Wanna trade better? Have a non-trader look over your shoulder in real time while you try to explain exactly what you are doing. Check out this video on trading Gold (GLD) and the Gold Miners 3x ETF (NUGT). (March 04, 2016)
GLD GDXX GDX NUGT DUST
In this Free video I want to talk about Gold ( NYSEARCA:GLD ), and frankly more specifically, just some intraday trading and analysis that I was dealing with on Friday morning. First lets look at Gold ( NYSEARCA:GLD ), then I’m going to get to NUGT ( NYSEARCA:NUGT ), the Gold Miners 3x ETF, you get tons of leverage there. So we’re looking at Gold ( NYSEARCA:GLD ) and I noticed just on Friday morning IBD had an article that this had broken out, I think it was a $120.00 buy point, 120.94, that was the buy point; 120.84 was this last high here. The text is, an extended cup with handle base. The operative term here is extended. I know what a cup and handle looks like and this sure as heck isn’t it. This had been in a downtrend, this was the cup, so then the handle was, I guess somewhere around here, whatever it was, and then a breakout. The operative word is, extended.
So Gold ( NYSEARCA:GLD ) had been crashing and struggling below the 200-day moving average forever it seems like. So we finally get a break ABOVE the 200-day moving average, and this was REAL, look at the volume back here, it was a very REAL move. This volume doesn’t look so noticeable with all of the prices, but when you look at how this was trading, look at the volume here, so you can see it’s starting to spike as this breaks out ABOVE the 200-day moving average. Now, on these two dates, February 3rd and 4th, this was NOTICEABLY high volume at 16 million shares, so something is going on here. And then we see this rest of the move. So this, huge, massive volume. If you don’t know that something is going on with gold now, it’s just because you’re not looking at it. Ultimately we get up to here, massive volume again so we keep going up. What I’ve been describing is something that got really, really extended, gave a pullback, now it’s even more extended. So this was the dynamic going into Friday where gold was up at this last high here and very, very extended.
Now, that gets me to NUGT ( NYSEARCA:NUGT ) because this is actually an ETF of the Gold Miners ( NYSEARCA:GDX ). NUGT ( NYSEARCA:NUGT ) is multi-leverage ETF. I want to talk about setting stops and taking profits. Basically selling too soon, but not that too soon. I was actually sitting with my wife this morning, waiting for an appointment. I was explaining to her, because I was doing some trading, not because I like to do that when I’m on personal time, but because I had to. And because the market was open, and because what was happening here. So I just want to explain this to you and hopefully this will help you in your own trading endeavors. So I came into this morning, and I had a fairly substantial position in this. Why I did, honestly I can’t tell you. I shouldn’t have because it’s not the way I trade triple ETFs, these are more intraday trading vehicles.
Which ever way they’re moving in the morning, Boom! You can get it and make a whole bunch of money and then get out. It’s a way to kind of catch up with the market.
But for whatever reason, I’ll tell you what the reason was, I was expecting a breakout. So then the jobs number comes and first thing in the morning, before the market opened, Gold Futures were way down and I’m thinking this is a Homer Simpson moment for me, I thought I was really cooked. Then as it turns out, this moves higher during the day. So let me explain this to you and I’ll explain my logic as I was going over this, explaining it to my wife, who doesn’t trade, and I’m really glad she doesn’t. So this is breaking out, I’m holding this and I’m watching this and I mentioned, “Well my target here is $70.00.” I mentioned it several times over the past week or so in our member site, in our premium videos, that I’m really kind of looking for $70.00. So this is moving up, it keeps moving up. Now, as this is doing this I’ve go my position bifurcated, I’ve got it split in two. On one half of the position I’m not doing squat with it, I’ve got nothing yet.
Now what I’m doing here is, I see the way this is moving and I keep in mind that my price target is 70.00. As this is moving up here there’s a little part of me, and you know the part I’m talking about that thinks, “You know what? Maybe it’s going to go to 75.00. If it goes to 80.00 I’ll be able to buy that new blah, blah, blah, or whatever.” So I’m aware of that, and so the thing that I do to keep me from getting my butt kicked by myself is to start using stops, trailing stops. Now mind you, I am sitting here WITH somebody else watching this real-time and I’m explaining to them what I’m doing and why I’m doing it. So the first thing I do is we get into this bar here, 9:45, I’m saying, “You know what? This is the last low. If this moves below this level, I’m going to want to get out. So I’m going to set my stop on half of my position around 66.40 or 66.30.” But then as the stock started moving up I’m thinking, “Well wait a minute, $67.00 is more of an even number. Really doesn’t have anything to do with here, but it’s kind of really a more even number, so I’ll set it at 66.95 or something like that.” So then this continues to move.
Now this 66.95 stays there. Now I’m looking at the other half, and again, I’m looking at $70.00 as being my top, but I don’t want to just sell because at the very end of moves markets get really, really irrational. It’s fun to trade against stupidity, but it’s really profitable if you’re trading along with it all the way up until the last minute. And so this other stop, on this other half of my position, now I set a stop up at a higher level and it was around 68.00, it was not 69.00, it was a little below 69.00. So that turns out I didn’t have to sell out. Now, I was looking at this and every little tick of the chart back. Lets look at the 1-minute, I’ll show you what I’m talking about, This is a 1-minute chart, I’m talking 9:34 so I’m going back in time a little bit, but what I’m telling you is, each red box, because I’ve got a big position, and it’s bigger than it should be. I am happy about it now, but I’m not proud of that. It’s bigger than it should be and so every time I see this red box like this I’m thinking, “You know what? I’ve got to fix stupid here. I’ve got to get out of here.” And then I’m sitting here explaining this to somebody else and I didn’t want to say the wrong thing, so I started explaining how trailing stops work.
