Renaissancemen.org

So I wrote a note about an experiment I was doing based off of this chart…

I wanted to put this out there QUICKLY before people just blindly follow me – despite me begging you not to. I’m running an experiment here, not only for me, but also to help educate others about Futures trading. When my analysis is complete, I’m hoping to me a solid amateur by then. But for now, I wanted to share some preliminary data and traps.

Item 1 – this is NOT free money

I would love nothing more than to trade this chart blindly, but I spent a lot of time at 4:30 AM yesterday back testing this data by manually going through charts and recording open and close prices. What you quickly find is that London has a way of taking profits from you at 4AM. On day 1 I woke up $285 richer, but had noticed London robbed me an hour before of more profits. The last two days I sent my alarm for 350 AM to beat london to the punch. Yesterday, it worked like charm. Today, I got stopped out of silver overnight $.15 down before it then went to $.30 higher than my purchase price. My idea here was to have stops set so I didn’t lose $1000 on a micro overnight while I slept. It appeared to bottom with taking out my stop. Almost as if I was the last stop they needed to trip. Obviously, they don’t care about my micro, but I literally sold my stop AT the ABSOLUTE bottom.

Item 2 – understanding profits

When back testing this so far, I’m seeing mixed results. In Jan/Feb 2023, it would have netted $.44 profit, or $440 for the 29 days tracked for a micro $2,000 contract. But that is every night of buying at 1800 and selling at 0350. That’s a 25% profit!! However, had you just bought at $24.31 at the open on Jan 3 and sold at $22.53 it was a significant loss. Jan was a tough month to trade!

With the first method, you are risking $2,000 per NIGHT. With the second method, it’s $2000 for the month. Meaning, you are adding a LOT of risk here daily for perhaps a lot less ROI.

Since no one KNOWS what the ending price will be at the end of the month, it does seem plausible to play the daily, as you still got a cool 25% profit. IF you dialed that up to more contracts, it’s the same ROI, but much higher amounts of capital expended.

Item 3 – periodicity

“If you can’t beat em, join em”. Part of me feels now this 8:30AM is part of a legion of people who understand the patterns. More than likely, you see a push down at NY time. And London time. You see overnight perhaps price rise.

Silver is highly volatile, and if you just want to hold a micro for awhile to make that 50%, cool. But you have to be aware of the massive price swings and if you want to just hold, you could have significant down days followed by euphoric up days. Stops are essential for trading.

Item 4 – it’s a probability game.

I do think the Futures markets are needed, but my main issue is the pushing of the directionality of things. When you see a good rugging at 8:30AM on some silly news, you know the markets wildly reacted. Or, did they? Because this market is so small, this is why you have the volatility you do.

Let’s assume you know that you have a SIGNIFICANT rugging taking place perhaps 50% of the time at 0830. I want to go back a year and get a lot of this data, but let’s assume that’s the case here for stats and numbers. That means that if there were 10 trading days a month, and each event went down $.50, that is a $500 move on a micro contract. Meaning, if you had sold at perhaps 0800 for $22.50 and bought back at 0845 for $22.00, you would have made $500. Now, let’s also assume you sold at $22.50, but had a stop set at $22.60 in case it was a day no smash happened, but you see “good” silver news. What then happens is everyone that WAS expecting to have a smash didn’t get it, and their stops then trigger everything to buy UP. You lost $100 on this trade by being stopped out at $22.60.

But if there were 20 trading days per month….

10 winners at $500 = $5000

10 losers at -$100 = -$1000

Net profit = $4000

If you ONLY played this trade each day, you could see how a $2000 micro contract could make you $4000 on this ONE play. Now – I don’t know if it’s 50% you are rugged, and I don’t know the average drop. However, if this is a known trend, you can potentially see why 0830 is so volatile.

Likewise, when the move UP or DOWN violently happens, you then see the trade right after that buying back shorts or selling into quick profits. This is the beach ball we see a lot, or the boomerang up and down move you see. Everyone who just sold short and saw a $.50 dip KNOWS it is oversold and expect a bounce, so they put on a long then to perhaps play the $.20-$.30 bounce.

