What To Do When Your Long-Term View Makes You Silly Money In Six Days

With gold ahead over $200 in 2016, the first thing I think about is why. In the past, I have seen gold rally as a “flight to quality” product, but gold ultimately is a product you buy as a hedge against inflation.

When I think about inflation, I think about the US Treasury Bond market. I know the bond markets #1 nemesis is inflation. If inflation comes roaring back like I believe we are seeing (be careful what you wish for central banks around the world), you have to be short the bond market.

So a couple of weeks ago I sold ZBM at 16529. In a matter of six trading days, I was taking four full points out of this trade buying my shorts back at 16126 on average. To be short one contract meant you realized a $4100 profit.

Silly money ZBM

On the bounce I shorted it again and lost $1500. The first thing my ego tells me to do is get your money back. Common sense and years of trading experience told me to take the damn money out of your trading account and put it in the bank. Making money is the easy part…KEEPING IT IS THE GAME.

As much as I think this market has a long way to fall, I have to take notice of the warning flags. The charts shows a possible Double Bottom and a buy signal. We get Non-Farm Payrolls on Friday which always has a major effect on the bond market.

So what do we really have now? We are bearish looking for much lower prices in the bond market over the months ahead. How do we trade the bond market RIGHT NOW?

WE DON’T TRADE IT. THE SHORT TRADE IS OVER…MOVE ON. May I reiterate? We made real good money in a very short period of time being short ZBM. Until further notice THIS SHORT TRADE IDEA IS OVER…END OF BLOODY STORY!!!

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Tony LaPorta

Tony LaPorta Futures Maven

Tony LaPorta has been active in the futures industry for over 36 years including membership at the Chicago Mercantile Exchange (CME) and the London International Financial Futures Exchange (LIFFE). Tony is an ex pit-trader turned screen-trader.

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