Ken Roberts Chat

Let's Talk Trading (tm) with Ken Roberts
from February 7, 2006

As we begin this evening’s session, let me state the reason I conduct these monthly online Course Member Chats: to provide you the opportunity to ask questions and pick the brain of a successful, long-time, real-money trader. It’s not the highest and best use of our limited time here together for me to define basic terms and explain introductory principles taught in your Course materials. That’s what my Course Counselors are here for... Now is the time for you to use me to help you apply the basics you’re learning and to prepare you for what to expect once you’re out in the market itself (either paper trading or with real money). And if we have some fun along those lines, so much better. Alright... I’ve got a Davidoff Double R fired up, here’s our platter of Krista's freshly baked ("Over-the-Top!") chocolate chip cookies, the Cafe Altura coffee’s poured, so let’s talk commodities! NOTE!!! When commenting on one of my Courses, please identify WHICH ONE. Also, when relating trading experiences and/or results, please give details: Futures contracts, options, options AND futures, etc. This helps others follow along and learn from your experience too.

BigAl asks:
Ken, Do you place any importance on the momentum of a particular commodity?…I have noticed that you tend to invest in any commodity that is breaking into a new trend…..regardless of momentum…… Sincerely, AL

at 6:15:12 PM
Hello BigAl!

When a market's in a trend, there IS momentum --- that's the definition! So yes, I DO consider momentum, but only because I see evidence of it on the price chart, NOT because I refer to a "Momentum Indicator" (which TOVI factors in already)!

Good one, BigAl, thanks!

Things are heating up tax-wise in Washington, D.C. now, so contact your Congressmen and Senators to let them know how you feel about the I.R.S. (Come on! We're closer than we've ever been to true freedom!)

Brian asks:
Hi Ken, thanks for taking my question. I am a returning customer because I am bound and determined to make this work for me. I took your TWMPMM course in 1996 and attended one of your weekend seminars in San Francisco shortly thereafter.. I never really did very well, but am back to try again. When I first got interested in TWMPMM it was all about futures contracts not options, now you seem to have moved toward options over futures, other than potential loss why are you more bullish on options?

at 6:27:34 PM
Options are the Great Equalizer, Brian (just as the six-shooter was in the Old West)! Utilizing options, a small trader can gain the same staying power that a cash-rich trader has.

Have you also considered, Brian, that options carry UNlimited profit potential, with LIMITED amount of risk; while futures contracts carry UNlimited risk (except in VERY extreme markets such as the Euroyen now) along with their UNlimited profit potential!

Since the Boardroom you attended in San Francisco in 1996, the options market has multiplied several-fold! And I believe it's important for ALL traders (old and new) to be well aware of, and knowledgeable in, options.

[Hey, Brian, do you remember the gentleman who brought me three of Castro's private cigars --- The Trinidad --- because he knew Nelson Mandela (who had just visited Castro)? Those beauties are still locked up, safe and sound, in my cigar room!]

Welcome back, and be sure to check out that option market, including the amazing tools contained within TOVI, Brian! (www.ToviOnline.com)

bob asks:
coach ken do you listen to any real time news before looking at and preparing your daily charts?

at 6:28:14 PM
Absolutely NOT, bob! (At least you didn't use the "F" word: Fundamentals!)

handle bars asks:
If I understand this right, did we just get another chance to buy cheap corn calls?

at 6:28:57 PM
Good eye, handle bars! Yes we did . . . . (And I'm shopping!)

Utah Matt asks:
Ken, How much cash do you reccomend opening a trading account with???

at 6:35:16 PM
Utah Matt, there's simply no pat answer to this question --- it all depends upon YOU (What's YOUR temperament? Are you trading futures, options, or both? Do you trade one contract/option at a time, or do you prefer trading two or more? Etc., etc. Put this issue to any and all brokers you interview, and see how their discussions/responses vary. This should be one of your factors to consider in making your final decision about which broker to use.

David asks:
Hi, Ken Have you tried the Cohiba Xtra Vigorosos?

at 6:38:20 PM
No, David! But now you've challenged me: Where did you get yours? (And how are they?!)

icyhot8 asks:
Hi KEN, Can I get set up with a counselor so i can start paper trading? Thanks, ICYHOT8

at 6:40:19 PM
Absolutely! Just call 541-955-2700 any business day from 9:am to 5:pm Pacific Time! My Team of Course Counselors are here just for YOU! Welcome aboard!