You see this type of thing after news events – if you think it is bullish for silver, you might see a first move of a smash down, then up. The shorts crush the longs, then buy back from them cheaper. It is indeed bullish, but the first move is a giant bank taking the money you have until you are stopped out – then THEY are long and you just lost $100 on bullish news.

You also see prices tend to rise overnight, and then London tends to sell at 0400.

What I’m finding is that the futures trading game in silver is a massive probability play on periodicity. I’m extremely comfortable with probability. Many are not, and take it personally.

Item 5 – Monthly periodicity matters

How I got into this is where I was noticing the monthly patterns with the selling and buy backs. It focused heavily on the options periods for metals. Coinciding with this was also monthly rollover. But if you look at the numbers, there’s like a week each month where the rugging is more brutal and frequent. I called this “delivery period” on my Excel spreadsheet I’m tracking. This takes down your monthly win probabilities for the overnight play. I then had a regular profit, and an adjusted profit to not be in these trades, at all, during that week.

Meaning – if you just get a good night sleep during the orange period, you make better money. This is December. Above, I mentioned about a $.44 profit. Those are raw numbers.

What you can then start doing is…

1. Carving out times where you feel you will lose money overnight, or perhaps go SHORT overnight rather than long, and set the stops in reverse. This is a money making racket, not a proof or not if you are right.
2. Tracking the charts above, you can also see there were some big gain nights and big loss nights. You can possibly adjust the big loss nights and substitute in something like -$.15 for a stop loss. The problem with this, is unless you have a quant analyst on staff, items like last night I was stopped out at -$.15, but then it rallied $.45 right after. I would have tracked -$.15 loss on my sheet, but the data from a chart would have shown a $.30 winner if you just did open to close.
3. Meaning – you can reasonably create “adjusted” P/L based off of monthly period times.

This tracks a lot with these charts I did almost 2 years ago.

The above showed the “delivery” times. These were times I was out of my options with miners. Today, I’d be more prone to being more short during these times with futres.

The above showed the “recovery” times after the “delivery times”. This pattern went until it didn’t. You can see May or so 2022, where the recovery was expected, and the bottom fell out. This is why stops are crucial with whatever decision you make.

Item 6 – volatility

With the above two charts, notice there is a top and bottom dotted line. This is “range bound”. If you bought a mining stock in August 2020 and held, you could see how by July 2022 you would have had your ass handed to you. Likewise, what I began to realize in late 2020 was that people who had much nicer cars than me didn’t care if the price went up. At all. They loved the volatility. Think about all of the trades up and down that happened. Think about all of the people who knew this 2-3 years ago and were laughing as I was talking about AG options. They. Don’t. Care. The best way these guys make money is volatility, and these patterns show a relatively reliable income stream of periods when things go up, and down, with a probability associated with it.

Likewise, you then have the REAL big firms who understand what I am seeing, and they potentially are the ones who then wait until enough are on one side of the boat, then they push the market to rinse everyone out of their positions, and make money both ways.

IF you are a silver futures trader, you need to understand this is purely a game of probability, periodicity, and money making. This entire market has virtually nothing to do with the metal. I’ve been doing this a total of 3 days now and with very minimal efforts, I’ve made over $1200 profits on micro silver/gold contracts. It was almost too easy. I’ll be spending the next few weeks going through the data, but I can tell you that it might make sense to stop this experiment WAY short of the month time frame. If I see a bulldozer coming, I’m not staying long overnight to prove a point. This is about making money.

I can CLEARLY see how the chart at the top works. Over a month of time, you can see where the overnight nets more money. But for argument’s sake, maybe it’s $1 per month. Over 12 months, it’s $12. Over 20 years, that’s $240. Meaning – I can pretty much show about $1 per month doing this trade. But, that’s 20-21 times you are buying at 1800 and waking up at 0350.

On a micro contract, that’s risking $2000 a night for a $1,000 profit at the end of the month. Like I also said, if you manage your stops well and perhaps go long on certain nights and not short in the delivery window, you can perhaps take that to $2000-$3000 a month. That’s not a bad side hustle to simply wake up at 0350.

