Same price – different psychology
We posted live in our telegram channel, a directional continuation long entry for silver on the 17th of this month. Three days later we published our weekly chartbook, but didn’t advise for a long entry, even though prices were almost identical. Why? One aspect was that the chart book was providing a larger view and as such a larger time frame outlook. It is imperative to not succumb to time frame relativity errors. Different time frames have a different perspective on the market. That was not entirely the case in this instance though. The same price does not mean the same trade or the same risk it rather means same price – different psychology.
An entry on the 20th of this month would have been a breakout play not a continuation pattern. Psychology, risk, position size and other factors would have been entirely different. Not only are we not big fans on breakout plays but in this case news were the driving factor. In addition, we especially do not favor breakout plays in extended markets. Different psychology results in a vastly different method of execution – an aspect that can strongly influence the outcome of a trade. Same price – different psychology.
Daily chart, silver/US Dollar 9/17/2019, continuation play :
Silver in US-Dollar, daily chart as of Sep 17th, 2019
This continuation entry confirmed, on light position size and late in the overall game and trend, and showed promise. Due to the healthy retracement and an intact silver trend overall with favorable internals on the day of entry. There was also confluence with the gold market on the day of entry.
Same price – different psychology, silver, daily chart, 9/23/2019, financing target reached:
Silver in US-Dollar, daily chart as of Sep 23rd, 2019
On the 23rd of September news driven markets had silver prices breakout through resistance. Our first target to take the risk out of the trade by taking half off the table was reached. After that we adjusted stop levels to our entry point to take the risk out of the trade and lock in profits. Exit and stop adjustment were announced live in our telegram channel.
Daily chart, same price – different psychology, silver in US Dollar – September 26th 2019, stopped out with rest position:
Silver in US-Dollar, daily chart as of Sep 26th, 2019
The chart above shows how only 2 days later this quick price burst up, collapsed by a more than 100% retracement. We locked in nice profits on half of the position, but the remainder of this trade’s capital got stopped out at breakeven. The yellow lines represent entry and financing target price. The light blue vertical line illustrates the moment of time that we explained at the beginning of the article, the possible breakout trade scenario.
Our trade (entered on the 17th) at the moment of the news move already provided for a psychology of stability by having gone through a prior negative p/l right after entry. A breakout scenario entry on news would have equaled a moment of great uncertainty and emotional risk. A whole different tool box would have applied not only from a psychology perspective. That is to say, same price – different psychology.
Gold, daily chart, 9/26/2019, telltale of a topping market:
Gold in US-Dollar, daily chart as of Sep 26th, 2019
Guidance for being reluctant to be too risky at these higher levels of the overall trend in the precious metal sector, was the daily gold chart. The possible reversal pattern of a head and shoulders formation was one of the warning signals to not be to aggressive in capital exposure.
It is being said that trading is 90% psychology and some set this percentage number even higher. We can nothing but agree. In a game where no one can predict the future and one has to act in a field of constant uncertainties. It is key to be in utmost control of all the parts that are controllable. Don’t let price alone lure you into a trade but simply consider every and all aspects of how to get a true consistent edge on the outcome of your trades.
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.
Important Trading Risks and Earnings Disclaimers - Terms of Use
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.
Terms of Use: Your use of this educational website indicates your acceptance of these disclaimers. In addition, you agree to hold harmless the publisher and instructors personally and collectively for any losses of capital, if any, that may result from the use of the information. In other words, you must make your own decisions, be responsible for your own decisions and trade at your own risk.