Clusters recent post on the 'getting a good new years spanking' thread has given me an idea which I thought I'd put to everyone.
After the recent thrashing of gold stock prices, I'm firmly of the view that we are now in for a sustained period of price rises in many of the gold stocks we collectively own and trade. I know the 'Monkey' is of a similar belief as are many of you.
Naturally we are all on here to make a bob or two and I think we may be able to help each other out. No doubt many of you have noticed the XJO thread where a new trading thread is started each day related to that particluar days trading and many participate and share ideas and information in the aim of acheiving the common goal of improving their trading and making some money.
Maybe we should do a similar thing on the gold forum. Start a thread each day (such as 'Gold trading 10/01/09' - so its easy to search back over old threads) and share analysis, ideas and even trades solely on gold and gold stocks. My idea would be to keep it technical in nature and try to avoid the 'this ones going to the moon' kind of comments without analysis and focus on the discussing the technical reasons we believe certain gold stocks are ready for a move, trading strategies, stops employed etc, which would no doubt benefit us all. Many hands make for light work they say. I personally find it difficult to keep track of all the trades available on the myriad of gold stocks each day, so maybe between us we could make the job easier and more profitable for us all.
So what do you think?
The more cynical on here may think I'm trying to pry out some secrets, so I'll even start the ball rolling. I've found (through the help of others), that using short term stochastics (8,3) can be useful in assessing whether gold stocks may be lining up for a move as a sector. It can be used for individual stocks, but is of most value when a number of the stocks have the fast lines lining up in a similar position, either aligning around or under 25 and turning up to crossover the slow or vice versa above the 75 to head down. A purchase on the crossover with a stop 1 tick below (or above) the most recent low (or high) can often yield a 1-4R profit.
Like I said, while it works for individual stocks, it is at its best when a number of the more traded goldies (say NCM, LGL, SGX and a few of the others) are all in alignment. Likewise when all are in alignment above the 75 and a bearish crossover ensues in a few at around the same time it is a good indication of a pullback and the chance to take some profits and look for a re-entry at a lower price. I have also found it is quite useful in trading CFD's over gold itself. It is not a be all and end all type system, it still needs a bit of discretion, but when a number are aligning, the odds are fairly good.
One note though is that I keep a core position and only 'trade' up to half of it. That way if there is any move to new highs, I'm not kicking myself for missing it - half of my 'total' position for that stock is still benefiting.
Personally I believe the profits gained in trading half of my position in each stock provides more of a benefit over the longer term than the occasional occurence where I miss out on a bit of the upside through having sold half my position.
Anyway, thats my ten cents worth. Cluster, maybe you could bring over your post from the other thread and re post on this thread so we can keep the ideas together and be able to search for this thread if an when we need to in the future. I hope some of you like the idea and are keen to hopefully share some of your knowledge and learn from others in the process.