So each time we see a little red box Danny is getting a little nervous, particularly now that this is hitting 70.00. So what I kept doing was raising the stops, it’s like I was kind of ping ponging. Here’s one stop and then the stock keeps going, then I’ll set a stop on my other half of my position. Then the stock goes up further so I’ll get rid of this stop and then I’ll raise that to this level. So I gradually just kind of stair-stepped up and back, and up and back, and up and back as the stock started trading into 70.00, above 70.00. Now, I didn’t take profits here. What happened was I set my stop, once it got above 70.00 I wanted to hold it as long as I could, but I didn’t want to give all this back. So I decided my price target was 70.00, that was my price target. It’s not like a prediction it was just, “Okay I think the stock can get to 70.00. If it goes beyond that I don’t know, but I’m basing my estimates for profit on $70.00.” So ultimately as this stock goes up I’m remembering, “Okay, $70.00, Honey remember I told you 70.00.” So then I put a stop on HALF of my position, HALF, like a little bit below 70.00, not 69.50, I don’t know, 69.80, 69.85, whatever it was.
I’m thinking that I’m going to get stopped out, but I’m not. And then finally I did. And then once I got stopped out on this, I didn’t sell the other half. I just put a stop a little bit below here. I put it literally right in there. So I’ve got a good profit on half of my position, that shouldn’t have been as big as it was, but it was. So great! Good for me I got stopped out of half. But I’m not just going to sell the other because I know the idea is, “Well how did you make all you money Bernard Baruch? Oh I sold too soon.” Okay, well that’s fine. Selling too soon, that’s a great idea. But when you’re selling something at $70.00 and then it runs up to 80.00, you’re not feeling too good. Even though you made good money. So I’m aware of that and I know my tendencies and that kills me. It really ticks me off when I do that. I know that I can’t top tick something, but I can sure as heck keep these stops really, really snug when I think that something is topping out.
So ultimately I wind up getting stopped out on this. And now I’m telling her, we’re talking about this and I’m saying, “Okay, I think now at 10:14, 10:15, whenever it was, I don’t think this is going to go up any higher. I think I’m okay having sold here. Because,” and I went back to the daily chart, “I’m seeing an exhaustion move.” Lets just do it now and see what this looked like. So we see this big move up here and then it’s come back below 70.00 and I said, “Given the time of the morning, after 10:00 on Friday, big, massive volume, now this is coming down, I don’t think traders are going to be aggressive enough with this after the stock has peaked like this. I just don’t think they’re going to be aggressive enough on a Friday to be buying this ENOUGH to push this to a higher price.” So we watched it. And the idea was, and again, I teach this course The 59-Minute Trader, the first 59-minutes of the day. The whole idea is by the first hour, actually about the first 45-minutes or so but by the first hour you know the move that’s been made is pretty much done.
So I was explaining how, lets say that I sold and then I see this move here, so I see this move and I’m thinking, “Oh my gosh!” And you know I’m talking about you, because you’ve done this, I know you have. “Wow! I sold it at 69.50,” or whenever it was, maybe right at 69.00. “Well crap, now this thing is going higher. I’ve got to get back in, I think I sold too soon so I’ll put a stop down there. Yes, yes, that’s the ticket.” So you’re long this. You buy it at 69.82, whatever it was. So you buy here at 10:15. Now it’s 10:20. Now it’s 10:25, we keep going, so that’s great. You bought here, you made $1.00, you made .66 percent. The point is, this has made it’s move. Now you’re spending your time with a high maintenance trade, waiting for this to do what? To do what it COULD NOT do during the most active part of the morning and that is move above, and stay above 71.00. So lets say you got stopped out for a break even, you got stopped out. You sat around, messed around, wasted your time on a trade that should not have been made had we just thought about the time of the week, which is Friday. The time of the day, which is after the initial move. And the state of the stock chart, the daily chart.
So what I’ve been trying to do is walk you through just a line of thinking. Intraday when you are trading a stock you want to always be flipping between time frames. If you have multiple monitors it’s easier, you can even do it on a single monitor by just breaking up your charts. But you’ve got to always remember, where am I on the daily chart? Because this will really make this stuff have more sense to you. You will see that this is an exhaustion move. After I sell into that exhaustion move I don’t want to buy it back just because I’m a little bit greedy. So you stand aside and then frankly, the rest of the day, again, makes another assault here and then that’s all she wrote. So I hope this helps. The idea is, first half hour of the day, whenever that move is, is where it is. You’re going to have a really tough time moving past it for the rest of the day. Particularly on a Friday, and particularly after a move like this. So what am I looking at going in on Monday? Well I’m happy because I don’t have any gold stocks, no gold exposure what so ever and then we’ll see what happens on Monday because maybe it’s going to be time for this, ( NYSEARCA:DUST ).
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