Gold: The Ultimate Wealth Reserve

Know your customer

Interesting experience by Market Skeptics with GoldMoney. Leaving aside the way it was handled or the time taken, but it does not surprise me with what happened.

The ability to transfer balances between GoldMoney accounts means that operation really is more akin to a bank than a custodian. As a result I can see that they are more diligent about knowing their customer and what the account will be used for, otherwise they could get shut down by regulators. Just see what happened to e-gold and the changes they have had to make in this DGC Magazine article.

The money laundering/terrorism rules these days puts the onus on the business to know their customer, make assessments about the potential for their customers to be engaging in illegal activities and if the risk is considered high, either declining the account, reporting it, or seeking further information from the customer to establish whether their use of the account appears legitimate.

There would be no doubt that GoldMoney would not want to go through the e-gold experience, hence the rigorous due diligence. This tells me they are serious about becoming a real "gold bank", which is something true gold money advocates would have to support. Yes, this means they become part of the regulatory "system" and will thus not appeal to those buying gold for privacy reasons, but I think GoldMoney's objectives are to target the wider market and it will be interesting to see how this develops.

Merry Christmas

Fat Prophets

Fat Prophets have been gold bulls for a long time and I give them kudos for that. However, in a recent article The Silent Gold Rush Is On they make the following faulty analysis:

The Australian newspaper reported over the weekend that the Perth Mint is not taking any more orders for gold until January. Our guess is that the Mint does not want to expose itself to higher future prices given that it does not have the inventory to meet the demand for bullion.

I sent the response below to them a couple of weeks ago, no response as yet:

Your guess that we do not want to be exposed to higher future prices is incorrect and is based on a misunderstanding of how the gold markets work. If we take an order and fix a metal price (it is also possible to take an order and agree to fix a price at the time the bullion is ready for delivery) then we immediately buy the raw gold that will be used to make the bars/coins for the client. There is therefore never any exposure the future prices. I discuss this is more detail in my blog on the value chain.

I really wish commentators would just call us up and ask us questions, rather than just guessing or making stuff up.

Open Forum

30 MINUTE MASTER STRATEGY

This great strategy is provided by Peterfibonacci:

Here is my strategy.

On a GBP/USD and EUR/USD M30 time frame:

Indicators:

8 EMA applied to Open
5 EMA applied to Close
Fibonnaci pivots to show the resistance and the supports.
Signal Line period of 45
2MA Crossover signal Indicator (to alert when a cross over has happened)

RSI 14
Stochastics (10,3,3)
MACD (5,15,9)

Long Entry:
Enter immediately when the MACD, Stochastics, RSI show a long position and the 5MA has crossed over the 8MA from below.

Place the stop loss a few points below the recent low with a take profit of 70 pips and a trailing stop of 30 pips.


Short Entry:
Enter immediately when the MACD, Stochastics, RSI show a short position and the 5MA has crossed over the 8MA from above.

Place the stop loss a few points above recent high with a take profit of 50 pips and a trailing stop of 30 pips.

This strategy seems to work best in a horizontal market. Sometimes one has to work with the resistance and support points to determine the proper Take Profit level, because it's not always 50 pips.

This strategy also works well with the H1 time frame. I personally like the H1 because the candlestick patterns are move evident and sometimes one can see entry and exit points before the alert(which is the EMA cross)!

Above and below a chart has been provided for your study, so that you can obtain a better grasp of this strategy. If you left click your mouse on the chart, you will have the options at the very top of that menu that says 'view image'. If you click 'view image', it will provide you with a larger, better view of the chart.

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Have an awesome trading week! Thanks!

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AWOL

Yes I am still alive. My break from blogging started with a trip to Canberra for the http://www.goldstandardinstitute.com/ conference. It was great to catch up with the attendees from last year and meet some new gold investors. The weekend after it was a short drive up to the Southern Highlands of New South Wales for the Highland Fling - a 100km mountain bike race. Six plus hours is physically tough, but it was harder mentally.

The plan was to get back to blogging on my return but the new Treasury system project I've been working on (in addition to the revamp of the Perth Mint's retail shop) kicked in with at lot of work required to meet deadlines. The new system will give us some efficiencies and thus help with customer service but we have decided to NOT go online for trading.

It is a bit old school, but the Treasury system will be standalone from our other computer systems and with no online ability means your account is just not hackable. I'm interested in any feedback on that decision - we feel if you want the ease of online then you can trade our ASX product (code ZAUWBA) or GoldMoney or BullionVault.

This Treasury system is going to take up some time so my blogging will be less frequent over the next few months but I'll keep any eye on any big issues that come up.

NO MAN'S LAND. GUEST POST

The No Man's Land Strategy is actually a very simple strategy.

It is based on Multiple Time Frames, Moving Averages (5 - 22 - 42) , and Pivot Points (for Support and Resistance), and I only run it on GBP.

The signal is generated from H4 Candle. I take the previous High + 10 pips ( you may use any number you like) + spread as a Buy Stop Order, while for the Sell Stop Order is previous Low - 10 pips.

Suppose I have a target 20 pips from my Buy Stop or Sell Stop Order. I then look to see whether there are some Support/Resistance or MA or Trendline Support/Resistance ahead to act as a barrier to the move I want to make. If there is, then I use the next S/R or MA or trendline S/R as a new point of calculation for my Buy Stop or Sell Stop Order. I repeat this step on the H4, H1, M30, M15 and M5.

