Relative Strength – And a Sea of Red

Relative strength is a term used to describe a given assets performance “against” a market in general – or within its given area or sector. When a given asset exibits  “relative strength” it can clearly be seen as outperforming a market in general and/or others similar to it. This in itself should afford an investor “some solace” or perhaps a “rock in the stormy seas” as others are seen sinking around you.

Do your current investments show relative strength on a day when “seemingly” everything under the sun is being sold like there’s  no tomorrow?

If you currently hold gold, silver and mining related stocks they do. In fact, several of which are actually “up” on the day, while the Dow dives -240 so…….ask yourself – why on earth are these things “holding their own” in a complete and total sea of red?

7 Responses

  1. Ben November 7, 2012 / 5:26 pm

    Alright, just doubled down on my gold calls.

    • Forex Kong November 7, 2012 / 6:08 pm

      Balls of steel this Ben fellow – just what I love to see, as miners now go green – and the final wash of weak hands in gold hit the skids.

      In a sense….we are buying their margin calls – and it feels great!

      Way to go Ben – great trading.

  2. Eddie Torrez November 7, 2012 / 5:36 pm

    Great call KONG it looks like gold is coming back already.

    • Forex Kong November 7, 2012 / 6:15 pm

      I appreciate the kind words Eddie – thank you…although – something to keep in mind.

      Ive been ranting about the “rise in commods / fall of the dollar” for well over a week now, and depending on how one has traded it – I could equally be in the dog house!
      Perhaps ” do as I say…..and not as I do” comes to mind in that…..this is still a very very tricky correction and is brutal on those newcomers and traders lacking a tough hide.

      As it stands the “real money trade” has yet to materialize as the dollar continues to baffle those lacking “kong like strength” sticking to the plan and looking for opportunity. Im sure we are but moments away…..but please…don’t quote me on that.

  3. Ben November 7, 2012 / 7:51 pm

    Alright.. I’m new to this, Kong. I’m up $1000 now in 24 hours on $5000 worth of various gold calls. How do I know when to take my profits? Is this a commodities surge that will last a day, a week, a month?

    • Forex Kong November 7, 2012 / 8:20 pm


      Managing a trade (a winning/losing one for that matter ) is the next “psychological battle” a new trader needs to consistantly win – in order to see long term success. You’ve managed to (gulp) enter the trade, which in many cases is difficult enough – and are then presented with the next set of hurdles – weather it be to “cut your losses” or to “take your profits”.

      Again – there are several different ways of going about this, and each individual trader will “eventually” find what works best for them. Generally speaking – removing the risk from trading is a great way to go…ie…move a given stop to break even (or very close to it) and allow the trade to continue…. at absolutely no risk to your capitial ( or less risk ) – a free trade if you will. Great for peace of mind…but also with the risk of being stopped out at break even (which is really never a bad thing).

      Or….feel free to take your profits, but in this case (so early into a trade) run the risk of “missing considerable upside” in having exited too early. As well… can always choose to re enter very soon after although- this requires more time, energy, trade skills as well as the fees that go along with it.

      Judging how and when to do this is a personal thing…and I dont believe there is a hard fast rule….but as a general “theme” – protecting your capital needs to be first in line, as opposed to “counting your profits” in order to succeed long term.

      What would I do? I would adjust my stop to 50% of my original risk – and allow the trade to continue ( considering how early in the trade we are ) and mentally come to terms with the fact that ” we’ve just gotten started here” buying at a bottom – and are no where near “selling at a top”.

      • Ben November 7, 2012 / 8:39 pm

        Roger that. Thank you.

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