Years ago Van Tharp (famous trading psychologist) taught me that the secret to designing trading systems was a “low risk entry point”.
What does that mean?
Well it does NOT mean that you have to know what happens next.
If you think you can divine the future then the market is surely going to crush your fragile spirit, for the market does not suffer fools easily. Wash your brain out with soap.
But fortunately you don’t need to be that smart. A “low risk” entry is where if you are wrong, you are wrong a little, and if you are right, you are right a lot.
Right now, Gold is on the verge of a major collapse, which would be freaking out the Gold bulls.
Paradoxically, the best long setups generally come from the point where bears about to start cheering. Remember the stock market on Christmas Eve?
The classic beginner mistake is to wait and wait until you are sure things are all lined up, by which time you’ve missed the bulk of the move.
Painful experience has taught me that the very best setups feel a little ass-puckering.
And here is the setup. Tight stop means risking a little, to get a lot
Now that doesn’t mean you should just jump in like a sucker. I always wait for the market to start confirming my view, by actually breaking the high of the setup bar.
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