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Observation Update


GLD, GDX, and GDXJ have become more constructive over the last month and offer an opportunity to discuss the importance of position sizing and initial stop placement.  

From the daily perspective on GLD, the $123 area appears to be the area of resistance for now. You'll notice that the calculator says that a 12.5% position could be taken based on the current price, a stop value at 119.84 and .50% of the account value risk.  The 12.5% is actually the preset max position size.  Without the cap the position would be closer to 25%.  I've found that 12.5% works best for me especially if there are similar investments.  The 118.44 (blue line) would also allow a 12.5% position to be taken, but would allow more wiggle room if GLD decided to move down before possibly moving higher.  

GDX and GDXJ would both be positions near 10% based on using the pink lines as the initial stop values and risking .50% of the account value.  When the initial stops are brought down to the blue lines the total position sizes also drop to around 7.5%.  When looking at future opportunities, you have to weigh your ability to stick with a trade if it moves against you. From my view it looks like the initial stop values should be set using the blue line for all three.  

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