Silver: There’s So Much More Going On

We don’t learn much about the principles of money-making in school. After basic living costs and security, money-making motivation is extending one’s self-expression. That next big purchase, that next vacation, living on a larger scale. Freedom! When stepping into the trading arena, the environment allows for such freedom. No nine to five, no rules, no boss; after all, you can do what you want with your money. A true lure for self-expression. That is a very dangerous environment. Without a tight rule-based framework, there is no chance of making money. It requires even more discipline than a typical job where you can get with charm and wit to manipulate a boss or colleagues. The market will not bend on your smile. Silver, there’s so much more going on.

This means the environment where you can extract the financial gains to live a more free life is first squeezing you into a very unfree daily exercise, for most an unsustainable task.

In addition, the only way to succeed is to overcome an endless array of obstacles. Setbacks are the norm, and most expect riches to come soon, but it takes experience to be a consistent trader.

It is especially now, with silver being right before breakout to new highs, essential to have one’s ducks in a row. Professional market makers are all in line to get their piece of the pie and make this market with all its potential not easy to trade for individuals.

Good risk/reward ratio:/h2

We find the only way to consistency is by looking at the market always from a risk perspective. If risks are acceptable, exposing one’s capital is fair. The monthly chart above shows prices heading for the third time to the US$30 mark with a reasonable chance of a breakout. A fractal volume transaction analysis of the silver market from March last year up to recent data shows a strong supply zone at US$27.50.

If you take a low-risk trade near the levels we are trading at publishing date, above US$27.50, a reasonably tight stop can be placed below the US$27,50 support zone. Liquidating half of your position into the momentum of a breakout slightly above US$30 would eliminate risk. Consequently, a second partial profit target (another 25% of total exposed capital) near US$39 with a final target to close out the position at US$47.83, just shy of ATH (all-time highs), would create a more than favorable total risk/reward-ratio on this trade (=acceptable low risk for the reward).

Various forces at work:/h2

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

Zooming into the smaller weekly time frame, we can make out what forces are at work. Bulls and bears are at a tug of war, and both are defending their turf. It is hard to make out when the final attack at the US$30 mark will occur, with gold also playing a role as the leader of the precious metal sector.

Nevertheless, this chart shows the primary support and resistance levels and is supportive of our monthly chart assessment of a low-risk idea. With either the secondary channel supporting price right now or a few weeks ahead of the main channel lower trendline providing the support, we might have various opportunities for this play to pan out.

Important here is to stick to one’s plan and not be deterred by real-time market behavior evoking emotions that are not principle-based in the alignment of our explicit risk control.

We are sharing our attempts to place trades in real-time in our free Telegram channel. There, more importantly, you will find a community of professional traders exchanging their ideas, and you can find support for your way of market interpretations.

Anticipatory positioning:/h2

While Fridays are typically days where Silver can give back some of their directional profits gained through the week, like everything, this is just a probability. While many make their bets on confirmed breaks, one gets more often a low-risk entry if acting anticipatory.

In addition to the previously pointed out US$27.50 supply zone, the daily chart shows support near US$27.76. With stacked odds and relatively little distribution volume at the resistance zone at US$28.29, we gave it a shot. We traded more aggressively than usual towards a possible breakout.

Only time will tell if these trades stay within income-producing profits or if some of these runners are getting rewarded on a different scale. But with a strong directional advantage (see the linear regression channel red/ blue/green and quite a few other edges as well), we are confident that sooner or later, recent highs in Silver will have to give way.

Silver, there’s so much more going on:/h2

The only way to overcome all these hurdles is to seek out support. Do not hide your losses from your family and friends. Look for traders and, ideally, a mentor. Accept the steep learning curve and, most of all, the extended timeline it takes to become consistent in this business. Treat it like a profession with a business plan and accept a disciplined daily routine to come out ahead.

Mastering oneself is the real task here. It takes self-responsibility, dedication, and sacrifice. One needs to accept that this isn’t a hobby but needs to become a career to work out in your favor. This is the only way to overcome the juggernaut you are up against.

Written By: Korbinian Koller