The problem with this is that you need an advanced understanding of the markets, periodicity, stops, when to go long and when to go short. It would not really be overly challenging then, looking at this data, to create an 0830 thesis as well.

My research over the next few weeks/months I think will be towards getting MY system down pat. I will NOT publish this. Why? For obvious reasons – someone tries to follow what I do, then they lose their ass, then they sue me. I’m not in that game. Maybe a handful of people I’m close with here I get in on this, and document it out, but it’s just a lawsuit waiting to happen for the rubes out there who won’t think for themselves, just parrot something someone else does.

Item 7- why

The question is, why futures? My biggest concern with the miners now is fuel costs. We could perhaps see $2500 gold this year. But what happens if this is in the backdrop of $140 oil? We could be VERY right on the metals, but miners could lose their asses on fuel costs and margins could be slim. This is essentially what happened in 2022, where we were in the best trade with the metals, but playing the miners hurt, badly.

What this has me doing now is completely re-thinking my allocations in my investment side of things. Meaning, if you want to use an example of my portfolio with rentals and my house – maybe 70% is real estate, 5% is PMs in the form of physical and vaulted, 25% is trading miners and other positions. My INITIAL hedging idea was to use my 30% for PMs/miners to hedge against downside risk of my RE. Well, my RE went WAY up, and I lost money on miners – and the miners performed a lot worse than my PMs. I made 6x in the upside of my RE equity vs the downside loss in my miners. So, it did work as a hedge. But…I wanted to fine tune this.

2022 had miners get killed with fuel costs. Had I perhaps been long oil in futures, of some sort, I would have probably been able to hedge the miner downside loss. I’m learning more and more about this daily. I had looked into EQT and TELL for Nat Gas in Nov 2021, but got stopped out before the massive move up. Had I played nat gas futures, I would have been rich – but I also have learned this makes silver’s volatility look like child’s play. So maybe UNG is a safer play for nat gas. I had looked at the Vanguard VDE fund prior to oil going nuts, and I was trading that around $97. Oil went wayyyyy up, and so did all of the equities with it. But these are really frothy right now. Many of these made killer profits, and to buy them at these levels isn’t….the smartest. You have Hunter calling for $60 something oil, and I can’t highly disagree one way or the other.

My point here is futures gives me price action to metals, 23 hours a day. This allows me to rapidly respond to world events. It allows me to be short gold WHILE having a long term hold on miners. My FSM position is now 10,500 shares and I’ve held all of it well over a year. But I was in and out of GDX, GDXJ, SILJ, and these things can wipe you out – you see a $.90 move in silver up, and SILJ yawns. WTF? Why didn’t I just play futures?

I would consider futures a way I can play knowledge of the markets and trading periodicity. It is EASY to see how most retail can get wiped out by futures.

Item 8 – stop limits…ouch

So adding to my last point, I had a MASSIVE win up yesterday, and I tightened my stop limit up. My rookie mistake was not setting my stop limit a little below my stop trigger. When the fire sale happened yesterday at one point, I was up $700 on the day between gold and silver contracts. Was having a MONSTER day. I look up over lunch and down to $250 profit. My stop loss was triggered, BUT my limit price was the same as my stop trigger. It blew through the stop so quickly that my limit order was never filled because price went down too fast. This also is where I see some criminality going on – those who push over the dominoes hit volume quickly, and with this, even if you have a stop set at $22.20, your limit order may need to be a cent or more below this. I looked up and silver was $21.91 and suddenly I was massively down on a long order.

Item 9 – micros to learn

Many of you have a LOT more money than me, I don’t give a shit. The point here is I’m using micros to understand how this works. Had I just loaded up with silver contracts, I could have been down thousands when my stop limit order wasn’t filled. Instead, I lost $500 of profit, of which I gained $150 back by the end of the day going short.

As I get more comfortable with micros, I may add a second one to increase the profits – but it also increases the losses. IF you feel it is too easy, you are probably right. These pros are watching order flows real time and have quant analysis to get in and out. If you try and play this all day, you will get “chopped up” as Phil Carr mentions daily in his videos.

