Interested in learning about trading gold and doing it effectively? You've come to the right place - out of our all services, we have been providing the Gold & Silver Trading Alerts for longest. On this page, we explain the key details behind these alerts. If you're not subscribing to them, please note that we have a free, 7-day trial of this service that you get as a bonus when you sign up for our free mailing list.

As the subscriber to our Gold & Silver Trading Alerts, you will be receiving our Gold & Silver Trading Alerts on each US trading day (unless there is some kind of emergency or it’s scheduled otherwise). To make the most of your subscription (or a free trial), we would like to briefly discuss a few questions that new subscribers often ask.

Publication of Alerts

Let’s start with the time of alerts’ publication and the way in which we will notify you about it.

Generally, we aim to publish the alerts before the markets open in the US and indeed this is usually the case. Every now and then (less than 20% of cases), we will not manage to do so and the alert will be published later (but still as soon as possible). Please note that the analysis is totally analyst-dependent and it also depends on what’s going on in the market. We usually strive to create the alert right after the session ends in the US, then have a fresh look at it in the morning, edit it, format it, then publish and send the alert before markets open in the US. However, there are multiple things that can delay this process – the delivery of data to our chart providers can be delayed, the situation on the market may seem unclear right after the close and the writing has to be postponed until morning, the market may have not done anything on a given day and we’re waiting for something meaningful to happen in order to have something to write about. Finally, your Editor, could simply not feel well (fever etc.) on a given day, which could delay the analysis.

So, while we’re doing our best to provide you with the analysis as soon as possible and we strive to publish it before the markets open in the US, we can’t promise that we will be able to do so on each day.

Alert Notifications

Moving to the way we will notify you about the alerts – we will be sending you e-mails with links to the alerts and some additional information shortly after the alerts are posted. However, please note that this is a notification and not the alert – the alert is published on the website and you can access it also through our website, without the notification e-mail. This is important, because it is possible that the notification e-mail that we send to you, will not reach you, or it reaches your e-mail but goes to the “spam” folder. We are doing everything we can to deliver the messages to you (for instance, they are text messages without any pictures/graphics, because this increases the deliverability of the messages), but not everything is in our control – the final decision whether or not the e-mail will be delivered depends on your e-mail service provider. You can increase the chance of receiving our messages by adding us to your address book / contact folder / whitelist (the names vary between e-mail service providers, but it generally indicates to them that you want to receive our messages and the odds are that they will not treat them as “spam”) – in fact, we encourage you to do so right away.

Still, if you think that you should have received an alert notification and it’s not in your e-mail inbox, please check on the website in the Gold & Silver Trading Alerts section. If it’s not there, then it means that we haven’t published the alert yet. If it’s there, please check you spam mail folder – maybe our notification e-mail went there. If this is the case, please select all messages from us and mark them as not-spam. This should make your e-mail service provider deliver our future messages to your main inbox. If the e-mail notification message is not there, please let us know – we’ll investigate.

Our Promise

The next issue that we would like to cover is that of the expectations you may have regarding our service. We aim to provide you with profits and sunshine, but neither we, nor anyone else in this business, can promise anything regarding the performance of the market. In particular, we can’t promise that each trade will be a successful one. Our promise to you is to keep you updated with our analysis through regular alerts and the intra-day notices if the situation requires it and that is what the subscription covers – even though you are likely to see them quite often on your brokerage account, the subscription does not promise profits, only our best effort to help you achieve them. The analysis of our own work and signals indicates that the best results are achieved over time, while focusing on the long-term result and when keeping the sizes of positions reasonable. Too big a focus on a single trade or too much capital very often results in losses. We will move to details in the final part of this message.

Alerts’ Frequency

For the moment, let’s move back to the frequency of the alerts’ publication – in the vast majority of cases (you can verify it by going through the list of the alerts that we published previously) the alerts are posted each trading day, but there may be temporary exceptions (for instance, when your Editor gets sick, is traveling or due to family obligations). These instances are rare and in each case they are treated separately. In many cases, even if there is no alert scheduled for a given trading day, we are still aware of what’s going on and we would still send a quick intra-day alert if something changes regarding the outlook or something major happens in general. Again, we will strive to keep you as updated as possible.

Intra-day Alerts

Now, let’s discuss the issue of the intra-day follow-ups. They are always sent if the outlook changes during the session and we are adjusting the trading and/or investment positions. They are also often sent under other circumstances – if we receive several requests for an update, the volatility increases substantially or when tensions regarding a certain upcoming event are very high. Please note that the above is the case usually, but doesn’t have to be the case each time – the reason is that sometimes, when the volatility increases substantially, the possible implications become too dependent on the final closing price and the volume levels (we can see what they are only after the session ends and thus we can discuss them in regular alerts) – for instance if gold is trading back and forth around a key support/resistance level in a very volatile manner (say, from $20 above the support/resistance to $20 below it) , the final implications of the session are unclear until the closing price is set. In this case, an additional alert during the session, would not add any clarity (regardless, we might send one, if we receive several requests for it).

