Commodity Chat With Trader Jim! (tm) with Jim Prince
from March 13, 2007
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Good evening! Trader Jim here. . .
Since our last chat many of the markets have been going crazy!
The volatility is what makes the business of trading so very special. Real movers of late have been May Lumber, April Live Cattle, May Pork Bellies Sugar, April Gold and the mini June Dow Jones. All of these markets have been quite volatile. Plus there are opportunities shaping up in several other markets too!
At one time or another we’ve featured all of these markets in our brand new Premium Alert Service™ (PAS) videos.
If you’ve had a successful paper trade or real money trade in any of these markets (or other markets), please feel free to chat about your trade details with your fellow Course Members.
Chatting about your trading experiences truly helps others realize that they are not alone in their own trading journey. So please share your enthusiasm, excitement, and zeal with your fellow Course Members!
I’d like send a big “Shout Out” to Ken Roberts. Ken first began introducing people to the World’s Greatest Business over 20 years ago. I was fortunate enough to not only be a student of Ken's, but I also had the great pleasure to work for him for 12+ years. I’m happy to be able to share with you what I’ve learned over the years.
As we begin this evening’s session, remember the reason these monthly chats are conducted is to: provide you the opportunity to ask questions and to pick the brain of a 20+ year student of the markets and active trader.
It’s not the 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 our Course Counselors are here for. They can be reached at 541-955-2885) This chat 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 and laughter along those lines, so much the better.
NOTE!!! When commenting on one of the WGB strategies or US Charts, please identify WHICH STRATEGY AND/OR MARKET. Also, when relating trading experiences and/or results, please provide details: Futures contracts, options, option strike prices, options AND futures, real money or paper trading, etc. This helps others follow along and learn from your experience too.
Mike in NYC asks:
Thank you for the updated features at the online US Charts. There are so many new time-saving improvements. Keep it coming! I am currently long 1-futures in July Sugar at 10.67, with a Stop-Loss at 10.07. Purchased also (1) 10-cent Put for price protection at 28pts. Have also (2) 12-cent Calls in July Sugar I purchased for 10pts each. Thanks again for making this all possible – with such great charts & technical analysis with your teaching.
at 6:08:40 PM
Hey Mike in NYC! We have a great crew here and we're doing all we can to provide the best trading tools possible. Thanks for the kind words and best of luck with your Sugar trades.
wendy37 asks:
hello there,
I am so excited that I get a chance to chat with you, I'm just getting started in commoditys and I want to start by trading options, However I was on a chat line with other traders who bascially told me that options were more riskier than trading futures. I personally don't believe that to be true, since all you can lose is the amount you pay for the option. Is that correct? Thank you
at 6:13:29 PM
Welcome, wendy37! You are correct, when buying put or call options the absolute most you can lose is the premium (option cost) plus commissions and fees. Most options expire worthless because perspective traders tend to purchase the wrong ones. Perhaps that is what the other traders meant. Anyway, glad you're here this evening and be sure to call one of our Course Counselors if you need assistance. They can be reached Monday-Friday, 8:30am to 5:00pm PT at 541-955-2885.
Full House From Chandler asks:
What's with the new features on the charts; entry date and underlined (some) trend signal ranking? Just noticed it a few days ago.
at 6:16:32 PM
Hey Full House From Chandler, We just keep adding more and more neat features. For others. . . the information you're describing is found below any chart. The entry date is the date the Trend Seeker(tm) trend began. On the Trend Seeker page we're now providing history of Trend Seeker. If you hold your mouse over the underlined text it will tell you what the previous trend and ranking were. I'll be producing a video on these features shortly. Thanks for the questions!
chatter asks:
Jim,
What is the purpose of this chat?
at 6:18:40 PM
Hey chatter, the chat provides you with an opportunity to ask your commodity questions. We're doing all we can to help you succeed and this is just another venue to help. Thanks for stopping by.
mike320 asks:
Hey Jim, can you explain the Trend Seeker rating of EXTREME and whether it would be wise to stay in a position, long or short, when the market is moving in your favor?
at 6:22:20 PM
mike320, The Extreme Trend Signal Ranking of Extreme is the strongest part of the trend as analyzed during the last several days. Since our strategies are all about trading with the trend, I would want to be on the same side of the market and the extreme ranking. Trading is like a river, go with the flow. You might say that the Extreme ranking happens to be the strongest portion of the river. Be sure to watch the Trend Seeker training video on the Trend Seeker help page for more info. Good question.
tacodog asks:
Hello Jim...Premium Alerts,this stuff is out of control! It's really nice to get a look into your coconut to see how a pro works, been noticing you really keep your stops tight on the future contracts,do you keep them that close on the options as well? Judging by todays Alert I'm thinking you do if your choosing options with a delta of 70 or better, do you ever trade options with less than that if the set up looks good but the 70 plus delta options are a little too rich? thanks a ton.
at 6:27:22 PM
Welcome to the "dog pound," tacodog! Yep, I'm all about protecting my capital. I keep my stops tight -- just like I display on the videos. Options are no different. Yes, I will trade options with a delta of less than .70. It just depends on the market and the setup. Glad you enjoy the alerts, thanks for the nice words.
fix and fly paul asks:
Jim: Most interested in the new Premium Alert Service. Question-- is this a replacement for WGB membership or online chart subscription or is it an adjunct. Meaning should I get both for the most bang for my buck?
at 6:29:54 PM
Howdy fix and fly paul, the Premium Alert Service is an additional video service we've made available. To get the most bang for your buck you'd want to be a subscriber to the charts and the PAS. As I use the charts and other features of the site within the videos. For more info. be sure to contact one of our Course Counselors. Thanks for your interest.
