Something Interesting in Financial Video January 2015 - page 2
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Forum on trading, automated trading systems and testing trading strategies
Press review
newdigital, 2015.01.03 11:26
Silver forecast for the week of January 5, 2015, Technical Analysis (based on fxempire article)
Silver markets didn’t do much during the course of the week as we continue to hang about in a small range, but at this point time we recognize of the $15 level is massively supportive. Nonetheless, we see a massive amount of resistance at $17 as well, so at this point time it’s difficult to imagine placing any type of longer-term trade at this point in time. However, we recognize the longer-term charts might offer those signals, but we don’t have it yet so we believe that short-term trades will be about as good as it gets.
Forum on trading, automated trading systems and testing trading strategies
Press review
newdigital, 2015.01.04 21:44
S&P 500 Index forecast for the week of January 5 2015, Technical Analysis (based on forextv article)
Strategy Video: Avoiding Stumbles on the Entry with EURUSD and EURJPY (adapted from dailyfx article)
The first step to any active trade is execution - and it is often the occasion for our first mistake to be made. Most traders will experience a period where they are too conservative ("gun-shy") with taking otherwise good trades and/or are too aggressive ("hasty") in jumping on dubious setups. The best solution to this common malady is approaching each setup with a plan - including a 'checklist' for execution. There are a few other aspects - the opportunity's time frame, your risk tolerance, viable alternatives - that go into the equation as well. We discuss conviction in trade execution using my views on EURUSD and EURJPY as examples in today's Strategy Video.
Price & Time: "Overlooked" Symmetry in AUD/USD
The Key to Buy and Hold Investing
1. Buy and hold is about being in the market when the big moves occur. This is important because big moves are what truly drives returns in the long run. For instance, if we look at the returns of the S&P 500 from 1994 to 2014, we find that if we eliminate the 10 best days we lose over half of our returns. Being in the market for big gains, and allowing those big gains to compound, is at the heart of buy and hold investing.
2. Because big days are so important to the buy and hold philosophy, it should be worth noting that big days frequently come after big declines. As such, investors should have capital ready to buy after big declines.
3. Part of having capital ready for declines is buying in tranches – blocks of orders at key levels. Basic technical analysis, just as support/resistance analysis or Fibonacci levels, can help traders identify what tranches they should buy at. This can also help traders identify when to sell, as selling as long term investing requires not only buying when the market is low, but selling when the market is high.
4. Note that buy and hold investing has its downside -- namely that in volatile markets it will result in greater drawdowns, and is potentially more conducive to traders who do not have any sort of a plan. A plan for when to buy and when to sell is still necessary for best results.
Forum on trading, automated trading systems and testing trading strategies
Something Interesting in Financial Video July 2013
newdigital, 2013.07.13 19:50
Trading the Gold Silver Ratio :
For the hard-asset enthusiast, the gold-silver ratio is part of common parlance, but for the average investor, this arcane metric is anything but well-known. This is unfortunate because there's great profit potential using a number of well-established strategies that rely on this ratio.
In a nutshell, the gold-silver ratio represents the number of silver ounces it takes to buy a single ounce of gold. It sounds simple, but this ratio is more useful than you might think. Read on to find out how you can benefit from this ratio.
How the Ratio Works
When gold trades at $500 per ounce and silver at $5, traders refer to a gold-silver ratio of 100. Today the ratio floats, as gold and silver are valued daily by market forces, but this wasn't always the case. The ratio has been permanently set at different times in history - and in different places - by governments seeking monetary stability.
Here's a thumbnail overview of that history:
- 2007 – For the year, the gold-silver ratio averaged 51.
- 1991 – When silver hit its lows, the ratio peaked at 100.
- 1980 – At the time of the last great surge in gold and silver, the ratio stood at 17.
- End of 19th Century – The nearly universal, fixed ratio of 15 came to a close with the end of the bi-metallism era.
- Roman Empire – The ratio was set at 12.
- 323 B.C. – The ratio stood at 12.5 upon the death of Alexander the Great.