Here is an example :
Prev High of H4 : 1.6300
Prev Low of H4 : 1.6250
Spread : 3 pips

Buy Stop order : 1.6300 + 10 + 3 = 1.6313 --> TP 20 pips = 1.6333
Sell Stop order : 1.6250 - 10 = 1.6240 --> TP 20 pips = 1.6220

I check my H4 Chart, to see if there is any resistance from 1.6313 to 1.6333, if not, then I go to my H1.
I continue repeating the above step. Suppose I find Resistance on 1.6320. I then recalculate making 1.6320 the new basis for calculating my Buy Stop Order.
So my new calculation is : 1.6320 + 10 + 3 = 1.6333 ---> TP 20 pips = 1.6353.
Then I recheck to see if there is any resistance that might prevent me from reaching my new target.

I do this until I get to M5.

This is why I called this strategy : No Man's Land.
Pivot's, S/R, MA, Trendline's S/R are things that I consider landowners.

For example:
There is Pivot Resistance at 1.6250 and Trendline's R on 1.6265. This 15 pips distance I consider as "Pivot's Land and Trendline's Land."
I don't want to fight either Land's owner, so I avoid them. I prefer to trade on "No Man's Land" where, there is no land owner who will be angry if I steal a few pips from the market.

I do the exact opposite for my Sell Stop Order. For the trendline I use the DeMark Indicator found at the Forex Factory.

The idea behind this strategy is to make a high percentage of winning trades. It works very nicely at the London open, around 6-7 GMT, depending on H4 cycle from the broker's chart we use to analyze. ( I like to use the ALPARI-UK, as I trade the London open).

I usually look to gain 20 pips; but if I am constantly profitable with this strategy, I think I can be one of the few winner in the forex market. The BIG BOSS who drives the market, that come from the big financial institutions and old-fashioned people who use just candlestick pattern and support-resistance as their trading guide; I am trying not to fight them, but to align myself with them.

Thanks Eko and Aan

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Gold: The Ultimate Un-Bubble

STOP LOSSES ARE YOUR FRIENDS

Many traders fear placing stop losses because they are afraid that they will get stopped out. This is the wrong mindset. A stop loss is a friend that helps you preserve your capital when you are on the wrong side of the trade.

A stop loss is simply what it says, it is a system that you put in place to stop the loss of your capital, just in case the trade goes against you strongly. Don't place stop losses with the idea that you are going to get stopped out, but place it with the idea that you are protected if a trade does something differently than you expect. It will give you the opportunity, if it is hit to step back and position yourself for a more profitable trade set-up and entry.

What happens when you ride a losing trade to long. It depresses your emotions. It keeps you locked in a losing mentality. It takes up margin that you can be using on a better more profitable trade. A stop loss gives you the freedom to move on, and be free from all of the negative things that comes from seeing that losing trade over and over.

Even if you have the capital to ride out a losing trade for months, then whenever you see a more profitable trade set-up in that same currency pair, you are not free to take advantage of that new opportunity because you are stuck in a losing trade waiting for it to turn back in your favor......one day 8^( .

Let's go back and look at that trade from day one. What if you had taken that hit the first day with a 60pip loss. That is quite a hit. You could have simply made 10 pips a day for the next 7 trading days, and you'd be a head 10pips. What that would have done is free up your capital as well as your mindset. There is an extra confidence that comes when you go to your platform with no losing trades staring you in the face. It is a feeling of power.

Instead you decided to hold that trade 7 trading days. Now you are in the hole 150 pips, plus you paid 7 days of rollover fees, but things have begin to turn in your favor like you knew they would. That is 7 days that you have locked yourself out of more profitable trades in that currency pair, and who knows when you are going to break even on that pair.

When you have losing trades on your platform, then you are fearful of taking other good trades that you see, because of your margin level, the new trade may go against you and wipe you out, or any number of negative messages that we hear in our heads when we are in losing trades.

Dearest traders stop losses are your Friends. Here is a video that can help you decide how you may want to place your stop losses.

Placing Stops, Traders Whiteboard #4 Click Here

I am certainly not encouraging you to take unnecessary losses, if you are in a situation where you are in harmony with your trend and you have a little retracement that has gone against you temporarily, by all means allow that trade to close profitable.

Just don't allow losses to run on and on and on and on, because it's like spiderwebs in the mind and pretty soon, they cloud your vision and your judgment until you are paralyzed and can not do anything until that position comes back into profit. It is better to be out of a good trade wishing that you were in, than to be held hostage in a bad trade that you wish you were out of. Lastly letting trades go to far against you is just breeding grounds for stress and anxiety.

Remember strong dips and rally punish traders who don't have proper stop losses in place.

Trade well, Live Well, Laugh a lot and have Loads of Fun (^_^)


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This blog is not in anyway an enticement or solicitation to trade in the Forex Market. These tips are for informational purposes only and are not to be substituted for legal advice or council. I have written this blog in hopes that it will help you to avoid some of the terrifying pitfalls I had in the Forex Market before I learned better.

Green Shoot Alert --> Nov. Unemployment Down!

Metamorphosis