What a week it has been for commodity traders! Silver, in particular, continued to move at the fastest pace in 30 years. In the process, it has been getting a lot of attention. For example, on Wednesday, silver was the theme of the day on CNBC , with crowds of experts of varied pedigree trying to explain what was happening. While individually they sounded like they new what they were talking about, collectively it was simply confusing, especially to casual trader, the type that is most likely to watch the channel, perhaps looking for some pointers. CNBC would serve its audience better if they had, say, one guest on a subject in a single day. Right or wrong, the comments would be much clearer…
After opening the week at around $48 per ounce, the price almost immediately dropped about 6 full points in 30 minutes. It rebounded a little bit, but then the down trend resumed all the way to 34.26 on Thursday, and probably it is not over yet. It s for me, though, or just about. I closed most of my silver short position earlier today. Ten full points in 4 days is enough.
The trade was opened at 44.45, using weekly candlesticks for analysis. My main reason was the parabolic nature of the rally, which, at this pace, was simply unsustainable. A sharp correction was more and more likely with every week, day even. My objective was 32 and realistically I expected 2-3 weeks for that level to be reached. The drop was so fast, that it is assuming parabolic characteristics itself. At this point it can easily jump 4-5 points in a matter of hours, so I decided to pocket most of the gains, at 34.41, for 10 full points and some change. The very small residual position will be closed at either 32, or before close of the week.
Since I am not a position trader, this is enough for me – I am out of the silver business for now. It still could move much lower, if 32 is broken 22 becomes the next objective, but it probably will be at a slower pace. It would be nice to be able to find set ups like these more often, but that is very unlikely. After all how often is it even possible to capture 10 points in silver in a less than a week ? Once every 30 years? As is, that is most likely the trade of the year.
Mike K.
Mike,
Good trade!!!!! I agree those who got in on silver on the short side defintely made a killing unfortunately the unsuspecting masses might have been thinking that its small a correction. I got out too early but not worried as thats how I trade not worried about what I left on the table, it could have definitely made my year for sure.
Regards
You should not worry about what is left behind. You set objectives to your trade, they were met, you closed – well done. Mine were bigger from the start, due to unique set up. Silver will likely head even lower, but I’m happy with the trade as is. Have a great weekend!
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What a trade! I wanted to ask you what you think about silver next, but since you are “out of silver business” it does not matter. Congratulations!
Nice analysis and conclusion. A ten dollars move is indeed rare in silver. Nicely done!
If I did not read the post before this trade, I would not belive this. Great job, man. I also took decent profits. Thanks!
[...] of financial markets moved today, including silver and gold. While on the subject… Since my recent trade in silver, I received many emails with questions about what to expect next from the metals. All emails are [...]
[...] of financial markets moved today, including silver and gold. While on the subject… Since my recent trade in silver, I received many emails with questions about what to expect next from the metals. All emails are [...]
[...] of financial markets moved today, including silver and gold. While on the subject… Since my recent trade in silver, I received many emails with questions about what to expect next from the metals. All emails are [...]
[...] including stocks and instruments. Even gold went through some gut wrenching moves, to not mention silver, which typically is very volatile and recently dropped about 25% in one day. Bottom line is that the uncertainty level is great, with [...]
[...] including stocks and instruments. Even gold went through some gut wrenching moves, to not mention silver, which typically is very volatile and recently dropped about 25% in one day. Bottom line is that the uncertainty level is great, with [...]
[...] trade right after weekend opening. Silver fell sharply and the trade was closed later that week for 10 full points’ profit. Very rare occurrence, to be able to even catch such large move in this market so fast. Trade of [...]