Yes! We’re trading NUGT!

Well that didn’t take long.  NUGT broke up through its 14 level yesterday.  As you know (because you’ve read every word I’ve written, right? haha), our plan was to watch NUGT for a small buy if it dropped to support at 11 and held there, or rose above 14.

So yesterday NUGT opened at 14.43 and spent the rest of the day wandering between 14 and 15.  There was one small dip back below 14, which you could have taken advantage of by buying when it rose back above 14 “a little bit.”

Now as anyone who’s traded a while knows, “a little bit” varies depending on the price of the stock.  In general it’s 1 cent for every point of stock price, up to 25.  Then 25 to 100 it stays at 25 cents.  Above 100… well, for now let’s leave discussions of high-priced stocks for the future.

So if you were following the plan, you would now be holding “a small amount” of NUGT, with a price around 14.15.  What should you be thinking next?

For answers to questions like that, we turn to the chart!

For visualization I’ve drawn lines showing the most recent, and most obvious, support and resistance levels.  Now suddenly the trading becomes obvious.

In our world of simple trading, where we want to ensure safety, capture profits and let winners run as much as possible, we have two options now.  The first, and more conservative choice, would be sell half once we are halfway up to our next level.  This locks in about 1 point, while giving the rest the chance to go to 16.

The other choice, which is more risky, would be to hold on to our position and see if it can get to 16.  Or at least, close to 16.

In both cases we’d look at either selling or putting in a tight stop loss when NUGT reaches 15.85.  Because quite often these things will approach a level, not quite get there, then fall away.  And we don’t want to lose our accumulated profit.

In either case, for safety’s sake we also want to put in a stop loss under our current buy at 14, around 13.70 or so.

So this is our current trading plan for NUGT.  If you didn’t get in, you can watch this one as a training exercise.

If you did get in – Good luck to us!

In either case – I hope you stick around a learn to enjoy trading the gold sector with us!  Have your friends sign up for our newsletter.  But don’t tell the cat.  (The Gold Enthusiast believes cats stay home all day and trade.  It’s not computers doing all that “computerized” trading, it’s cats…)

Signed, The Gold Enthusiast

DISCLAIMER: At the time of writing, the author was long NUGT, and may increase or decrease position size in the next 72 hours.

About the author

Mike Hammer

Mike Hammer has had a wide-ranging career, with trading and investing as continuing themes. Mike graduated with a business degree and spent years as a financial advisor, before moving to New York and to pursue a career in IT and education. For more than a decade Mike has been working with the Adam Mesh Trading Group as a stock market and commodities mentor. He’s trained over 200 individuals, spoken at several national conventions, and is a frequent contributor to educational webinars.

Mike writes The Gold Enthusiast daily newsletter, runs the Golden Hammer trading service, and participates in the Mesh Private Portfolio. He also keeps a position in international education which keeps him in touch with "the student mindset".

Mike focuses on the precious metals markets, the energy industry, and the financial sector. His motto is "Plan your trade, then trade your plan!"

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