Trader Alert: Gold Buy Signal

Courtesy GoldinAmerica.com

Update: 736 am. System advises trailing stop loss up to point of entry. Target not hit in 3 bars warns of failed momentum higher.

Update 9:50- signal negated. Target not attained. Instructions in this post would have given a scratch trade. We move on to other markets that present signals.

Though not backtested; a reversal lower is on the table now as the system predicts accurately an increase in Vol. point is, with a trend reversal in mid stream of volatility expansion, could get ugly.

We will not trade the reversal as a result of the lack of data here.

Original post:This evening spot gold has generated a risk reward buy signal predicated on expanding volatility.

The chart

As of this writing: the VBS signal was triggered to buy Gold spot above. $1332 with a target 1.5x what you are willing to risk. Optimal parameters are as follows:

1- long entry $1336.41

2- stop loss on a print of $1332

3- profit target of 1.5 to 2.0 times capital risked using the advised stop.

4- secondary stop: close position if neither in the money nor price stop hit after 3 candles (12 hours)

The formation

This is a professional speculation system discussed many times in this space. It is not technical analysis, and is based on volatility cycles.

The basis for its validity is 25 years of successful use in options and futures trading.

The disclaimer: Don't be stupid. Think for yourself. But if you understand the risks associated with these type of compartmentalized trades then you should be able to understand what it means to risk 1 to make 2..

good luck.

About the author: Vince Lanci has 27 years' experience trading Commodity Derivatives. He is most recently published on "Volatility in Energy Markets" in partnership with UCONN and professor Robert Biolsi.

Retired from active trading in 2008 after netting $90MM in an Energy arbitrage strategy he devised for a NY hedge fund; Vince now manages personal investments through his Echobay entity and advises natural resource firms on market risk.

Over the years, his expertise and testimony have been requested in energy, precious metals, and derivative fraud cases. Lanci is known for his passion in identifying unfairness in market structure and uneven playing fields going back to his first anonymous Zerohedge post on Silver. He remains a contributor to Kitco, Zerohedge, and Marketslant on such topics. Vince contributes to Bloomberg and Reuters finance articles as well. He continues to lead the Soren K. Group of writers on Marketslant.

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