There are lots of reasons to be bullish gold or silver but you would be foolish if you were looking to be buying gold while its sitting at an all time high.   But where can one find an opportunity in the metals? How can you take what all the reporters are talking about and make money from metals?  Simple answer, you short.  Now, now… don’t get your panties in a knot.  Long term we are very much bullish gold and silver, but lets have a look at specifically silver and where we stand today.

Bearish

Bearish Bat pattern on Silver

So you can see here from the chart, we have a decent looking bearish bat pattern.  This is of course a weekly chart and thus the medium term potential of the trade.  This is for the trader who likes the longer patterns, who can live with a trade being on the table for a month or two and be able to leave it alone.  Its not in everyone’s personality to be able to do this, especially if your a short term trader.  But lets look at the numbers:

Enter Between:  18.00 – 18.89

Stops:  19.34

So, your risk in this trade if you took it when we did at 18.34 and 18.44 is about $0.96, for the simple purpose of math, lets say $1.

Targets:  $14.65,  $11.50, $8.88

I honestly don’t think well get down to 11.50 or 8.88, but i do believe we’ll hit the $14.65.  So this gives us a potential gain of about $3.73, or a risk of 1 for every 3.73 gained.  So if i’m going to risk $100 on this trade, then I have a potential of making $373.  Now thats trading with odds on your side!

So remember, the most important job as a trader is to lower your risk.  Because your losses is the only thing you can control  So before entering a trade like this, first be prepared to accept this trade as if you already loss.  That way your emotions will remain calm as price goes up and down.  Also make sure your trading a pattern that has a decent risk vs reward, in this case 1:3.73  (check this off your list)….  from there you have to determine lot sizes.  Oh, I also scale into all my positions, and my scales run between 18.34 and 18.89… and this can ask effect your risk vs reward.

Well happy trading, and remember your losing trades are which make you money.   If your confused, stay tuned into the next post…

If you are interested on how and why these patterns work, you can watch this video here:  Watch It