Finally, please note that since the nature of the intra-day alerts is heavily event-dependent, we are usually not able to schedule them and thus we cannot let you know in advance if one is coming up. The minute we decide to send an intra-day alert, is the minute that we start working on it and we are in a hurry to send it as soon as possible.

Signals – What, When and Why

Last but not the least (in fact, that’s one of the biggest issues), is the portfolio structuring and the position sizing. Each alert will discuss our thoughts on 3 key parts of the portfolio: insurance (generally a long position in gold and silver as an insurance against major financial turmoil), long-term investment (the core part of the portfolio – that’s where the biggest money is likely to be made in the coming years), and trading. Each part is treated differently – only the most important changes affect insurance and investment capital, while more short-term-oriented changes affect the trading capital. The changes in the trading capital are seen more often and in case of the long-term investment capital, but the size of the positions in case of speculative trades is smaller than in case of the investment positions. If you haven’t done so already, please read our Precious Metals Portfolio report for details – it will tell you more about our approach toward capital management in general. The report is quite long, so if you don’t have extra time now, we still encourage you to plan to read it tomorrow or at the first favorable occasion.

More SP Goodies

Speaking of the link to our portfolio, you might be wondering what else there is that you might be interested in, or what might be particularly worth checking out. Since you just subscribed to our Gold & Silver Trading Alerts, the odds are that you are also interested in gold and silver mining stocks. Our alerts don’t cover individual mining stocks (except for the rare instances, where the analysis of a single stock can have implications for the entire sector), because the share price of a single stock can be more easily manipulated or be affected by company specific events than the price of an index or a broad ETF, and because the mining stock selection can easily (from the end-user’s perspective; the algorithm itself is not that simple) be done through a program that detects a company’s usefulness as a proxy for gold and silver investment. These tools are called Golden StockPicker and Silver StockPicker and can be found in the Investment Tools section. The Market Overview reports can also be useful to you, if you’re interested in the “why” behind gold price movements. There are also option tools if that’s what you’re interested in and more specialized tools for traders – True Seasonals (seasonality enriched with the effect of expirations of derivatives) and the Fractalyzer tool (trading signals). Finally, we provide our in-house developed SP Indicators dedicated to the precious metals market – they work very well during a bull market, but you may want to examine their performance even outside thereof.

Digression: Leveraged ETF Analysis

By the way, the above discussion of individual mining stock analysis is connected with the reason why we don’t feature technical analysis of the leveraged ETFs. Their prices diverge from the underlying assets over time due to the time decay and cost structure. In other words, their price drops over time due to reasons that have nothing to do with the precious metals market or the situation in it. Therefore, analyzing the leveraged ETF in order to gain extra insight into the precious metals market gives one exactly the opposite – disinformation as the “meaningful divergences” that were supposed to indicate something are not related to PMs at all and thus provide false signals. For instance, if gold trades sideways, but UGLD declines a bit (perhaps breaking below the previous lows), it doesn’t indicate lower prices for gold – it reflects the normal consequences of UGLD being a leveraged ETF. Moreover, the bigger the time-frame that is being discussed, the bigger the above effect gets and thus the more distorted the picture will become. So, all in all, in the vast majority of cases, the technical analysis of leveraged ETFs should not be conducted at all. Speaking of ETFs, please keep in mind that we have a large ETF database with separate rankings for traders and investors.

The KEY Issue – Position Sizes

As far as position sizes are concerned, the issue is too important (likely the #1 cause of losses among beginning investors) to postpone it for later, so we’ll go over it right away. Also, it might be a good idea to mark this message and revisit it whenever you are tempted to take a huge bet in any market and look at the below simulation.

We want you to grow your capital over time thanks to our analysis and support, but if it happened that you are not yet aware of a few key things, the outcome of our cooperation (our analysis and support and your investment decisions) might be worse than it could be, no matter how hard we work and how good the analysis we provide (of course, nobody can be correct 100% of time), but that’s not what we mean. We mean that even if we have 70%-80% efficiency that is the realistic maximum that one can get, one can still lose money over time if one does not pay attention to a few key details).

The first and foremost thing is the size of the position in case of speculative trades. The vast majority of beginning investors and many advanced traders as well are either losing money over time (or spectacularly lose everything quickly) or are making money but at a slower pace than they could and taking on more risk than they could and should. This can be the case even with signals that are correct, for instance, 70% of the time. Consequently, as hard as we try, you can still do something that will make you lose money over time.

