Silver happens to be one of my favorite commodities to trade but it's not for the faint of heart. Early in my career a very successful commodity trader told me that silver takes the escalator up and the elevator down. Translation: When silver cracks it can be a big move in a hurry as seen in last week’s action. In the last six sessions, silver has been down every day, dropping roughly 11%. In dollar terms that represents almost $19,000 per future contracts. On ,oves like that, fortunes can be made and lost, so make sure you know what you're doing or deal with a professional if swimming in these waters.Tactics
My objective has been reached as I’ve been saying a trade under $30 bearish trades should be taken off and with a 61.8% Fibonacci retracement completed, Thursday, that is good enough for me. If you notice, I point out that we filled the gap from 8/22 mentioned in previous posts. My stance now is aggressive traders should reverse and start scaling into bullish trade. At current levels I suggest buying 1/3 of the ultimate position you want to own. Lightly start scaling into futures or call options on the upside. I will be suggesting various strategies depending on clients account size and risk tolerance. Use the Fibonacci numbers on the upside on the chart above as your target. At a minimum into early 2013 I think we can trade back near $32/ounce. The chart above is for March options and I suggest May or even July contracts depending on the strategy.
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data .
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.