The Question That Used to Haunt Me
I haven’t given it a thought in over a decade, but…
When I was starting out as a trader, the one question I obsessed over was: Is this a bull market or a bear market?
I mean, it was all I thought about. If the market hit new highs, I was convinced the bear was just around the corner. Every trend felt like it was doomed to reverse, especially in the stuff I didn’t like.
Funny how that works, right?
I couldn’t bring myself to buy a breakout or continuation pattern. In my head, everything was “overbought” or “oversold,” and the pullback or bottom was always imminent.
Spoiler alert: It wasn’t.
Back then, I thought technical traders only bought at all time highs and fundamental investors were the ones scooping up stocks at rock bottom. So naturally, I tried to do both.
You can guess how that went.
I thought like that guy—you know the one.
The type who’s so sure about his opinion he’s in everyone’s comments telling them why they’re wrong.
I would never be rude enough to tell someone something like this but it is a good example… I kept my bad takes to myself.
But, the comment they made got me thinking, what is the truth about technicals and fundamentals and what lessons did I learn and why am I so open to understanding and merging so many different styles in to my trading.
Really I don’t fit in to any mold. Im not a fully systematic, I am not fully TA and Im not fully fundamental and I’m not fully macro. I don’t always buy new highs and I don’t buy at lows. I try to catch the meat in the middle of the move.
This above comments were because of this post.
Trading is not magic… So I will just tell you what I did.
AAO bought gold on a false breakdown signal in 2023. ⬇️
But here’s the thing: when gold did break out to new all time highs at the end of 2023, I didn’t hesitate to act and add to the position and recommend it once again.
As you all know, I run multiple strategies to diversify and hedge against drawdowns and perform in multiple environments.
As you can see it is in the portfolio to start the year in 2024 once again. For you guys who have been here for awhile, you don’t need to hear me go over this again,
Here’s the takeaway:
Breakout traders can buy around lows, and fundamental investors can buy around new highs.
Think about Warren Buffett buying AAPL. Everyone said he was crazy to jump in after that monster run, buying after a 10 month high.
But guess what? Another 700% gain later and during that time Apple became the first trillion dollar company.
Crazy?
Not anymore.
And trend traders can buy around lows as you can see by where I got my signal to buy cocoa before its massive run.
The thing I always say is this: I’m not against buying low. But if you’re going to step in, you absolutely need momentum behind your signal. Whether it’s multi day highs, breaking through a moving average, or a band squeeze breakout—it doesn’t matter. Just make sure there’s momentum supporting the trade.
Without it, you’re not buying low, you’re just catching a falling knife, and trust me, all that gets you is bloody fingers.
Above all, understanding this concept will make you a better trader. There are countless ways to trade just like there are many ways to diet or work out.
Everyone needs to have their style.
And here’s the truth: all of them can work if you get position sizing right and keep one thing in mind: you’re not trying to be right.
You’re trying to make money.
Quick housekeeping on the dollar and gold:
It looks like now is the time to start buying gold again.
Let me address the hate I’ve gotten over this chart. Is it a solid setup? Absolutely. Do I know it will work out perfectly? Of course not. But do I want to always take high-quality setups? 100%.
A volatility squeeze breakout in a strong uptrend? I’ll take that trade every single time.
For those following along, AAO is already long, so if you’re trading gold with me, you can hold that position.
If you don’t have a position and want one, the time is now.