Tuesday, September 30, 2008

Silver Plunge Opportunity! IFCN Wk 43 – Tue- Equity: $1,449.47

European banks are running amuck this week as global money markets are locking up. Numerous foreign banks have required capital infusions from governments, including our Federal Reserve.

Because money markets have gotten difficult to obtain money from, typical business isn't so typical anymore and credit risks have increased greatly for these European banks. They are dealing with the problem by dumping anything they can to straighten out their balance sheets and dropping anything that they think might make them look bad to the money markets who they depend on for liquidity. That means-- sell anything not nailed down.

As the bailout scenario before us is extremely inflationary long term, it was very interesting to see silver, and gold – to some extent; both being dumped – just like the other currencies to raise dollars.

Early this afternoon I bought some additional silver for the Challenge account. I emailed the subscriber list to notify those who are interested in silver, one of the two original currencies.

The email I sent follows:

-----Special Situation Alert!-----

Due to panic selling in the markets, we are able to obtain
silver at a better-than-average price. Even though the
silver price may go lower, I consider this a reasonable
area to obtain additional size. Also, for the record, I
have added more silver to my private accounts.

I just purchased 50 additional units of XAG (equivalent to

50 oz. of silver) on Oanda @ $12.00, with a stoploss point
of $11.00. (Total risk of $1.00/ounce or $50.00.)

I am still holding my current position of 100 units of XAG

obtained at $10.75. I am raising the protective sell stop
on that position to $10.75, up from 10.25 for a loss of -0-
in case it gets touched.

This means that the total risk on the IFCN Challenge

account silver position is still $50.00; yet I have a total
position size of 150 oz. with an effective average of

Joel Rensink


A number of subscribers emailed me back to say they were able to buy additional silver at $12.00 and below.

The markets are far from being settled, but that is often when some of the best opportunities show themselves. Time will tell regarding the silver position. Who knows how much more liquidation might be ahead?


After today's chaos, we are definitely not making new highs in equity. We lost over $100 in less than 12 hours.

Yesterday I placed a 50% profit trailing stop, which locks in at least half of the maximum profits attained before getting triggered, on the short FirstStrike Gbp/Jpy trade. The market rallied with all of the confusion today and we got stopped out locking in 367 pips of profit. The Usd/Jpy short trade was placed at a breakeven stop, which got triggered for a 1 pip profit. So, the only FirstStrike trade remaining this week is the short Gbp/Usd, which at the time of this writing had 418 pips of profit.

As there are no guarantees which way these markets are going to react, except erratically – I am placing a 50% profit trailing stop on the Gbp/Usd trade, as you will see below.


The week's FirstStrike trades:
  • Eur/Usd: Short @ 1.4449, stopped out at 1.4509 for a 60 pip loss.
  • Gbp/Jpy: Short @ 193.74, exited at 190.07 for 367 pip profit. (50% profit stop)
  • Gbp/Usd: Short @ 1.8230, stop 1.8001. (50% profit stop)
  • Usd/Chf: Long @ 1.1007, stopped out at 1.0947 for a 60 pip loss.
  • Usd/Jpy: Short @ 105.89, exited at 105.88 for 1 pip profit. (Breakeven stop)
FirstStrike trades not stopped out before Friday-- exit on Friday just before 15:00 CST.

Current trade equity is: $1,297.47.
Silver position equity: $152.00. (Current silver price: $12.18)
TOTAL Equity: $1,449.47

Plenty of motion this week. I'm glad we were able to extract some profit from some of it.

Have a good morning.

Joel Rensink

PS: To receive the FREE! trading rules for the Infiniteyield Forex Challenge ($499 value) and the semi-monthly newsletter about this challenge, send an email to: newsletter@infiniteyield.com and tell me to which address you would like it sent. Please do not use AOL, Hotmail or Yahoo addresses. They've been known to filter out more good mail than actual spam. Try a Gmail address. It's free, simple and perfect for traders!

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