Deb & Andy from Ontario asks:
Evening Ken & Gang, Thanks so much for choosing our photo caption entry last month it was fun entering and exciting for us here when we won. Looks like most of the commodities took a nose dive today can you shed us some light as to why or is that just funny news again?

at 6:45:28 PM
Supply and demand, Deb & Andy! I have NO IDEA what happened today, other than many prices dropped drastically. (Here's a case for options . . . .)

We all loved your Chat Photo Caption! (Hey, Everyone: Be sure to check it out at www.KenRoberts.com, as well as this month's new Photo. Then enter the contest as Deb & Andy did!)

(After today's drastic drop in several markets, I lost my OTHER sleeve!)

geneo asks:
Ken, when I purchase an option and it goes into the money, can I sell it any time?

at 6:47:04 PM
Yes, geneo, you may liquidate it ANYtime, even before its expiration date (and you do NOT have to exercise it). Congratulations!

Dave C, Natick asks:
OK, well, I've got an R&J Exhibition #4 ready to go. I'll have to say the markets have been very exciting lately. Today's pullbacks in the metals has been a long time in the making. I wonder how some other traders reacted to today's results.

at 6:47:46 PM
Not as relaxed as you did, Dave C --- great goin'!

Bill G asks:
I talked with Grand Central Trading and they sent me a Startup Kit. I am very impressed with the materials and also the www.grandcentraltrading.com website. I am looking forward to opening an account. I also signed up for your next avaialable Trading Camp and am looking forward to meeting you in person.

at 6:52:47 PM
Me too, Bill G.! (And I look forward to meeting you too!)

Glad you like Grand Central Trading Company --- that's why I started it! Read my broker Steve's Welcome Letter and learn HOW Grand Central Trading is so different from all the rest! What a special team of brokers . . . .

Yes, I'm looking forward to Trading Camp too --- they're always GREAT! (As Tony the Tiger would say . . . .)

Kirk asks:
Hello Ken, When technical trading do your ever look at the events in the world to make a decision? War, weather or otherwise

at 6:55:04 PM
NO, NO, and otherwise NO!!! (Honest!)

katet asks:
Ken, just like to say thanks for the jellybelly's,ruler, and pen you get in the info packet from grandcentraltrading. My question is how do you use the weekly and monthly charts in relation to the daily chart in helping you determine when to enter or exit an option trade?

at 7:01:31 PM
You're welcome, katet! (Guess who's brilliant idea the Jelly Bellies was?!)

When planning a LONGterm trade, katet, I ALWAYS refer to Weekly and Monthly charts, then I zero-in on my actual entry strategy using the Active Futures Month (daily) chart. Weeklies and Monthlies are where I find my 50% Retracement targets, support, and resistance points.
See "Ken's Chart Book" for actual examples/illustrations.

And next month, my brand new 50% Retracement DVD package will be available too . . . .

jimsideas asks:
Ken, How do you know when to exit a market, assuming it did not hit your target?

at 7:05:56 PM
There are several examples of EXIT strategies listed in each Trading Strategy at KRC's Members Center. Realize, jimsideas, that there's no ONE right exit strategy. This demonstrates why trading is an art, not a science. Experiment with several exit strategies under different circumstances, and in varying markets to determine which work(s) best for YOU and your trading style.

"Plan your trade, and trade your plan."

accuhands asks:
Hi Ken, and gang (Jim and Louie Too) I'm back at work in the oilfield, but I am paper trading. Working with a corn future @ 222.75, off a 1-2-3-bottom, Exit is 237.50. Saw in your chart book where it is also a channel. Such an art. Just want one of those singles to begin with. I want to tank ya all for the great weekend that I had at trading camp last month. Even with a price increase it is well worth the value. My first experience working with a broker, from Grand Central has been everything I was told and even more. Thank you Ken and Steve. Are you going to be putting on anymore UTS Grand Workshops? My schedule just didn't fit this one. Again thanks for everything. William

at 7:09:35 PM
Hey Bill!!! (Bill was the "bad boy" at our Trading Camp that weekend!) Congratulations! Yes, I certainly WILL do more and more UTS Grand Workshops (since trading is, after all, 80% psychological --- it's the 80/20 Rule). Glad you're so happy with Grand Central Trading too . . . .

traderken asks:
is euroyen in a channel/

at 7:11:44 PM
YES!!! And the Euroyen is my favorite market now! (I even have a brand new DVD being made right now that's coming out soon on the Euroyen.) The Euroyen is THE most extreme market I've ever seen (and likely ever will see)! Check out Ken's Chart Book too . . . .

