Friday, September 19, 2008

"Many many thanks for you wonderful blog ,i learned a lot from your blog ."

a reader writes:


Hello Lucas,

I found your blog 1 month ago ,it is very helpful ,especially about the analysis for COT report .

I was waiting the COM short position drop to 0.5, missed this rally . Lucas ,is there any chance to get a good position again ?

Another thing , if I only want to invest 10000 for trading ,and I want to trade gold and currency ,and maybe also some commodities ,

Could you please recommend where to open an account ?

Maybe we can buy more gold next week ,is that correct ?


thanks so much for the note.

my analysis of the COTs has been pretty conventional, aside from pointing out the extremely low Small Spec position, I don't think anything I've written on the matter has been particularly unique.

one will notice that the final break of support on Gold last week happened after Tuesday's reporting cutoff. and then by the time this week's cutoff rolled around the price had already rebounded back above the capitulation level. so unfortunately, on this occasion at least, a focus on the week to week COT numbers wasn't the most effective signaler.

for my own account I was able to get in on a highly leveraged Gold position last week and early this week because I trusted my own analysis. my long standing target had been 760. so I placed an order there. then I bought more at 752. more at 745. and more at 748, 755, 782, 778, 777, 782, 804, 818. then I sold a quarter of my position at 890 on Wednesday night. last night I was trying to buy that portion back on dips.

so you and my other reader(s) don't have the luxury of being as credulous to my bullshit as I myself am. when the COTs, the long term charts, the short term charts, and my sentiment gauges all started to flash green I didn't wait until they were all exactly my favorite shade of green. I'm colorblind for fuck's sake. last year and this winter I was positive that Gold would top out at 1000. well I was wrong, it went to 1030 or whatever. if you manage risk properly, a couple percent here or there isn't the end of the world.

I've found my analysis to be pretty good at the extremes, but more hit and miss in the no-man's-lands like we have now. therefore I'm personally committed to being substantially long until this current impulse wave (sub-wave 1 of major Wave Three) has run its course. I may sell 25% of my position on spikes, as I did earlier this week, but never more than that.

is there any chance of getting a good position again? sure, there always will be. the question is whether you or I will recognise those opportunities. and execute.

will there be an opportunity next week? quite possibly. although the action today kinda makes me wonder about the validity of the script I had worked up. I don't Know what comes next.

but you need to get an account opened and funded. for the dollar amount you indicated, your best bet would be trading on Oanda's FXTrade Platform.

http://fxtrade.oanda.com/