How Well Do You Know Your Markets?

KNOW YOUR MARKETS - We haven't seen much follow through on that GOLD position and it's possible we might not see any. Of course, ideally, this would not be the case and the market will turn higher. The reason I kick off the update like this is because GOLD has been an interesting market for me over the past few years. I have grown to discover a different kind of rhythm with the yellow metal, though ultimately, as would be expected, the technical dynamics are still consistent with my analysis. But the rhythm is an important point here, as trading demands that you have an intimate understanding of the intricacies of the market you are trading. With GOLD, I have found that the market has a way of making some dramatic moves, only to end up not really doing much at all, adhering to the bigger picture.

cartoon july 17

IGNORING THE NOISE - And right now, that bigger picture is a picture of consolidation at a minimum, if not a picture of the formation of this longer-term base. All of this supports the current position, which looks for the market to hold up above $1200 for a push back towards important range resistance in the $1350 area, if not a push resulting in a break of the 2016 high at $1375 and a much bigger move to the topside. Whatever the case, getting caught up in the intraday movement in between is not something I want to be doing and I am happy deferring to the bigger picture, with good risk management in place. If it doesn't work out, it means something different is going on and things are changing in a meaningful way. And if I'm going to be wrong here, this is what I want to happen. I want those big guys to also be thinking something has changed. As a reminder, the total risk is less than 3% of equity.

Before you trade a market, make sure to have a good handle on the unique intricacies of that specific market.

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