Gold, Silver & SP500 Trading Charts & Video

May 16, 2010
Last week was amazing for both gold and index traders as gold surged higher and the SP500 tested a key resistance then fell 4% in our favor. The past couple weeks with the mini market crash and Euro issues making the market extra volatile both gold and the broad market (SP500) index has been wild.

The added volatility makes trading more difficult because price patterns become less predictable and price movements are much larger increasing risk for traders.

Below are the charts & videos of what to look for in the coming days…

GLD – Gold ETF Trading
Gold continues to trend higher at an accelerated rate. Friday we saw gold pullback and test a key support level then bounced to close in the middle of the days trading range. As you can see the trend line support has become very steep and once the trend line support is broken I figure there will be a sharp drop to digest the recent rally.

SLV – Silver ETF Trading
Silver popped and tested a key resistance level from a previous high as expected. It also tested the top of its trend channel providing even more resistance. This week will be interesting as we wait to see if precious metals have a small pullback or continue to rally.

SPY – SP500 Index ETF Trading Chart
This chart clearly shows what I think is about to unfold by looking at the past market drop. Because of the mini market crash triggering everyone’s stops already I figure we have made the low and the dip we are seeing now will drift down a few more percentage points then bottom out.

ES M0 – SP500 Mini Futures Trading Setup – Pre-Drop
Below is a chart of the SP500 which we shorted or bought the SDS bear etf trading fund last week looking to profit from a falling stock market. As you can see from the chart we saw the es mini contract drift into a key pivot point on light volume. What this means is that a large group of sellers will be waiting at that price, and because volume is light we know there are not many buyers at this price level. Simple supply/demand comes into play with more sellers causing the price to stop rising and eventually force the price lower which is what we were anticipating.

The green arrows show key support levels on the 60 minute chart where 1/3 of a position should be taken of the table to lock in gains which also reduces overall risk on the trade. Once we cash in the first 1/3 of the position we move our protective stop the breakeven which is the entry point for the remaining portion of our position. This turns the trading into a winner no matter what happens allowing us to enjoy the ride…

ES M0 – SP500 Mini Futures Trading Setup – Current Price
Here is the same chart 24 hours later showing both of our profit targets triggered pocketing 2/3rds of our position for a very nice gain. Depending on the type of trading vehicle you traded there was potential to make up to 150% return in less than 24 hours.

We currently hold 1/3 of the position left with a loose stop allowing the trade to mature incase the down trend continues for several days or weeks. If not and the price rallies then our stop will get triggered for small profit on the balance of the position. Either way we win.

Pre & Post Market Correction Video: http://www.thegoldandoilguy.com/articles/sp500-market-correction-trading-videos/

Stock Market ETF and Futures Trading Conclusion:
In short, the market is trading on increased volatility making it difficult to find low risk setups. At the moment we are long gold and short the SP500 with both position deep in the money. All we can do now is manage our positions to make sure we maximize our profits.

If you would like to Get My Trading Signals be sure to check out my services at: www.TheTechnicalTraders.com

Chris Vermeulen

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About the Author:
Chris Vermeulen is Founder of the popular trading site http://www.thegoldandoilguy.com. There he shares his highly successful, low-risk trading method. Since 2001 Chris has been a leader in teaching others to skillfully trade in gold, oil, and silver in both bull and bear markets. Subscribers to his service depend on Chris’ uniquely consistent investment opportunities that carry exceptionally low risk and high return. Reach Chris at: Chris[at]theGoildAndOilGuy[dot]com
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3 Unbreakable Money Management Rules

Proper money management is imperative for success in futures trading, and there are several very common trading mistakes that will guarantee failure should you decide to implement them. It’s not uncommon to see people engage in these account busting practices. To be sure, most unsuccessful traders engage in these practices on our regular basis.

I want to clarify that money management refers to the manner in which you manage risk in your futures trading account, not the way you manage your personal finances or pay your bills. The balance in your futures trading account is your lifeblood in trading, and safeguarding the stability of this account through best practices should be a priority for every trader. While several factors contribute to novice trader failure, money management would rank very high on the list of causal factors for failure.

While there are many rules that need to be observed in managing your futures trading account, I have selected 3 rules that cannot become part of your trading style. I consider these 3 rules of paramount importance.

1. It’s not unusual for a trader to become convinced that he or she has found a great trade. Perhaps this setup has been successful for him or her in the past, and he or she believes that this setup is the recipe for guaranteed success. Of course, every good trader realizes that even the best set up has a probability component for success and failure. Good setups have a high probability of success, but that does not mean that a good set up cannot result in the loss. Oftentimes when a trader believes he or she has found a great trade and it starts to head south on him or her, there is a temptation to move his or her stop-loss limits down to accommodate the trade. It is imperative that you never move your stops to accommodate a market that is not going in the direction you desire.

When considering a trade, a trader sets his or her stops at a point that reflects his or her level of risk tolerance. When you move your stops lower, you are essentially expanding your risk exposure on a trade that is already going poorly. Does this make any sense? Of course not. The cause of this behavior is an emotional involvement to the trade, which is something no trader can afford the luxury of participating in. Some great setups simply don’t work out the way they ought to; that is a fact of futures trading. It’s important to minimize your losses and find a new and better trade, not to try to make something happen I have an existing poor trade. If a trade is not going the way you expected, move on to the next trade. Don’t exacerbate the potential loss on a trade gone bad.