Item 10 – strategies

I can see a situation where someday we are in a position where RSI on gold is 82 and everything is SCREAMING pull back for $200-$300. At that time, I might have a gold contract short perhaps for a month or two hold while RSI calms down. However, that might be a $200 move down, and perhaps $20,000 in short gains. Likewise, you can also play daily with contracts in and out with the time periods to also capitalize on the saw tooth moves up or down. Gold could go down $300 in a 4 month pull back, but if you know what the hell you are doing with futures, you might make $50,000 profit on that. Then, as you see gold is bottoming, you go long. Rinse and repeat.

This isn’t written to discuss specific strategies, but to show you that volatility is how these guys make money. They aren’t buying a 1,000 oz brick of silver in their home at $16 and lug it to a coin shop at $24. No – this market is about playing macro moves, understanding periods of time to trade, probability, and risk management. My background in math makes me suited to not lose my ass on this, but those who are gamblers who cannot manage risk and only trade one direction could get murdered in this game.

IF you like metals and just want to play the doomsday game, just deal with physical. I have physical in like 8 different forms, and this is a way for me to raid the ATM machine to then convert shitty paper into more shiny.

Item 11 – complete disconnect from the markets

If you understand the macros of silver right now, you would realize being “naked short” for a long period of time is kind of ridiculously stupid, especially without stops. For me and you playing one micro or a regular contract, it’s not a big deal. But when these big firms who hold the metals AND trading account information are then smashing markets with paper at specific times, day in, and day out, you quickly understand how ludicrous this futures market is in respect to the physical.

Right now, I’m bearish short term with the metals, as I feel they need some time to cool. But how will the CPI print go? IF you think it will be lower, it would indicate that the Fed has done most of what they needed to do and rises in FFR would stop soon. This would be bullish for the metals. However, you then go long at 8AM, and the first thing you see is 1 second after open a $.40 move down. Completely washes you out of your long. Then, rocket up $1. If big entities are sitting there seeing all of these longs with stops at $.10-$.20 lower, they can wipe them out, then all of the shorts with stops $.10-$.20 higher they are coming for in 3 minutes as they push the dominoes where the shorts then start to buy back and profit, and anyone not watching this second by second is blown out.

That is not a real market. It’s pretend. This is completely, 10000000000% disconnected from the macros of silver production and deficits. It is, however, a good casino trick to make some money and take that money and buy silver.

Ultimately, what will happen, I thought would be limit up days. While that is in the cards, I can see how the saw tooth pattern can go up, consolidate, go up, consolidate – rinse and repeat. You have longs and shorts at all price points here. I believe where it starts to get tricky is low volume times. IF we get above $30, you may have some of the generalists start to pile into long contracts, but as long as the BB can push these markets, they can rinse those people multiple times while gradually allowing the price to move up.

Where I feel the real risk here that is not really talked about is the actual inventory in the COMEX. What happens to this entire thing as metals are draining and draining? If you can somehow tell me this is bullish for $15 silver, it proves my point.

I believe I will use the COMEX as an ATM like others, and take that fiat and buy a 1,000 oz door stop or buy KAG in Kinesis and let them vault my silver for free as I can then potentially spend this with a virtual debit card.

Item 12 – graduation

At some point I’m either going to continue to be successful with this and graduate into more micros and up the stakes, or I will graduate into the class of people who throw in the towel with futures. Based on what I’m observing with probability and risk management, I think I’m suited for this game. However, to play a silver contract might need $10k in margin and then a $1 move down in a day, with no stops, could cost me $5,000. Before I ever get there, I need to really “earn” my way there. I have told myself the only way I’d ever buy a “full” silver contract is by earning it – meaning, I have about $1200 in profits or so total now in 3 days with some other trades that aren’t overnight. IF I can EARN $10,000 in profits, I will have EARNED my right to buy a full contract. I believe that those who just jump right into the full silver contracts are destined to be who I’m taking profits from.

Item 13 – diversify metals

Last night, I was stopped out on silver as it was more volatile, but gold went down – I wasn’t stopped out, and I recovered and profited. Had I just played two silver micro contracts, I would have had double stop loss. Having a gold contract that was less volatile could have also been stopped out, but didn’t drop as drastically and gave me a chance to “hedge” against silver downside risks. If you want your face ripped off – JUST playing silver is a good way to do it. Gold may have a more muted upside, but a lower downside as well.

