Way back in late 2008 I was a very active ETF trader. We knew a gold stock crash was coming , as the top 2007-2008 was ready to implode. Many contrarians saw the gold stock crash coming as I even tried to short for a trip down. As usual I got scared out of my short positions, just before GDX did crash. I didn’t have to wait long before I started buying GDX as it was crashing.
The most dangourous thing we can do when buying into a Falling Knife situation, is that the emotional trader buys his entire allotment all at once. Taking on any risk in any direction must be feathered in, with a predetermined Ladder of GTC orders. In 2008 I did that but I was doing it in real time as it was crashing. Most of the time I try to put in all my orders at night when the markets are closed. I might put in a ladder of orders that do not get canceled unless it expires or gets filled. I’m sure there is always a macho buckaroo that jumps in with buying a 1000 shares of GDX all at once. Taking an entire position at once, is breaking the rule of taking on risk slowly. I started buying after $22, down to about $16 by the time it finished. ($19.10 Average) I ended up with $1200 shares and about $22,000 at risk. I loved catching those kinds of crashes as it is the style I feel most comfortable with. I never buy crashing stocks like this as it is better to play the strength of all the gold stocks inside GDX.
I could spend a lot of time on this topic, as it is so critical to enter any trade in a disciplined fashion. It doesn’t always work that way because when gold investors freak, anything could happen.
At this time it looks like the same type of a setup that happened in early 2008, is now being setup again in 2018. I have decided that once GDX crashes I hope to pickup 100-300 shares at the tip of the Falling Knife.
I have a small short position out on GDX, and as soon as GDX falls bellow $12 I will close them off, and start testing the waters 100 shares at a time. The angle of the bear market, and then the 2016 wild ride up is more like a bear market rally, as these types of setups can crash in pretty dramatic fashion. I want readers to know I put up real CAD money in trading my waves in any ETF as the purpose for my wave counts is to always find a better fitting wave pattern to trade with. I know the gold bugs don’t see a gold crash coming, but there is no way in fricken hell, that I will carry a bullish position, sitting on top of a Death Cross! Gold traders in chat rooms get real emotional as they are just waiting for the gold $1400 breakout to happen. When they get all giggly and thinking the same, I know the bullish move is coming to an end.