As we wrote above, we want you to make money, not to lose it, and, well, we don’t want our work to be useless at the end of the day. I want our work to contribute to your success, but it will not happen unless the position sizes of the trades are appropriate, and in most cases this means “small enough”.

Ok, enough with theory. If this is to be remembered by heart, we should go through a real-life scenario. When thinking about 70% probability of being correct, one usually (almost always in case of beginning investors) thinks that since this is above 50%, almost every trade will be profitable and if not, at least every second trade will be profitable. This is not the way it works and expecting the above can seriously hurt you. It is more realistic to expect something like: 9 winning trades in a row, then 5 losing trades in a row and then 2 winning trades. That gives us about 70% efficiency. Now, based on our experience and e-mails that we receive, we’d like to discuss what investors often think at different moments and how they often adjust their positions.

Many investors don’t conduct thorough research and are not checking if the analysis that they follow is based on techniques that were really researched or are just copied from a book with universal rules or forums without giving them a second thought and investors base their opinions about analysis on the short-term performance of the latter. There are a few ways which this short-term approach lowers one’s rate of return, but in this message I’d like to focus on the common thoughts and reactions in the above scenario.

Let’s assume that an investor started following the analysis and signals right before the first winning trade. For the first trade, the investor is usually conservative and they don’t follow the trade at all. The second trade is then conducted with an average amount of capital (say 10%; again, on average – some people go all-in at this point or even in the case of their very first trade). After making profits on the trade, the investor increases the size of the trade and after a few winning trades in a row, the investor is so certain that they found the always-right analyst that they go all-in. If they win once again, they are so convinced that this is the way to go that nobody can talk them out of it. After the 9 winning trades and before the 5 losing trades, the investor is convinced that things can never go wrong and if they do, a loss will be small and temporary and followed by immediate (!) profits once again. As you will see, this is dangerous.

The all-in investor is losing their first trade. They were using their entire capital and in most cases, they used leverage to bet even 2-3 times more than their entire capital (leveraged instruments such as NUGT and DUST are particularly popular among beginning investors). Let’s say that the first loss takes 30% of the capital. The investor is shocked and angry – “How could you do this to me? I pay them and they failed me. What’s going on? Why did that happen? Why didn’t you let me know?” – these are all common questions that we would likely receive at that time (based on what we actually receive). The reply is that, well, “trading happened” – it doesn’t bring profits each and every time. The investor is not going to lower the size of the position because they want to get back their gains as soon as possible. Basically, what happens next is either the same thing is repeated 5 times and the investor gets angrier each time (and the investor never decreases the size of the position as they feel the urgent need to get back their capital right away) and the investor is left with shattered nerves, sleepless nights and a tiny fraction of their capital at the end of the 5th trade and / or the investor stops following the signals after the 4th or 5th loss, “losing trust” in the signals or because they completely run out of capital. At that time, the investor thinks that all signals will be wrong (the opposite of what they thought after a series of gains) and they stop trading altogether. After the next profitable trade, the investor thinks that it was just a coincidence and that on average the signals are still useless. After the second winning trade, the investor starts to think that maybe the signals and the methodology have some value, but they still don’t participate.

In case of highly leveraged products, such as futures or options, the above scenario can even take fewer transactions and there is the tendency to increase the size of the positions after the losses, which further decreases the profitability. (Note: both instruments are highly useful, but they have to be applied professionally and are usually not recommended for beginning investors trading on their own)

So, what would be the impact on the investor's portfolio assuming the above – quite realistic – series of reactions? Let’s assume that in case of each trade the profits or losses would be 30% and let’s assume that the size of the trading capital is $100k.

After trade #1: $100k (not participating in the trade)
After trade #2: $100k x (90% + 10% x 130%) = $103k
After trade #3: $103k x (80% + 20% x 130%) = $109.18k
After trade #4: $109.18k x (70% + 30% x 130%) = $119.01k
After trade #5: $119.01k x (50% + 50% x 130%) = $136.86k
After trade #6: $136.86 x (100% x 130%) = $177.92k
After trade #7: $177.92k x (100% x 130%) = $231.30k
After trade #8: $231.30k x (100% x 130%) = $300.69k
After trade #9: $300.69k x (100% x 130%) = $390.90k
After trade #10: $390.90k x (100% * 70%) = $273.63k
After trade #11: $273.63k x (100% * 70%) = $191.54k
After trade #12: $191.54k x (100% * 70%) = $134.08k
After trade #13: $134.08k x (100% * 70%) = $93.86k
After trade #14: $93.86k x (100% * 70%) = $65.70k
After trade #15: $65.70k (not participating)
After trade #16: $65.70k (not participating)

The same size of gains and losses, about 70% of profitable trades and yet after 16 trades the investor actually lost over $34k instead of making profits. How is that possible? Position sizes. Is this the fault of the signals? No – the 70% accuracy is a very reasonable number. What really lost money was the incorrect position management and psychological biases (loss aversion and emotionality in general).