TOVIJUNKIE asks:
Good evening Ken and crew,Tovijunkie here from Cuyahoga Falls,Ohio.I have many questions tonight.I use the three chart method to plan my trades,monthly, weekly, and daily.I wonder Ken, if you are charting a formation on all three which one do you use the most in your trading decisions? Example March06 corn,on the daily it broke out of the channel so I purchased a call,however on the monthly and weekly it is still inside the channel.What do you use? I have my own trading style but always want to know what the true big time trader thinks. As always I thank you so much for being there and can not wait to come to your town. TOVIJUNKIE

at 7:19:30 PM
Yes, come on out and see us, TOVIJUNKIE!

The Active Futures Month (daily) is always the "driver" where I take my entry and exit signals from.

Big Tex asks:
Hello Ken, do I need to subscribe to TOVI in addition to becoming a member to have all the tools I need to get started trading Options?

at 7:21:38 PM
Well, Big Tex, y'all don't HAVE to, but I wouldn't trade options without TOVI . . . .

P.S. For years, Course Members asked me if there was a "template" they could place over their price charts to identify 1-2-3 tops and bottoms, narrow sideways channels, etc. And I always had to say "No, there's no such template." But now there is: And it's name is TOVI!!!

Steve from West Hills asks:
Hi Ken, Thank you again for your and your staffs hospitality last month, during the What? Where? When? and How? seminar. Last summer I purchased your ACTT Course and thank goodness for it!! It helped me recognize the flat top triangle in the Sugar market back in November so I purchased some "At the money" call options for around .65 points and it has been a sweet ride ever since. I have been considering an exit strategy: The paper chart monthly, dates back to 1981 for a high of 34.00. The on-line chart dates back to 1974 high of 66.00. The market has been getting volitile and it has me a little concerned as to whether or not to hold on until the higher 50% level. I look forward to visiting Grants Pass again! Oh!! and I would also like to say "hi" to the guys at Grand Central Trading (now I don't have to worry about any TLTC (to late to cancel) orders. Thank you for refering me to them. Steve

at 7:31:12 PM
Hello again Steve! Thanks, and congratulations! (That IS a s-w-e-e-t story . . . .) I have an idea to answer your question, but can you fill us in on the details of your sugar trade so I'll have a clearer picture . . . . Thanks!

This is the Course Steve just mentioned . . . .

Money Bag asks:
Are women better traders than men?

at 7:33:06 PM
Yes they are, Money Bag! You know why? They follow their plan MUCH, MUCH better than men!

DM HydroPower asks:
Hello Ken and Friends! Nice to be back on the chats after a brief hiatus. I have a technical question that I would like to ask you, and everyobody on the chat. If I'm looking to play a commodity that is near an all time low, and want to get in on the bargain price, should I pick the furthest out contract given that I plan to be in it long term (18-24 months)? Or is there some "slippage" if the farther out contract has a higher "buy in price"? Your expertise is greatly appreciated!

at 7:36:33 PM
Hello DM HydroPower! (And just so everyone knows, you're speaking of futures contracts here, not options.)

You will generally pay a higher (perhaps MUCH higher) price in the farthest-out futures contract months, and this can cost you if this turns into a long-term trade. Generally, I trade the Active Futures Month and then "roll" that contract out as needed to remain in that trade.

kevinb83 asks:
Ken when trading options, do you have a rule of thumb as to how far out you look at the strike price?

at 7:41:02 PM
Yes, kevinb83, that's easy: I let TOVI find the best-valued option for me! But if you're not using TOVI, generally speaking, look out at least 90 days and within three strike prices of the money. Also be sure to refer to the Trading Strategies at KRC's Members Center.

If you're not clear, always call a Course Counselor. Thanks!

flyer asks:
I'm in two call options which have paid off extremly well. I felt I should liquidate but TOVI says they are still in strong up trend. Shoud I hold longer or liquidate. Opinion?

at 7:43:33 PM
OK, flyer, what was your plan going into this trade?????

