The precious metal markets is often considered ‘off-limits‘, too complex or too risky for the individual investor.

For us, none of the above worries are a concern for us. Why?

1. There is nothing saying we can’t trade these markets

2. Too complex? Not really, especially when you understand and accept the fact that no one knows anything more than you do, in terms of where an asset will go.

3. Too risky? Impossible when you define your risk before you enter a trade.

Now that all of this is said we can start to talk about what we saw this week to short Silver ($SLV).

At the start of the week, we got short Silver and sent out this Tweet:

What we saw in $SLV was simple. We saw weakness, closing at the lows and within a price contraction. This is our textbook set-up, The Coghill Flag. You can read more about that here: 

The FED made their announcement and then we saw some follow through selling, nothing major yet. Not even down to our first cover area (below lower BB, as per Coghill Flag Rules).

This, was today, this morning (10/30). Overnight the metals pretty much had a mini crash. Opening down about 4% and then throughout the day continuing lower. When this Tweet (above) was sent out, $SLV was below the lower BB and therefore we planned on covering half at/near the open.

Still pre-market, my class started at 8:05 and ended at 8:50. Was planning on covering half after my first period this morning (10/30).

34 minutes before the open, we reached the level I Tweeted about earlier in the morning (this level was selected based off a prior pivot low). When it reached this level, we covered half.

So many people across media outlets were talking about Silver now. Were they speaking about it Monday? No. Often times the media is late to the move, you need to keep things in perspective as to where assets have been and where they can go.

After the open, Silver continued lower. Therefore we needed to zoom out our charts to see where the next support was. Based off the weekly chart, we saw Silver had some strong support near the 15.70 level.

About 45 minutes later, we were filled on our second half of our Silver short. We were now 100% flat the trade. Silver ($SLV) closed the day at 15.82 (.10 higher than where we covered today).

This was a four day swing trade –  not too long, actually one of our shorter trades in the scheme of things. What’s important to glean from this post is the following:

1. Define your risk and nothing is too complex

2. Stick with your rules, they are there for a reason

3. Stick with the trade, (i.e don’t let the FED Day alter your perspective)

4. Remember: Where has it come from and where does it have the potential go (AKA what’s the risk to reward)

Trade Review/Walk-Through Short Silver ($SLV)
Tagged on: