Trader Scott’s Market Blog

December 7, 2016

The reason I keep harping on trading skills as being more important in the long run vs. the method (analysis), is because trading skills are what’s required to navigate the every day weirdness in markets. Markets are totally about uncertainty, and we need a way to neutralize it somewhat. One way to do that is by being comfortable with taking profits, even if you believe in the original “premise” and the potential outcome of the original trade. Because, as just stated. markets are not about certainty, but they’re about uncertainty. So even if we believe something, it doesn’t mean that will actually be the outcome. And when a trade or investment goes in our favor, human nature makes us more convinced of our belief in the potential outcome. In other words, we get more bullish as a long position goes in our favor, because it’s “proving” we’re right. People who have been pretty good at markets for a while, learn to do the opposite. They start to get uncomfortable as the market goes in their favor for a while. That in itself is not necessarily a reason to get out, but it is a consideration. So what I try to do is to tailor those concerns based upon the time frame of each specific position – meaning if it’s just a short term trade, my urgency to get out is heightened, and for investments it’s tempered. And of course, taking partial rather than full profits can be a good balance between maintaining your original premise/outlook and using pure survival skills. We tend to make markets out to be some academic, complex endeavor, but markets are actually just a game – a game of survival. The fittest (those with the best skills) will survive. And I could claim this business requires a high IQ, but it doesn’t, as one of the greatest traders of all time, Tom Baldwin, said regarding success in markets, “You don’t need any education at all to do it. The smarter you are the dumber you are. The more you know, the worse it is for you”. It’s pretty humbling to have to admit how straightforward this business is. We’ve all seen the websites with the fancy methods, algorithms, etc. For the folks who use them, more power to them. But these fancy notions don’t impress me, because there is zero there about acquiring trading skills. Those skills can only be learned thru experience, there is no shortcut. A fancy method does not address that at all, which is why virtually everyone who uses those fancy crutches fails.

As for markets, and some recent trades – from December 1st, still long TLT (expecting lower yields), but this is certainly only a trade. Bond yields are eventually headed way higher from late 2017 onward. As to gold – mining stocks and silver are continuing to lead the way. Here is the bigger picture exact same silver chart which has been posted for several months, along with my belief of a late November bottom, with re-testing well into December. And here is a shorter term chart. I last bought silver on Thanksgiving night, and now into a further rally I will sell some. Many people will be using this close in silver above $17.10 as a “confirmation” and a “breakout”, but my approach is different. They may be correct, but it’s just not comfortable to me, so these are often areas to take some money off the table. I do expect another re-test/spring of the lows. But my plan laid out several months ago in the blog was to use this time frame to accumulate silver and the mining shares, not gold itself (next year). Gold’s support and resistance areas are only to be used as timing tools. As for the stock market, covering a QQQ short into the selling wave lows on December 1st was about survival – very uneasy about staying short. As to long side opportunities, a few things I’m watching – two big biotechs, but the BBH ETF is a proxy, the biotechs keep getting hit with bad “news”, they’re getting interesting. And overseas markets which are starting to show good relative strength vs. the US. More on that soon.




img_0074bwcrsmTrader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day.Scott returned to markets over fifteen years ago where he continues as an independent trader.

'Trader Scott’s Market Blog – QQQ/Gold/Bonds – December 7, 2016' have 9 comments

  1. December 8, 2016 @ 3:13 am frank

    good morning from EU, I have been accumulating SPXS, SQQQ as well as SDOW since about one year every time the indexes hit a new high, I could have done much better if I would have taken some profits at the beginning of the year, I see your point.


    • December 8, 2016 @ 12:27 pm traderscott

      Frank, It’s just my approach to keep the capital from stagnating.


  2. December 8, 2016 @ 3:47 am Aamer

    You are indeed a wise if not a smart trader……

    I am beginning to finally see the light and making sense of what you say.as a novice trader who began reading your blog only a few moths ago and with several paid subscriptions to financial newsletters etc I have managed to make mistake after mistake….with the double whammy of not really understanding the mistakes I was making….blaming the mkts,manipulation etc everyone but myself !!

    Will need to start putting g more work into my learning journey….but am grateful that you have shared so much and probably spared me many years of mistakes and losses.

    Would love to get more insights on trading skills and the mental side of trading. I understand that I need to learn this by trading but having seen what you teach actually play out in mkts has given me hope that I can at least learn more before allowing the mkt to teach me the hard way…..

    Again a great th ank you and this was a very good post !




  3. December 8, 2016 @ 2:12 pm traderscott

    For the questions about the stock market. On a big picture basis, we can’t step in front of a freight train, and until the train shows it’s hitting the breaks in a big way, avoid it, except for very short term opportunities. And even when the breaks are hit, it’s only the first step. But on a very short term time frame, there are opportunities to go with the immediate trend. And please keep in mind, those leveraged reverse ETFs are great for short term trading, but that’s it. My approach to markets is not focused on hitting home runs, but on surviving. That way you’ll get your home run, and with way less risk, but it takes time.


    • December 8, 2016 @ 3:14 pm David V.

      Any thoughts on the Deutsche Bank material in the silver fixing case. Might it have any effect on silver prices?


      • December 8, 2016 @ 3:58 pm traderscott

        Short term no, the manipulation will continue. Much bigger picture, international banks will slowly continue to lose their power to control everything, as will central bankers. They’re destroying themselves and they’re too arrogant, immoral, and crooked to recognize it.


  4. December 8, 2016 @ 6:44 pm Jon

    PM’s and miners were eerily quiet today which I’ve noticed usually precedes a big move. Friday’s prior to FOMC seem to be a favorite time to hammer the sector. I’m guessing the reaction test of the lows will be a buying opportunity. Any thoughts? Thanks again for all your posts.


    • December 9, 2016 @ 11:40 am traderscott

      Yes Jon the tendency is weakness before the meetings. And if the reaction is big enough, I will accumulate.


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