Gold had a nice continuation rally on Monday and is very close to reversing to the long side. However, we remain short, cautiously. It feels like we will be reversing soon, the pattern looks good and there appears to be some buyers ready to step in. We will not be adding to shorts, we will observe the action around these levels.
Gold looks the strongest among the precious metals with Platinum looking better, while Silver is still weak. We must remember that markets can change in a heartbeat, weak can become strong and strong can become weak. Therefore, we follow the algorithm, emotionless trading as we await the next trend.
When we separate trading and investing, we must do so with a plan. We are trend traders looking for extended moves in either direction. We don’t care which way we make money from a trading position and nothing changes our investing.
Precious metals should be owned on a physical basis with capital that is not needed tomorrow or anytime soon. Trading should be done with paper knowing that we can trade either side without emotions.
In all markets price action determines what will happen in the next day, week, or months. Keep the two strategies separate, the worst trade anyone can make is turning a trade into an investment hoping for a way out. Traders must learn to take their losses and move on to the next trade.
Patience, discipline, and money management always win the day. Let the map of the markets show you the way.
Todd Horwitz Chief Strategist BubbaTrading.com
Stop being a prophet and make profits
On Saturday February 5th, 2022, we shared our Hedging Model. You can review the recording below: