trading and chess

Already about a year ago, with some ETF's going up by trend
as expected, there are some more opportunities in investing
for the more adventurous, namely by active trading.

With a lot of vague theory like technical analysis and
money management, the question still is how risky
such active trading is. And the answer is ofcourse
depending on the skills of the trader.

Well in fact there are a lot of similarities
in trading, and playing chess. The trader has to
be keen on risk, try to minimize losses, head
for material advancement, stay in the lead,
watch his time, etc. Many of such skills are
also developed when improving chess playing
skills. And there is a parallel between
increasing your chess rating, and increasing
your portfolio worth.

Having found out the above in practice, in the
next messages i'm intending to provide some
concrete trading examples, whereby i'll might
make some comparisons with chess.

First of all, following the trend also in trading
is one of the safest methods. But the question
is when to enter, and when to exit the trend.
For such a strategy, we can resort to the
swingtrading method, instead of using the
common (?) wisdom of support and resistance
levels. And interesting example is Silver.

See the chart below:



The trend still is up, but when we look at
the momentum, Silver seems to get overbought,
and there is a divergence with the commodity
channel, which already is declining.

So my expectation in this case is that soon:
exit long signal, assuming you bought it,
ie profit taking.

For gold, the trend still seems to be up,
especially on a logarithmic scale. Next
time a chart, and some concrete
other examples.

So good luck with your trading.
(and your chess :)