What would happen if this investor just invested 20% of their capital in the case of each trade?

After trade #1: $100k x (80% + 20% x 130%) = $106k
After trade #2: $106k x (80% + 20% x 130%) = $112.36k
After trade #3: $112.36k x (80% + 20% x 130%) = $119.10k
After trade #4: $119.10k x (80% + 20% x 130%) = $126.25k
After trade #5: $126.25k x (80% + 20% x 130%) = $133.83k
After trade #6: $133.83k x (80% + 20% x 130%) = $141.86k
After trade #7: $141.86k x (80% + 20% x 130%) = $150.37k
After trade #8: $150.37k x (80% + 20% x 130%) = $159.39k
After trade #9: $159.39k x (80% + 20% x 130%) = $168.95k
After trade #10: $168.95k x (80% + 20% x 70%) = $158.81k
After trade #11: $158.81k x (80% + 20% x 70%) = $149.28k
After trade #12: $149.28k x (80% + 20% x 70%) = $140.32k
After trade #13: $140.32k x (80% + 20% x 70%) = $131.90k
After trade #14: $131.90k x (80% + 20% x 70%) = $123.99k
After trade #15: $123.99k x (80% + 20% x 130%) = $131.43k
After trade #16: $131.43k x (80% + 20% x 130%) = $139.32k

The results of the second approach are completely different – the investor gained almost 40% instead of losing about 34%. The final amount of capital was more than twice as big as in the first case. There was no difference in the efficiency of the trading signals – the only thing that changed is investor’s ability to keep the positions small and don’t let temporary emotions rule their investment decisions.

Naturally, the order in which the profitable and unprofitable trades take place will usually not be exactly as above and gains and losses can indeed be more interchangeable (so dropping a strategy after just 1 or 2 losses in a row would most likely not work even though it might seem like a good idea in case of the above example) and sizes of gains and losses will vary, but that doesn’t change the key lesson from the previous paragraph: in case of trading, positions which are too big can and most likely will hurt you.

While we’re at it – we include one additional paragraph about moving from one strategy (market, source of signals, indicator, or analyst) to a different one after one becomes dissatisfied with the outcome of the analysis.

The No-Change Change

If one proceeds, thorough research regarding techniques that are used, their usefulness in various market conditions, long-term performance and common sense behind it, then one should be fine with the outcome of such a decision. However, based on our experience, such a decision is usually an emotional one that is based on one or a few losing trades (like the series described in the above example). In this case, the odds are that by changing the strategy you won’t change much (especially, if the real reason for low rate of return was position management and / or emotional biases). The only time when such a change would benefit the investor is when they would move from a strategy of a lower expected long-term (!!!) accuracy to a strategy that has higher expected long-term (!!!) accuracy based on more thorough research etc. In all other (usually emotional) cases such a switch doesn’t change or improve anything, because nothing and nobody can get very close to 100% in predicting markets’ behavior. Moving from a strategy with 75% accuracy to a strategy with 73% accuracy will not seem different at the first sight (investor may seem happy with the change due to the feeling that they did “something”) but over time it will lower this investor’s rate of return. Still, if this investor doesn’t focus on position management and is emotional about their investments, the odds are that they will lose money over time regardless of what strategy, indicator or technique is used or which analyst they choose to follow.

Summing up, as beneficial as it may appear at the first sight, using a lot of capital for just one trade is usually a bad idea and the above example proves how much can be gained by taking it easy. Again, we encourage you to revisit the above described simulation when it seems that you “have to” bet everything on one speculative trade as it seems so extremely profitable. It may be, but trading is a game of probabilities and in order to grow your capital, you’ll have to manage the sizes of your bets and in most cases it means using less capital than emotions suggest. We are not trading just for the fun of it, we are trading to make money and in most cases smaller positions can help us in that, while bigger positions can do harm – be sure to monitor the sizes of the positions. Remember – sometimes less is more.

Congratulations

Finally, if you read the entire message and managed to get to this paragraph… Congratulations! It was a very long read, but we’re happy that you dedicated time to help us help you in your trading and investments. Remember, if you'd like to take a free trial of our Gold & Silver Trading Alerts, all it takes, is just a few clicks - it's a starting bonus that you get once you sign up to our gold newsletter. We encourage you to sign up today.