2. I routinely observe traders initiate trades without stops in place. Most trading platforms are capable of initiating trades with preset stops in place at the time you initiate the trade. You can set your stops as a bracket trade, or specify a specific stop and profit targets at a point where you are comfortable with the amount of risk entailed in that specific trade. My point is not a complicated one; every trade needs to be placed with the corresponding stop point. This particular rule should never be broken. You must decide prior to the trade the level of risk you are willing to accept, not during a trade when you are prone to make emotional decisions that are not based upon probability, facts, or the reality of the trade. Should the market experience an unexpected spike prior to establishing a stop loss point, your losses could amount to the entire balance of your trading account. For that reason alone, it is imperative that you have a preset stop in place when you initiate a trade. Never break this rule.

3. It’s not uncommon to see a trader who is convinced he or she has come up on a great trade that is doing poorly, but the trader is convinced the trade is sound and due for a turnaround. In this situation there is a temptation to add additional contracts to his initial position. Never add contracts to a losing position. By adding contracts to a losing position you are expanding your level of risk. Again, this practice usually falls under the guise of an emotional attachment that is not based on probability or fact. Yet it is a common occurrence, and the results are usually disastrous. Just like point 1, a trader needs to accept a trade is not going to work out and adding contracts to an already losing position makes absolutely no sense. But as I have said, I see it all the time. It is my belief that some traders have a difficult time accepting a losing trade and will take extremely illogical measures in the belief they can rectify their sinking ship. I will say this one more time, never add contracts to a losing position.

While these 3 practices sound absurd as you read them, their implementation is commonplace and you must work to make sure you do not fall into a habit of taking desperate measures to salvage a losing trade. A losing trade is just that: a losing trade. By adding contracts, or moving stops, you expand your risk to a trade that may well be destined to lose money, regardless of your actions.

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About the Author:
Learn to trade the Emini Contracts from a real trader, not a salesman. Learn everything you need to know to trade the emini contracts with confidence. Recieve a free ($500 value) Emini starter kit by clicking here
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Futures Trading: You Need a Backup

There is more to day trading than making money on high-probability setups.  As a trader, you have to be prepared to handle several situations that occur unexpectedly and without warning.  Your data and your ability to transmit data are two of the most important and often overlooked aspects of trading.  What would you do if you lost your internet connection and were in the middle of a trade?  What would you do if you had a hard drive crash?  These are two questions you need to have answered before you begin serious futures trading.

I was trading last July and my broadband connection failed during an emini trade. I was long 5 contracts and everything just went silent, no data feed.  The market was very volatile last summer and I needed to talk action fast.

What would you do?

I think the safest bet is to simply call your broker immediately, which is what I did.  I also have a back-up dial-up connection set up, so that was another option.  The point is a simple one, though, and that point is that I had thought about this eventuality, and was prepared to deal with the problem.  I even have my broker’s number on my speed dial.  I was lucky and managed to get out of the trade with a small profit, but can you imagine the range of consequences had I not given this problem proper consideration?  

I’m not sure there is any right preparation for losing your broadband connection while trading futures contracts.  The right answer is one that works and you are confident in it’s execution.  Cell phones, land lines, and alternate internet connections are all viable options, but the important part to remember is that you need to plan ahead for problems.  I had thought about this problem several times and thought one of the real dangers of trading online is how vulnerable you are to potential problems.  I had read several articles describing the horror of sitting at your computer, powerless to rectify or manage your trade because your data feed went dead.  I think it is important that you have a back-up plan to manage an emergency, and test your plan to make sure it works.

What if you computer stops working?  

I have a laptop hooked up along with my desktop computer anytime I am trading.  If the problem is my computer, I can rely on my laptop to complete the trade.  Of course, I can still give my broker a call instead of using my laptop, but I feel more comfortable with two computers.  Again, the point is a simple one, and that is to have a plan in mind before a problem occurs.  Give it some serious thought.  If you live in the country, make sure your cell phone does not have any potential reception issues.  If you are using a cable connection for both your internet and land line, chances are your phone will not work if your data feed stops, so a cell phone is imperative.  Just make you sure have a workable plan.

One of the most precious commodities is my past trading experience which I have documented on a very large Excel spreadsheet.  I download each days chart too.  Three times every week I download all of my information onto an external hard drive.

Why?

Aside from hard disk failure, there is also the possibility of hackers, viruses and a host of malware that threaten your computer.  I run a very specialized firewall and have a number of anti-virus and malware programs running to protect myself in the event of any of these threats.  You should, too.  Your data is important for your progression as a trader, it’s the laboratory from which I continue to test my trading skills by reviewing past trading days. Securing your data from harm is an important function, so it is important to use some sort of data backup system to prevent data loss.  External hard drives work well, but there are online backup alternatives available, too.  I have recently started using one and am very pleased with the results.  

The secret to keeping your data and computer safe is to plan ahead and not let an unexpected and unpleasant turn of events affect your futures trading account.  You can’t control the wide range of problems that can occur, but you can control the consequences.

You can learn to trade from a 15 year veteran trader, not a salesmen. This program comes with a lifetime mentoring program and an educational package that is second to none. Additionally, the trading system is time tested and has been in use more than ten years. You can get your emini starter pack (valued at $500) by going to Click here for your trading pack at Trading Concepts, Inc

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Futures Day Trading