Customer Service 1 (888) 261-2693
Please enter Search keyword. Advanced Search
Home About Us Resources Archive Free Reports Market Window

Is Bitcoin Killing Commodity Prices? Here's How to Beat the Pain...

By Dr. Steve Sjuggerud
Monday, December 11, 2017

Is the speculative money that's going into bitcoin coming out of commodities? It sure feels like it.
 
Last week, in my True Wealth newsletter, we hit our stops on commodities ranging from precious metals to cocoa – taking some small gains and small losses along the way.
 
Whether you are trading commodities or bitcoin, I urge you to use stop losses...
 
In short, before you enter any trade, you need to decide on the maximum amount that you are willing to give back – and you want to set that number up front and unemotionally.
 
Here are a couple examples from the trades we stopped out of recently...
 
Platinum hit a new low for 2017 last week. I recommended buying platinum in True Wealth earlier this year through the ETFS Physical Platinum Fund (PPLT). But I set a tight stop loss. We hit that hard stop on Thursday for a loss of about 3.6% on the trade.
 
We also hit our trailing stop on cocoa last week. I recommended buying cocoa through the iPath Bloomberg Cocoa Subindex Total Return ETN (NIB), and I set a 10% trailing stop when we entered the trade. Since cocoa went up after my initial recommendation (and since trailing stops rise along with your stocks), we ended up exiting this trade with a gain around 4.1%.
 
The important lesson is, I got these two trades wrong – but it didn't hurt me too badly. I stopped out before my losses got too big. I can easily live to fight (or trade) another day. No sweat.
 
What is your point of maximum pain?
 
What will you do when you get a trade wrong?
 
How much pain are you willing to take?
 
This applies to all your trades... especially on speculative assets like bitcoin.
 
What? You own bitcoin and you haven't decided your point of maximum pain? What are you thinking?
 
How much of your money are you willing to lose? It's real money.
 
Are you willing to lose 25%? 50%? 75%? 90%? All of it?
 
You need to decide this number – in advance – and stick to it.
 
I explained last week what I look for in a trade... I make sure the upside potential is dramatically larger than the downside risk I'm taking.
 
I strongly urge you to do the same.
 
Many commodity prices have hit new lows this year, while bitcoin has soared.
 
My losses in commodities don't worry me, though... because I set my downside risk so low.
 
What about you? What's your plan? How much money are you willing to lose?
 
Figure it out – in advance. Then stick to it.
 
Good investing,
 
Steve
 
P.S. If you're a True Wealth subscriber, we'll cover these two stop outs again in our issue this week. Remember, as we always say, it's important to mind your stops. And if your stop is triggered, sell the next day.




Further Reading:

"You want to put the odds in your favor from the start," Steve writes. If you follow two simple steps, you can significantly limit the downside on your trades. Read more here: 99% of Investors Don't Do This... Here's How to Be the 1%.
 
"Make sure your stop aligns with your outlook," Ben Morris writes. He explains how to choose a stop loss, and why it should be the core of your trading plan. Learn more here: The Most Important Question You Need to Ask Yourself Today.

Market Notes


NEW HIGHS OF NOTE LAST WEEK
 
World Wrestling Entertainment (WWE)... sports media
Twenty-First Century Fox (FOXA)... entertainment
Six Flags Entertainment (SIX)... amusement parks
Monster Beverage (MNST)... energy drinks
Shake Shack (SHAK)... fast food
McDonald's (MCD)... fast food
Dunkin' Brands (DNKN)... coffee and donuts
Bloomin' Brands (BLMN)... chain restaurants
Sysco (SYY)... food products
U.S. Foods (USFD)... food products
Blue Buffalo Pet Products (BUFF)... high-quality pet food
Clorox (CLX)... consumer goods
RH (RH)... home furnishings
Dollar General (DG)... discount retailer
Dollar Tree (DLTR)... discount retailer
Ollie's Bargain Outlet (OLLI)... discount retailer
Five Below (FIVE)... discount retailer
Carter's (CRI)... kids clothing
Etsy (ETSY)... online marketplace
Interactive Brokers (IBKR)... online brokerage
LendingTree (TREE)... online lending
Paychex (PAYX)... payroll processor
Wells Fargo (WFC)... banks
Progressive (PGR)... insurance
United Rentals (URI)... equipment rental
Waste Management (WM)... trash and recycling

NEW LOWS OF NOTE LAST WEEK
 
GlaxoSmithKline (GSK)... pharmaceuticals
Frontline (FRO)... oil shipping
Coeur Mining (CDE)... precious metals
Eldorado Gold (EGO)... precious metals
Hecla Mining (HL)... precious metals

premium teaser

Capture potential triple-digit gains, while limiting your downside risk...
 
I believe we are in the "Melt Up" phase of this historic bull market. It's the last major rally in stocks before it all comes crashing down. And triple-digit gains are possible in this sector from here...
 

Recent Articles
Legal Notices: Stansberry Research LLC (Stansberry Research) is a publishing company and the indicators, strategies, reports, articles and all other features of our products are provided for informational and educational purposes only and should not be construed as personalized investment advice. Our recommendations and analysis are based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.

 

Readers should be aware that trading stocks and all other financial instruments involves risk. Past performance is no guarantee of future results, and we make no representation that any customer will or is likely to achieve similar results.

 

Our testimonials are the words of real subscribers received in real letters, emails, and other feedback who have not been paid for their testimonials. Testimonials are printed under aliases to protect privacy, and edited for length. Their claims have not been independently verified or audited for accuracy. We do not know how much money was risked, what portion of their total portfolio was allocated, or how long they owned the security. We do not claim that the results experienced by such subscribers are typical and you will likely have different results.

 

Any performance results of our recommendations prepared by Stansberry Research are not based on actual trading of securities but are instead based on a hypothetical trading account. Hypothetical performance results have many inherent limitations. Your actual results may vary.

 

Stansberry Research expressly forbids its writers from having a financial interest in any security they recommend to our subscribers. And all Stansberry Research (and affiliated companies), employees, and agents must wait 24 hours after an initial trade recommendation is published on the Internet, or 72 hours after a direct mail publication is sent, before acting on that recommendation.

 

© 2024 Stansberry Research, LLC. | Privacy Policy| Customer Service
Stansberry Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This website may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry Research, LLC. 1125 N Charles St. Suite 500, Baltimore MD 21202.