Gold rose as expected. I will start with the conclusion that you can capture price movement even without hitting the bottom.

In the previous article I wrote that you should average down, and gold subsequently fell below 4,300 before reversing.

https://www.gogojungle.co.jp/finance/navi/articles/124672

It is currently around 4,480.

It is quite close to the profit-taking target of 4,500.

People who could buy from the cheap parts probably captured a decent price movement.

However, what I want to convey this time is not that “the forecast was correct.”

You can create a situation that yields profit even without hitting the exact bottom.

This time, I will write about that.

Last time I wrote about buying down from around 4,320

The title of the previous article was

“Gold has not stopped falling yet. Still, I will average down.”

Gold was around 4,320 at that time.

It had been sold from near the high around 4,700, nearly 400 dollars down.

In the short term, it was clearly bearish.

Nevertheless, I believed the overall upward structure was not broken yet.

So I thought, if the downward momentum slows, there would be a certain rebound.

The profit-taking target was 4,500.

The bottom was expected around 4,230.

And, rather than hitting the bottom at a single point,I wrote that I would buy in thin lots as it went down.

Gold continued to fall afterward

Looking at the actual chart, it did not reverse immediately at 4,320.

It was sold further, and at one point it dipped below 4,300.

In other words, from the perspective of the initial buying position alone, it wasn’t perfect.

One could have bought even lower.

That is what one could say.

But what I was aiming for was not to hit the bottom price exactly.

To create a position that remains profitable even if it goes lower, anticipating further declines.

Therefore, there was no problem if it fell below 4,320.

Because I was entering with thin lots, I could add more at lower levels.

As the average buying price dropped with additions,

if it then reversed, there would be a substantial price movement even without purchasing at the absolute bottom.

Gold this time became exactly that shape.

If I had confirmed the bottom, I would not have entered

From just looking at the chart after the reversal, it appears easy.

Buy around 4,300 and sell around 4,480.

But in reality, it is not so easy while it is actually dropping to 4,300.

Candlesticks are pointing downward.

Unrealized losses are increasing.

It looks like it could fall further.

If you try to decide only at that moment, you become afraid and cannot buy.

And by the time you can clearly confirm a reversal, the price has risen significantly.

Confirming the bottom and then buying means giving up on cheap prices.

Therefore, I did not wait for a bottom to confirm; I started entering gradually as it fell.

Of course, I did not buy haphazardly.

How far could it fall?

How large a lot could I endure?

Where would I add more?

Where would I take profits if it recovered?

I decided these questions in advance before buying.

Just because the forecast was correct doesn’t mean I profited

This time, gold rose in the direction I anticipated.

The direction was correct.

However, that alone did not guarantee profit.

Even if the direction is right, if the lot size is too large, you cannot withstand the intermediate drop.

If you cut losses before the reversal, even if it goes up afterward, it won’t be a profit.

The reason I could take profit well this time is not that I could predict the bottom exactly.

It was because I divided positions assuming a slight mismatch in the forecast.

Enter thin from the start.

Add more if it falls.

Leave some room for further declines and preserve spare capacity.

That way, even if the initial buying position is wrong, it won’t be a fatal blow.

Rather, it creates an opportunity to add at a cheap price.

More important than the accuracy of hitting the bottom is to build a structure that can withstand misses.

This trade reaffirmed that feeling for me.

4,500 is approaching. From here, don’t be greedy

Currently, gold is around 4,480.

The target of 4,500 for profit-taking is nearing.

At this point, there is no longer a scenario to become more aggressive.

It is a stage to consider how to preserve profits.

I think it is fine to take profits on part of the positions bought cheaply.

Even if you keep the rest, you should avoid eroding the profits you have earned.

Of course, if you clearly break above 4,500, there is a possibility to test higher levels.

However, the initial scenario was to let a portion of the fall recover.

I did not intend to ride everything back to the top.

If the first price range I planned to capture is achieved, that is enough.

If you hold to the ceiling, you will lose the unrealized profit you have.

Even if it rises after you take profits, that is not a loss.

If you can leave profits according to the planned scenario, that trade is a success.

Jumping in now is not the same trade

The conditions around 4,300 last time and around 4,480 now are different.

Around 4,300 there was value in buying the dips while enduring the decline.

Now it has already rebounded substantially.

Moreover, it is near the profit-taking target you were watching previously.

If you buy anew here, it is not the same dip-buying as before.

The potential upside is smaller, while the downside price movement is larger.

The idea that it will go higher and the idea of buying now with favorable conditions are separate matters.

After observing this rise, there is no need to rush in.

If you couldn’t buy at the cheap price, wait for the next opportunity.

The market will not end here.

Summary

・Previously, around 4,320 with thin lots for averaging down
・Gold subsequently fell below 4,300, but reversed from there
・Currently rises to around 4,480 and approaches the target of 4,500
・Not because I hit the bottom, but because I anticipated the decline and diversified positions
・Because I could withstand forecast deviations, I captured the upside move
・Around 4,500, consider preserving profits rather than chasing further gains
・What you think it will go up versus buying now with favorable conditions are separate

This time, the movement was quite close to my expectations.

People who could average down from the cheap levels likely captured a substantial price movement.

But what is truly important is not that this forecast was correct.

Even if you cannot determine the bottom, you can still create a profitable shape without hitting the bottom.

Decide the direction.

Split the timing.

Leave room for errors.

And if you can capture the targeted price range, do not be greedy.

This gold move taught me the importance of that once again.

Were you able to take advantage of this rise?