Item 14 – diversify into other things

I am a gold and silver nutjob at the core, but this game is about making money. Day 1, hour 1, minute 1 of any business school asks – “why do companies exist?” The answer is “make profit”. You can have tree hugger companies, obviously, that want to save the world, but you cannot save the world until you are first profitable.

My RE holdings are my largest. For ME, I’d have a different metals strategy than you. I am hedging against downside RE risk. Meaning, my physical metals and less volatile items should be at the core of the defensive strategy. Risky miners are fun, but due to the super high risk, I have to play less of them than I want to. But as I’m reducing my miner holdings, as a percent, I want to increase my holdings of other things.

This allowed me to take a relatively sizable position in UNG recently. I believe I plan on waiting a little to get into CCJ for Uranium. But the VDE/XOMs are also pretty overbought to me. Maybe I look at oil micros? Maybe I look at NG micros and ensure I got stops everywhere. Maybe I am concerned about miners in Chile and Peru with copper – but it might make more sense to play the metal itself from $4 to $12 on leverage than playing the miners in these countries. I don’t want to take delivery of copper, but I want to bet on a LT upside. Had I had a futures account, I would have also played corn, lumber, and a bunch of other things.

My HS buddy is a futures trader for a hedge fund with soy and I’m hoping to have a chat with him the next few weeks about tips on risk management and bullshit about the world macros and what some of that could imply. He was a master probability guy, and took a lot of math in college. I think it worked out well for him to trade for others. In my case, I’d like to perhaps take control of my finances and make these side bets a few minutes a month for LT holds and just help grow the fund.

I have compiled these charts below. The US is a strong producer of a lot of this stuff in green.

Likewise, they don’t produce a lot of this in pink.

I think the big takeaway you have here is that the US COMEX mechanism is pricing a lot of these metals that they do not produce. Markets like silver are tiny and clearly are disconnected to the actual metal. It stands to reason here that there is risk of the pricing mechanism moving to BRICS+. There is definitely a nickel-like play here with these, but that also can be the same fate as nickel – imagining a limit up day in silver, banking tens of thousands of dollars, and waking up to them raiding your account and reversing your wins. To me, that is a statistically not insignificant to happen. And THAT is how the pricing discovery is moved to Shanghai. At some point COMEX shorts will get blown out, repeatedly – and the answer is these banks will not go down, they will ensure the trades are reversed. That is a tough pill to swallow, but I believe that is what is moving silver and gold East.

With respect to the food – that isn’t going anywhere. I want to pick a month and study a market. Like, “what is the deal with the beef market in the US”. You might find things like farming costs increasing and it’s harder to raise steer, and with this, you might understand supply problems ahead. Why not go long a contract? These markets aren’t nearly as crazy as silver and NG.

Conclusion

Hope this helps. I’m going to see how this overnight thing goes for a few more weeks before I pull the rip cord. I am finding a LOT of information with the hourly charts going back. It’s just going to take time to build out all of the tables for the last year. Additionally, I want to build strategies on things like this…

In early Feb, you could see 8AM hour smashes. You can see the hours leading up to it. In the first case, I would have made money overnight going long, and getting out by 4AM. I could then put a short on, go back to sleep, and with this, have strategies about when to buy back if the short is profitable. This is an hourly chart, but you see in the first case the big move down happens at 8-8:30ish. How much of a move? This helps then to understand when to buy back the short. Maybe you have a target of $.30 and sell.

You can also spot patterns on hourly charts to play…of course have stops, but you can see this play out…

There also may be times you want to hold a contract for several days and have a looser stop if you think price is really low…

You also might discovery strategies to get in and out of longs on a way up….

You can also see how RSI might help you find entry/exit points…

Overall – I love this experiment, but I’m rapidly understanding how this is an ATM and you are either the one making the deposits or the withdraws. Do NOT enter this market unless you have a very, very, very, very strong understanding of trading and math. You will probably get hammered.