significantly high and the reward is quite satisfactorily too. If I am not satisfied, then I don’t take the risk. If I am satisfied, I just pull out.

Its the matter of comfort that decides what is best. Trust me when I say, some times we have to risk appropriately more to get it correct as anticipated (eg. the $SI_F and $GC_F I was short as in here : http://wp.me/p1Zsuc-V ) and many other times we need not risk much (eg. as discussed in this post: http://wp.me/p1Zsuc-1k )

The thing to understand here is that every time I trade, it depends on the instruments I am trading that defines my risk and reward profile. Its as simple as this. Can $ZC_F (Corn) be used for jewellery? and can $SI_F (Silver coins) be used for food/petrol, nope, right? This correct correlation matching is what is the “ART OF TRADING”, and trust me its not tough.

My dad says, perseverance is the key to success. Remember, there are many locks out there ($SI_F, $GC_F, $HG_F, $CL_F, $ES_F, $NG_F, $ZC_F, $ZW_F, $EURUSD, $USDCAD, $GBPUSD, $USDCHF) and to open them you don’t need different set of keys, its just the level of perseverance that matters.

Happy trading!

God bless. Ciao.

New post: How to best implement the BPS and BPL strategy

Hey Friends,

I just felt that this quick write up was needed, and it was good time. Whilst by now that many posts here discuss well the Belly push (Long & Short) strategy, there is a need that I discuss with you all the additional tweaks to the initial strategy that I discussed here .

Just as you see that whence we get the RSI hit the line and closes near that we take action in respect to BPS (Short) and BPL (Long). This action can be tweaked a little. Just as you know 4 hours is a very long period of time, when the RSI hits for the first time the Horizontal Belly Line (HBL), we do not generally expect the price action to swing in the direction of BPS or BPL immediately, but rather its the time for patience to step in now.

By patience I mean, we need to now look very carefully, the way price is moving or acting at that particular stage. For eg. as we see in the BPS strategy for the $USDCAD , the price candle at Dec 15th 1600 hrs is not near the HBL value of 69, but is around 64.50. The need to understand is that when the price approached this HBL, it acted rejection from the psychological level of 1.0400 and soon reversed down side and closed at 1.0395. Have a look below chart image again:

$USDCAD - BPS strategy

 

This price has two things to note. One, its near the psychological level, and second, that it touched and closed below the HBL and near the 1.0400 psychological level. These two  things helped us use the BPS in play and we short the $USDCAD expecting 30-50 pips, and we succeed.

The second time when the price followed and brought the RSI near the HBL again on Dec 19th 0000 hrs candle close, it is to be noted then that the close is very near to the one we had with the Dec 16th 1600 hrs candle just discussed above. So we wait for the market to make decision near the 1.0400 psychological level and we see that getting failed with the next candle of 0400 hrs with a close of 1.0401 and RSI below the HBL level. So we decide to effect the BPS strategy in play one more time by shorting the $USDCAD and waiting to gain 30-50 pips, and we succeed this time as well.

The strategy can be used initially with low leverage and proper risk calculation per trade. Normally, novice traders should not risk more than 3% of their net value per trade. Once you become familiar in understanding this strategy and its techniques are developing to work for you in favor, increase you leverage and try carefully. This way you will start to develop confidence in the strategy and would be in better position to judge the state of price action that takes place round the clock.

Remember, there is no greater tool for success but learning. Learning gives wisdom and that’s the ultimate.

Trade safe. Good Luck. God Bless. Ciao.

 

PS: Don’t forget to do your part of charity if this strategy works for you. No conditions apply!

$ES_F belly push – Long 25th Nov, 2011

Hey friends,

Another example of the “Belly Push” Long strategy. Have a look below.

Divergence and Belly push strategy!

Note the three instances present for going “Long”.

PS: Don’t forget to do your part of charity if this strategy works for you. No conditions apply! 😉

Trading strategy for $ES_F ES mini SP 500 futures

Hey friends,

The ES mini SP 500 futures ($ES_F) are great tools as investments. They offer good liquidity and also are not much risky for intra-day trade. Each of $ES_F futures are valued at $50 per one point of move. Look at the following image.

Divergence and Belly push strategy!

This is a very beautiful strategy, where one indication allows us with enormous opportunities to enjoy the belly push. And as I explain, you will know why I call this strategy as “Belly Push!”. Have you ever wondered what happens when some one sleeps facing downwards. And with huge belly facing downwards, any thing spirals down whence hits belly.

As seen in the image, you may need the following:

1. 240 min chart.

2. RSI(7,Close)/RSI(14,Close)

3. Some lines to draw.

Now, as seen in the image, we note the divergence. Draw a horizontal line as shown to the RSI. This horizontal line as shown, is the belly thing explained as above. Note, the RSI touching the horizontal line, and also see the price action. Every time the RSI touches the horizontal line, the belly spirals the price down. The spiral action is shown with the help of vertical lines. Every spiral action had helped us gain cool 15 points.

Considerations:

I use the 24o min action plan strategy always when I want to look at the broader picture. Its good to have a note of long term, when you want to intra day trade.

I hope you liked this strategy and I also wish this comes to greater positive use to you. Do drop in your feed back on what you think, and what I have missed to look. Till then, trade safe. Good Luck. God Bless. Ciao.

PS: Don’t forget to do your part of charity if this strategy works for you. No conditions apply! 😉