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Author: MDCigan Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 41315  
Subject: Re: Gold - Intermediate-term bottom? Date: 4/15/2013 11:32 AM
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Wow! Gold price action is stunning. Glad to see that you had at least had a short position.

Yeah, although I still wish it had been the full-sized contract. I was long the full-sized contract at 1528 and exited at 1504, and my concern on going short the full-sized contract was getting massively whipsawed. From a position sizing/capital at risk standpoint I shouldn't really be trading the full-sized contract but I felt like I had to take that chance at a major support level.

But this is what technical analysis is about IMO. Not predicting, but risk management and realizing action was needed. Once the support level gave way, that was all she wrote and I knew I had to immediately exit and go short. I'm actually surprised how easy it has become for me to "turn on a dime" and simply follow what the chart is dictating to do.

But gold over the last 2 days has illustrated why it is absolutely imperative that for the majority of securities, one MUST have some price level that triggers an immediate exit. As I type this, gold is at 1363. I was able to exit all long-term client positions around 1500. I would feel terrible right now if lack of discipline still had me holding...and I can guarantee right now there are a bunch of people long gold and hoping. Hope isn't a strategy.

FWIW, the two Fibonacci retracement levels of 1300ish and 1155ish also coincide with the price troughs of previous pullbacks (July 2010 and January 2011) so those are very reasonable price targets. The box target of 1250 also is likely. At those price levels, I would look to exit my short position based on also seeing some divergences and momentum indicators stabilizing.
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