Now that I've scolded you, I'd stay in the trade now until TOVI changes from "Strong" to "Moderate/Neutral". You could also take your profits on ONE option, and let the other continue on. Remember my favorite saying: You can't lose money taking profits! Thanks, flyer!

Eric asks:
I am new to commodities and would like to know what are the best steps to take to learn this business and become profitable. Will you have a service in the near future whereby subscribers will receive recommendations from you?? Thanks.

at 7:45:52 PM
Hi Eric --- Yes, go to www.KenRoberts.com and click on "Join Now". You'll be on your way! Thanks . . .

Cornhappy asks:
Ken "message from the master" at Four star books is by far the greatest explanation so far!!!!!!!! AMAZING

at 7:47:35 PM
Yes, don't you love Four Star Books! (I do too . . . .) Also take a look at Dr. Hawkins' books and CDs --- talk about AMAZING!

gizmo asks:
Ted warrens book from 4 star books, what a total masterpiece! One thing always stuck in my mind that he wrote, watch for the quick two day rise! anybody look at a few of the metals today? The whole book is pure genius.

at 7:50:36 PM
Yes, wouldn't you love to have met Mr. Warren?! (But I was fortunate enough to meet his widow, Helen, when she entrusted the copyright to his "masterpiece" to me!)

coyotee asks:
I just wanted to share with everyone tonight a valuable trading experience that I have major troubles with. When a market in options is moving opposite of my position, I hate to give up and this mentality (ego) has caused me bigger losses. I just lost 1600.00 in two Feb.live cattle put options, because I did not cut my losses in half, and let them expire worthless.I am currently studying your Rich man's secret course and your UTS course. It has helped me greatly. Thank you for all that you do to help. My biggest enemy is myself

at 7:58:22 PM
Hi Coyotee. That was not a very "wiley" move on your part --- sorry, couldn't resist! Thank you for sharing your experience with us. Hopefully, it will prevent other WGB Members from falling into the same trap you did.

Yes, you're right: Our biggest "enemy" is our self! But without our self, we wouldn't be here! So the answer is to understand it, make friends with it, and learn to work WITH it. This is what Dr. Hawkins teaches so well --- better, in fact, than anyone I've ever heard.

And thank you, coyotee, for sharing this with all of us tonight. We ALL need to learn what you've witnessed.

David asks:
Ken (and Brian) I also did TWMPMM in 1996, along with some options courses...my first trade was a cocoa put that made $1,300...and had success with corn and oats as well...then as time went by I started trading "intuitively" and went downhill...just got back into it with my 13-yr old son Jesse...he keeps me honest! Good luck, Brian

at 7:59:54 PM
Thanks David! How great is this?! Yes, you'll find that Jesse doesn't have the hang-ups we adults have, and will tend to see things a lot more clearly than we do! And Jesse's very fortunate to have a Dad like you, David.

Dave C, Natick asks:
Yes, Ken, I didn't really bat an eye as today's drops occurred. I have been waiting for these pullbacks, esp in metals, so I just beefed up my account in order to take advantage of the situation (with options) should it prove fruitful. Whatever happens, I am prepared to absorb it and take appropriate action. I watch 50% points a lot, esp for entries, so we'll see what happens. Nothing that happened today made it to a 50% point--maybe later this week. I'll keep watching.

at 8:00:56 PM
Notice how calm you are, Dave C!!! This is "trading wisdom" . . . .

borpacinvest asks:
BahamaPapa Hi Ken, happy to be on the chat line with the best and brightest traders. I'm in the proces of opening my account with GCT.Can't wait to start paper trading. How soon will you be coming to Boston?

at 8:02:29 PM
Thanks BahamaPapa! We were just there last October! (And we went to Walden Pond --- what a treat! They should sell "Walden Water" in the gift shop!) Welcome aboard, and stay in touch!

