David Fuller's view Hoping to beat the high frequency trading (HFT) boys at their own game, just like everyone else, I jammed up my silver (weekly, daily & intraday) stops on early strength this afternoon, placing them arbitrarily at $34.85 and $34.86. My agreement with IG is that they execute these stops on a 'price to me' basis, where possible, meaning that I would be selling at those prices if the market fell. Normally, IG does a good job with this. However, neither their computers nor any individual dealer can move at the speed of the HFT machines housed within the exchange. Consequently, my two Dec silver longs were stopped out in a down draught at $34.808, well below the 'price to me' stops. So much for that 'extra liquidity' that HFT propaganda emphasises. These sales were against my purchases at $34.553 and $34.828 on 1st & 2nd Oct, respectively. I repurchased one of the positions at $34.755. These prices include all spread-bet dealing costs.

I mention all this because there have been several questions from the Collective on trading recently. I am certainly not criticising IG, who provide a great service, and no, I am not on a retainer or any other form of remuneration from them. Instead, I fault myself for not raising the stops further while silver was trading above $35, leaving the door open in case the market surged again, while also knowing that I would almost certainly be stopped out with this tactic, but probably before the price hit the equivalent of an air pocket.

I do criticise the exchanges for inviting in HFT firms and letting their predatory practices dominate markets with their aggressive form of casino capitalism. It is possible for individual traders to profit in this environment if they get the trend right and leverage up behind loose trailing stops. However, the risk will be greater if and when we do not get the trend right. Also, just the little trading exercise above required me to watch the screen for a while, which I do not wish to do, having a service to provide and a life to live.

Trading is hard work, as I have said before. Those who are riding long positions in bullion funds are profiting from the trend once again and need not be concerned about the intraday volatility of these markets.

Later this afternoon, I took a partial profit in platinum (weekly & daily) because it has risen for eight consecutive days. Accordingly, I sold my most recent and expensive platinum at $1707.6 for the Jan position against my purchase at $1677.9 on 2nd Oct, reducing my long position by a third. I also increased my gold (weekly & daily) longs, despite the proximity of the Nov and Feb highs, because the recent trading range should be a consolidation of earlier gains rather than another medium-term top. Also, the US Dollar Index is weak today and the greenback has fallen sharply against some emerging market currencies recently, such as the Indian rupee and the Philippine peso. Lastly, this evening I bought more gold (weekly & daily) paying $1793.5 and $1795 for two more Dec positions. These prices also include all spread-bet dealing costs.

The biggest short-term risk in precious metals, in my opinion, is the possibility of a temporary stock market setback following such good gains since early June. If so, this would probably be led by Europe which had the best gains between June and mid-September, albeit from a very low level.


Please note - Eoin is currently in the US, now participating in the 50th Annual Contrary Opinion Forum but he will return on Monday October 8th.