gold investment, silver investment

Precious metals investment terms A to Z


Imagine such a situation: if you could determine when you buy or sell your assets by watching just two lines, when one line crosses the other line, you buy. When the same line crosses the other line in a different, way you sell.

Eric asks:

Saturday afternoon, Eric and John are in their favorite café after a golf match.

John, the Trader

John, the Trader

(sipping coffee and skimming through a newspaper): Interesting, they write here that the main economic indicators have improved, which really bodes well for my investment.
Eric, the Beginner

Eric, the Beginner

Oh yeah, I’ve heard that indicators are really important in technical analysis.
John, the Trader

John, the Trader

(smiling): That’s correct but you need to distinguish economic indicators from technical analysis indicators.
Read the whole discussion

That will make life on a stock exchange much simpler. If this lines are somehow correct then this leads you to big future profits. So, the million dollar question is: How do you draw these lines? This line is an indicator and there are numerous and vary options to draw this lines in a way that provides you with the highest possible return.

Let us take a look at a sample of “the indicators’ power”.

RSI - Relative Strength Index

The above chart presents SPDR Gold Trust Shares from August 2010 to the beginning of December 2010. We can observe a continuous positive trend since August and a massive fall in the middle of October. However there was an opportunity to avoid huge losses in our capital, this opportunity was a sell signal generated by the RSI indicator. As it can be clearly seen form the chart, following the signal could save your money. For more details concerning this example check our Premium Update from October 15, 2010.

Indicator uses price volatility to recognize patterns in the movements of stocks in order to find optimal moment for buying or selling it often including up and down volume, advance/decline data and other inputs. In other words, a stock indicator detects some repeatable situations on the market and thanks to that is able to predict how a particular stock will behave in the future. As a result of calculations, it generates signals which inform us about a level of overbought or oversold. A level of overbought tells us that the price change of a particular stock indicates that there is a small chance of further increase and encourages us to sell the stock. Analogically, a level of oversold tells us that the price change indicates that there is a small chance of further decrease and encourages us to buy the particular stock.

There is a lot of websites which provide you with the stock indicators. However their calculations are based on the formula which was invented a long time ago and it is adjusted to bring profits on all markets. Using standard version of indicators you will be doing quite well on the various markets. But what if there is some other version which will bring you enormous profits on the gold? Maybe is there some indicator that is especially reliable on the silver market but totally useless on the general stock exchange? Is this indicator efficient in the short term? How can I find modified version of it that brings me huge profits on the sell position? Moreover, having this information still does not guarantee high profits. There is always a need to monitor the whole optimization process, check its results and update it systematically.

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