Trading the Risks & Managing the Risks

All of us know that markets carry high uncertainty & risks. Despite that we are all here to win. However, trading is not about being right all the time but about maximizing our wins, cutting our losses & improving our overall returns by –

(a) Adapting a proper trading strategy

(b) Formulating a trade plan that has the right set-up &  an ideal Risk-Reward element

(c) Exercising discipline with Risk Management techniques

By following a rule based trading system that covers all the three elements listed above, you can soon be a winner!

If you are interested in learning more about this rules-based Trading & Risk Management System I use, you may want to check out this Training Program

What can one learn from this program? This program is all about learning to build a sound trading strategy,  understanding chart basics,, using charts to identify trade set ups, developing trade plans with the right entries, exits & stops, and most importantly learning the principles and techniques of Risk Management as well as its application to real time trading.

Who is this program for? This program is for novice & intermediate level traders

What is the goal of this program? The goal is to apply what we learn about Risk Management (a key area that is ignored by many) to cut down loss making trades, improve the overall odds of winning using the right set-ups and increase the overall profits from trading

Classes for the next batch of “Trading Strategies & Risk Management” program start on Sep 30. For details & registration, please click here



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NatGas Update

New! Flourish Alerts launched in September – for details, click here

Natural Gas is still in its 2 year cyclical trend.  After 7 attempts, it finally broke the 50 Week MA at 3.10. However, two more major LT moving averages – the 200 WEEK MA (3.16) as well as the 50 MONTH MA (3.20) continue to be critical hurdles for the bulls.

This is an important chart update  based on the weekly – please read it along with the Cyclical Trend chart posted on August 22, 2017

NG Sep 20 (site)

The Aug 22 Cyclical Trend Chart based on monthly:

NG Aug 21 -2

The previous article on NatGas is here:

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WTI – update

Comments are in the chart. I would maintain a short position until 50.75 is taken out as the break above the 200 DMA has not produced a significant run (as yet) and the daily & weekly stochastics are signalling a reversal

WTI update Sep 15

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XIV: An update to ‘Bearish markets in September?’

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XIV – inverse volatility – is another reason why I am betting on a decent near term correction to the markets. 2016 & 2017 saw volatility getting absolutely crushed whenever it reared its head. However, after that great run, XIV is now exhibiting some real weakness on both long term & short term charts. Besides the positioning of Yen, bonds and other safe haven assets like Gold & Silver,  the current status of inverse volatility is signalling that a market correction may be imminent.

XIV Monthly – Based on the signals generated by the monthly chart, I would expect a deep correction to XIV from the current levels.  If uncertainties on the geo-political front persist, the critical 50 Month MA might become an extended target.

XIV Sep 10 Monthly.PNG

XIV Daily – Based on the fast as well as slow stochastics on the daily chart and the current positioning of XIV within the Keltner Channel, a potential correction of 20% – 25% for XIV looks highly probable .  The 50 day MA at 85.87 should act as a big Resistance for now.

XIV Sep 10 Daily

While global markets attempt to rally again due to a boost in risk sentiment (caused this time by some relief on the geo-political front as well as the reduced impact of Hurricane Irma), this may once again prove temporary as worries & tensions could return anytime. More importantly, XIV is positioned for more weakness on the charts and seems to be just waiting for a new catalyst to push volatility up.

Here is the link to the earlier article – Bearish Markets in September?


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What’s next for Gold?

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Gold has risen from 1203 to 1340 in a matter of just 2 months. While adverse news (domestic or global) hasn’t generally had much of an impact on the stock markets in 2017, the market’s fancy for Gold has gone up in recent weeks – showing that reasonable fear does exist in the markets. After such a phenomenal run, what is next for Gold? Let us take a look at these charts:

Gold weekly chart – A major long term trend line resistance was broken in August as Gold powered its way above 1270-72. This is extremely bullish for Gold. But now it has to overcome one more TL Resistance from 2010 (drawn in red) in the 1340-42 zone. I think the bulls will continue to push Gold beyond this point and easily reach our target of 1372. Based on the current bullish indicators, I am revising my forecast target for 2017 to 1428 (the earlier target was 1372 which I now expect to be met in Sep).

Gold Sep 4

The link to the earlier article (July 27)  on Gold is here

Gold daily chart – However, I do see some possibilities of a reversal before Gold powers its way ahead. This reversal possibility is of course indicated by the daily RSI & stochastics which are nearing overbought levels. The good news for the bulls is that the MACD is still looking up. So any reversal should be temporary and the 1312-1315 zone should act as a strong support in the event Gold reverses.. If Gold doesn’t reverse at 1342, we might soon see 1372 where it may face the next resistance.

Gold 2 Sep 4


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Bearish Markets in September?

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Markets have been phenomenal.  They seem to have become insensitive to all the adverse news – be it with what is happening in DC, or with NK or anywhere in the world – and have been staying close to record highs with investors & traders thirsting for more. However, I am expecting September to be the month that would bring a decisive turn to this market if recent volatility spikes are any indication.

Let us get this straight – the companies have been performing well and the economic data has been generally good. Jobs are getting added, unemployment rate is down & consumer confidence is up (though I have learnt to take some of these data with a pinch of salt, always). So what could possibly go wrong?

Markets run on sentiments and so I would play heed to every adverse news from here on, based on 4 indicators that are flashing warning signals.

  • Rise in demand for safe-haven assets like Gold, silver and treasury bonds over the last one month (indicates fear)
  • US 10 year & 30 year treasury yields dropping below major trend line supports as well as their respective 50 Week MA and 200 Week MA
  • CBOE put-call ratio dropping considerably in the last week of August, with put volumes among the lowest seen in the last two years (indicates extreme greed)
  • The appetite for the Japanese Yen that has been growing over the last two months (with NK threats & the Washington DC impasse, this appetite for the Yen is not going to go away soon).  After hitting a low in Dec 2016, the Yen (FXY) has now bounced back above its 50 Week Moving Average.

Markets can ignore all these warnings and keep going up, so I am not expecting a 20% crash. But surely there are enough signals that warrant a decent correction in September before the bulls can start betting on another good ER season (who knows how much damage Hurricane Harvey is going to inflict on the GDP and company performances? Right now, no one)

In anticipation of the above, will be shorting the markets (SPY, IWM and may be QQQ) and remain long GLD, SLV thru September

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Gold – An update to last month’s “Is Gold nearing a breakout?”

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Yes, we got the answer. And Gold did break out out of the triangle & a major LT trend line resistance in August. The long term target (originally forecast in Dec 2016) now looks a little easy. Rest assured there are going to be some resistances along the way but I am not wavering from this 2017 target of 1372.

Gold Aug 28

Link to the July 27 article “Is Gold nearing a breakout?” here


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