Monday, January 11, 2010

Trading Tendencies in Gold

I owned one contract of $GC_F (February Gold Futures) at $1140. I sold it this morning at 8:21 AM EST at $1160 because I've noticed a "trading tendency" that keeps re-occuring *almost* every day since gold bottomed at 1075. Gold gets ramped up in the low volume off hours and then sells off during the high volume market hours. This is a tactic used by professionals to make it hard for an amateur to buy into a security. Even though gold futures are traded almost around the clock, it creates a situation where the professional essentially gaps the opening, shorts a bunch of contracts, and then gradually converts his position to net long by the end of the day. Then, the next morning he sells his longs and gets short, and the process begins all over again. I bought back into $GC_F at 1:22 PM EST today at 1152. So, I'm trying to stay long the overall trend, but also exploit the tendency. My overall target on gold is 1300.

Like I said, it's a "tendency" and it doesn't happen every day, but keep an eye out for it! As most traders know, Gold futures are probably the single most tricky vehicle to trade so watch it!

Here's a chart of $GLD. Notice how, today, $GLD bounced off the 50% retrace of this latest 4 week pullback.

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About Me/Disclaimer/Philosophy

Trading since 1996, it NEVER leaves my mind which is a curse and a blessing. I trade stocks, options, and futures.