TOVIJUNKIE asks:
Todays pullbacks were much larger than expected. Another benefit of options,to be able to stay the plan and ride the move. If I were holding a contract I would have been sick over Oats.TOVIJUNKIE

at 8:02:58 PM
Well said, TOVIJUNKIE, and so true!

sabrena asks:
Hi Ken, I just renewed our U. S. online charts. We love them. We are on the waiting list for the 50% retracement DVD. I was wondering when you thought the DVD may come available. Thank you very much! Sabrena

at 8:04:10 PM
It's actually being reproduced in quantities right now, Sabrena!!! Look for a March launch. Thank you!

juniegirl asks:
June from Pa. Hi Ken, Jim, Louie, the rest of the crew, and to all my fellow classmates at the Jan 21/22 trading camp. The entire weekend was excellent from start to finish. Everyone was so gracious and helpful. Jim and Louie did an outstanding job at presenting the material and we all appreciated your Sunday afternoon discussion. Thanks again for everything you do for all of us course members.

at 8:05:34 PM
Hello Juniegirl! Krista sends a big "Hello!" too! Great to hear from you, and keep us posted on your progress! Onward & Upward!

runningbear asks:
Ken,thanks for everything you provide for us. I have been reading all the old chats... in a 2002 chat a "tools of the trade" course was mentioned. Is that still available, and also in the April 12,05 chat it mentions a "premium trading service". What exactly are you refering to. Thanks a lot.

at 8:06:59 PM
Hello Runningbear! Stay tuned: The old "Tools of the Trade" videos are being redone --- bigger and better than ever! And our brand new "Premium Alert Service" is coming very soon now too. Thanks!

timjh asks:
Ken, is the 50% retracement rule still a trading strategy that you endorse? I, too am a returning trader. I made a ton in 1999 when Gold shot up for about a week. Lately (until today, anyway), I was thinking of going short since it seems to be overdue for a 50% retracement What do you think?

at 8:08:14 PM
Absolutely, timjh. You'll LOVE my new 50% Retracement training session DVD. (Darn! Why didn't you short it TODAY??!!) Oh well . . . .

Ron from Alaska asks:
Ken: I read (and reread) The trading rule that can make me rich. Thanks for pointing the way. Again. I played with recent charts and then with older charts. As you preach and as I have observed over the last 5 years, there are a whole lot of 50% retracements out there. I have been using the 50% retracements as profit targets but I never thought to use them as entry points. I am now attempting that as well. Question: Any idea when the 50% Retracement video will be available? Thanks for these chats and all that you do. Ron

at 8:09:01 PM
Real soon now . . . . Thanks!

perrynlsn asks:
Hi Ken When you talk about going out 90 days with options is it 90 days form today or 90days from the front month?

at 8:10:14 PM
Ninety days from today!

antiquer asks:
Since there are no options avaliable in the Euroyen market is it not feasible to buy a far out contract? It has to move at some point

at 8:12:58 PM
There ARE put options in the Euroyen, antiquer --- and I own them all! (June 9975 puts, all 25 of them!). And yes, you CAN sell a farther-out futures contract, but be sure you know what you're getting into. That's why I created my brand new My Favorite Market Now DVD (available soon --- we're editing it now). Yes, your analysis is correct: It HAS to move at some point!!!

Spakles asks:
Great questions tonight. I really enjoy hearing others experience. Thank you for holding these chats.

at 8:13:08 PM
Thanks, Spakles!

Bill in NC asks:
Hey Ken, I just want to say Tovi is a big delicious cake and Ted Warran's ACTT course is the icing that makes it complete. NOW I'm having success because I understand charts BETTER. THANK YOU!!

at 8:13:23 PM
Hello Bill!

3-D asks:
Ken you are the greatest! I opened a real money account Dec. 6th ($5000.00)as of today it is worth $24,000.00! What do you think about those weekly 50% canola call option prices? This is the world's greatest business!!!! thankyou ken, Doug D. Downs ,Lander Wy.

at 8:16:35 PM
Thanks, and congratulations 3-D! I agree: This IS the World's Greatest Business!!!

Be sure to check in your Members Mailbox at www.KenRoberts.com often! With all the spam filtering and everyone being our policeman nowadays, I'm not getting half of the emails people send me. And I'm sure the same's true for you too. So I set up your own "inbox" so you can check in with me to see what I've sent you recently. This should help the situation . . . .

Well that's it for another month. Check out my favorite web sites: www.ToviOnline.com ; www.uschartco.com ; www.FourStarBooks.com ; www.HistoricTrees.org ; www.BillOreilly.com ; www.WldlifeImages.org ; www.Salestax.org (Let's abolish the IRS!); www.LP.org (Take The World's Smallest Political Quiz and see where you stand!); www.VOTE.com (Make your voice heard!). My next chat will be Tuesday, March 7th. As always: Use these newfound powers only for Good. Good night, God bless, and watch where you step!

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