These days, gold and silver trade more or less in sync, but there are periods when the ratio drops or rises to levels that could be considered statistically "extreme." These "extreme" levels create trading opportunities.How to Trade the Gold-Silver Ratio
First off, trading the gold-silver ratio is an activity primarily undertaken by hard-asset enthusiasts like "gold bugs". Why? Because the trade is predicated on accumulating greater quantities of the metal and not on increasing dollar-value profits. Sound confusing? Let's look at an example.
The essence of trading the gold-silver ratio is to switch holdings when the ratio swings to historically determined "extremes." So, as an example:
- When a trader possesses one ounce of gold, and the ratio rises to an unprecedented 100, the trader would then sell his or her single gold ounce for 100 ounces of silver.
- When the ratio then contracted to an opposite historical "extreme" of, say, 50, the trader would then sell his or her 100 ounces for two ounces of gold.
- In this manner, the trader would continue to accumulate greater and greater quantities of metal, seeking "extreme" ratio numbers from which to trade and maximize his or her holdings.
Note that no dollar value is considered when making the trade. The relative value of the metal is considered unimportant.For those worried about devaluation, deflation, currency replacement - and even war - the strategy makes sense. Precious metals have a proven record of maintaining their value in the face of any contingency that might threaten the worth of a nation's fiat currency.
Drawbacks of the Trade
The obvious difficulty with the trade is correctly identifying those "extreme" relative valuations between the metals. If the ratio hits 100 and you sell your gold for silver, then the ratio continues to expand, hovering for the next five years between 120 and 150, you're stuck. A new trading precedent has apparently been set, and to trade back into gold during that period would mean a contraction in your metal holdings.
What is there to do in that case? One could always continue to add to one's silver holdings and wait for a contraction in the ratio, but nothing is certain. This is the essential risk to those trading the ratio. It also points out the need to successfully monitor ratio changes over the short and medium term in order to catch the more likely "extremes" as they emerge.
Conclusion
There's an entire world of investing permutations available to the gold-silver ratio trader. What's most important is to know one's own trading personality and risk profile. For the hard-asset investor concerned with the ongoing value of his or her nation's fiat currency, the gold-silver ratio trade offers the security of knowing, at the very least, that he or she always possesses the metal.
Forum on trading, automated trading systems and testing trading strategies
Press review
newdigital, 2015.01.13 06:22
USDJPY Threatens Opening Range- Sub 118 Targets In View (based on dailyfx article)
Euro Range in Focus- USD/JPY Downside Targets Remain Favored
EUR/USD may continue to face range-bounce prices ahead of the European Central Bank (ECB) policy meeting as market participants look for a QE announcement.
Markets Gone Wild And Turmoil in Europe But Silver Demand Strong
The dollar rallied from .85 to .92 as the 10 year bond yield went from 2.62% in September to 1.83%. Gold is recovering from its early November lows at $1,140 as it almost touched $1,250 this week.
Looking at Europe, it seems Greece is back in the news and it will probably remain in the news for some time. The Syriza Party is probably going to win the election and throw out the current regime of “technocrats.” Syriza has said they will not pay and have told the people of Greece they will simply default on the loans and leave the Euro. This is going to create disorder for the short term, but will allow Greece to regain it’s sovereignty and begin rebuilding it’s nations wealth.
The silver institute is claiming there will be a 27% increase in the use of industrial silver by 2018–mining operations are either slowing down or shutting down, where in the world are we going to find 27% more silver over the next 3 years? According to Andrew Hoffman, that is not entirely correct. The number of ounces required for industrial use are going to be further squeezed by the investment demand which, as Steve St. Angelo has pointed out on numerous occasions, is on the rise and will continue to rise at a much greater clip than industrial demand. 2013 and 2014 were back-to-back record years for both the American Silver Eagle and the Canadian Silver Maple Leaf. Not an easy task when you are talking about 44 million and 25 million, respectively, for the top two silver coins in the world. That is a massive amount of silver in just those two products alone. It is unlikely that the new demand will be satisfied, according to Hoffman.
The US Mint reported for their 2014 sales a gold-silver ratio of 83.9. Currently, real world ratio is 74.5 ounces of silver to ounces of gold. According to mother nature there is approximately 9.5 ounces of silver coming out of the ground for every 1 ounce of gold. There is a divergence between demand and price.