Trading Jargon? (jargon 101)
Posted:
Wed Sep 28, 2011 9:42 pmby Thogey
neil, JFF and others.
Your commodities trading jargon is driving me nuts. I don't think I'm the only one.
I will admit my ignorance and would ask you to explain what this jibberish means.
Let this thread be an English only question and answer session.
I'll start with a basic question: What are 'the Big boys'?
and what is 'hammer the market'?
Re: Trading Jargon? (jargon 101)
Posted:
Thu Sep 29, 2011 12:56 pmby beauanderos
Supposedly, JPMorgan and HSBC (two major banks) are responsible for the volatility (ups and downs) we see in the silver and gold prices. They would be considered the Big Boys. They "hammer the markets" meaning they drive down the price, by artificial means, by "selling" millions of ounces of futures contracts into the silver or gold futures markets, thus affecting the price. Anytime there are more sellers than buyers, the price drops. These BB are "short" the silver market. They sell something they don't have, receive the price at the time of sale, and then hope the price will drop and they can replace what they borrowed to sell. The difference, less commissions and fees, is the price drop they engineered. Whenever the price rises "too fast, too far" you can rely on them to take advantage of that "overbought" stretch and pull precious metals back down towards their 200 day moving avg. An indication that a market is overbought or oversold is when the 200 DMA is stretched more than, say, twenty percent above the avg.
Re: Trading Jargon? (jargon 101)
Posted:
Thu Sep 29, 2011 1:24 pmby slickeast
Can they drive the price up?
I understand what you are explaining. They sell 1 millions ounces of paper silver at $43. They don't own this paper. Maybe they borrowed it or shorted it. When the price drops to say $30 they buy 1 million ounces of paper and return it to whoever they borrowed it from. They make $13 million
Re: Trading Jargon? (jargon 101)
Posted:
Thu Sep 29, 2011 4:36 pmby beauanderos
slickeast wrote:Can they drive the price up?
I understand what you are explaining. They sell 1 millions ounces of paper silver at $43. They don't own this paper. Maybe they borrowed it or shorted it. When the price drops to say $30 they buy 1 million ounces of paper and return it to whoever they borrowed it from. They make $13 million
There are members with expertise I don't share who are far better suited to answer this question than I am. However, I think you have a fairly correct grasp of the situation