Trading Involves Flexibility

The market is always correct. It’s a trader’s job to read the clues/charts the market gives us and use technical analysis to decipher those charts. I recently took a trade in gold stocks in which I was looking longer term. After a beautiful entry, and riding the stocks for five days up, I let those equities retrace 100%. I’ve decided to strictly focus on what I do best. That’s trading short-term day and swing trades. The last 1/3 of the gold stocks were sold at a loss the same day I traded BOOM and KYPH. Today we’re back to business.

BOOM, Dynamic Materials Corp. is acting ok. Today was the third day in the trade. The stop-loss is being raised each day, and placed under the prior day’s low. Currently the target is around 38 on the 5th day. We’ll see.

The trend is your friend. Recognizing the weakness in the gold sector provided a day trade in AEM, Agnico-Eagle Mines Ltd. The best gold stock in a sector falls with the rest when a sector starts selling off. In hindsight, I should have traded NEM, which is acting very weak. The trade was a short, and it’s easier shorting the weakest stocks. Regardless, the trade worked out.

Agnico-Eagle Mines has really fallen apart. Now trading below it’s 50-day and 20-day moving averages make it a short selling target. Don’t try buying this stock until it puts in one of the day trading buy patterns. You’ll get hurt bad trying to pick a bottom. The stock gave a BS3, Bear short 3 on the 5-minute chart. This was taken advantage of. The same trading pattern used on the daily chart of Hexcel was applied to AEM today. Trading these patterns in multiple time frames gives the trader many options.

I’ll enter stocks in the morning using 2, 5, 10, and 30-minute entry points. A longer time frame provides more information on the trade. A 30-minute entry was chosen for the trade in AEM. The stock was filled at 31.99 and a stop placed above the day high of 32.54. R = .55 A target of 2 was given for the stock. It would be a day trade. The 200 day average (blue line) can sometimes act as a magnet. Gold stocks and the XAU fell all day. The trade was closed near the end of the day for 2.53 R. That day trade gave a nice reward for the risk taken.