The Premium Alert Service
Click Here or Call a
Course Counselor at
800-230-2427
To Sign Up Today!
Desert Girl asks:
Hi Jim, I am back for the first time after quite a few years. Have to start completely new and refresh my memory of all the things I learned from Ken. I will call the office and will sign up for the new charts. Where is Ken? Retired? Please say hello to him for me.
at 6:35:20 PM
Welcome back, Desert Girl. We changed our trading approach a couple years back, but not to worry. Call the office in the morning and they'll get you pointed in the right direction. Ken has moved on to other things, but I'm sure he's enjoying the good life. Rather than me relay what he's doing today, you can hear it in his own words by clicking here. Thanks for stopping by tonight.
Ronald asks:
Jim...Ever since the initation of P.A.S you have taught us the importance of using "stop loss". Have you, your staff or the programers of the WGB website ever thought of utilizing "stop loss" as apart of TRADE TRACKER?
at 6:39:07 PM
Hi Ronald, Risk and money management are very individual things. Some of us can afford more/less risk than the next person. Thus, in my opinion, I think it's not a good idea to post such data. It would be completely arbitrary anyway. The person with $100,000 in their account can afford a lot more risk than the person with $1,000 in their account. To me it's a much better idea to teach folks how to read a chart and then let them decide where to place their stops. Good question.
Mike in NYC asks:
AWESOME! Another "chart wish" come true with Trend Seeker history. WOW! Just terrific service - I wish all businesses in America were run like this.
at 6:40:35 PM
Thanks, Mike in NYC!
Byrdman asks:
Hey Jim. I am yet in the paper trading stage (looking to go live really soon). I am currently trading two call options in June Live Cattle that I purchased at 2.0 pts. My exit strategy is to exit at 103. My question is should I be looking at the current front month or the month that I am trading to for that exit sign. Thanks for the incredible opportunity.
at 6:46:50 PM
Hey Byrdman! I'd continue to use the same chart. In other words, if you made your buying decision using the June chart, then use it to make your exit decisions. If you used the April chart when making buying decisions, use it. (Both the April and June charts look similar.) One of the advantages now of having individual Trend Seeker ratings for each trading month is that we aren't limited to making trading decisions based on the front month. Anyway, I'll produce a training video on this subject at a later date.
SujeevanToronto asks:
Hi there, Sujeevan from Toronto, Canada here. My question is if you look at the Weekly COCOA you'd see the price has been in a channel since mid-2003 and the highest price in the channel is 1850. At the same time if you look at September COCOA, you'd see today's high to be 1860. Based on the weekly chart, price hasn't broken above 1850 for quite a while and yet on the far out months prices have already broken above 1850. How can I use weekly chart to decide profit targets for options? I understand if I were trading futures contracts, things would be much simpler. Please help clarify this problem. Thanks for all you do.
at 6:52:18 PM
Sujeevan, When trading options I still rely on what the futures price is doing on the charts. So if I set a profit target and the futures price hits it based on the chart I'm using, then I'll exit the option -- regardless of the option value. Remember that the data that is placed on the weekly and monthly charts is taken from the front month futures contract. The front month futures contract changes each time a contract stops trading. Anyway, I look at options as a vehicle to get me into the market. But I still base all trading decisions -- futures or options -- on reading the price charts. I hope this helps. I'll try to do a video about it within the next few weeks.
ready2win asks:
Hi Jim, I am probably asking a stupid question but referring back to Mike NYC where he said he was buying a 10cent put option for 28pts for july sugar. does that mean the cost is .10 x $11.20 which is the point value on the charts or does the point value change? Trying to grasp it and hope this question is ok to ask.
at 6:55:40 PM
Hi ready2win, First of all I gotta set you straight. . . there are NO stupid questions. Okay? Okay, what Mike in NYC was referring to is that he purchased a July Sugar 10-cent strike price option for 28pts. 28pts x $11.20 (value of one point in Sugar) = $313.60.
Mike asks:
The Premium Alert service has been good for me. So far it has helped me with understanding and practicing the requirements that need to be met before entering a trade. Would you speak a bit about trading different chart patterns, does a seqasoned trader like yourself and Ken Roberts trade all the patterns that meet the requirements equally? Does the more patterns you trade increase your odds or can it hurt you? Hope this makes sense.
Thanks
at 6:59:35 PM
Welcome Mike, I have specific patterns that I look for. I chat about most of them on the Premium Alert Service or write about them in the chart book notes. There are probably hundreds of patterns. I can't speak for Ken, but I've found those that I like and can easily identify (and teach). I feel it's better to concentrate on a few patterns, specialize in them and do really well with them. Only then would I consider moving to another. Remember, the more things you try to do, the more apt you are to make mistakes. Successful trading has a lot to do with making few mistakes. Hope this helps.
Wafa asks:
Good evening Jim and all! First I like to thank you Jim & the crew for the ammazing help and services you are providing. Second, I like to know what is the Delta (tacodog has just mentioned). Thanks Again!
at 7:03:12 PM
Wafa, the delta is part of the search function contained within our newest Option Search feature at US Charts Online. I discussed a bit about it in tonight's PAS video and will do more at a later date. For now we offer a free delta options course to Course Members. The link for the course is contained in the "Help" file for the Option Search. Thanks for the kind words.
Smokin Joe asks:
Hi Jim,
I sure do like the improvements you've made on the charts. I didn't think they needed to be improved but they're so much better now. If the trend on a chart changes from up to neutral or down to neutral is that the indication that the trend has changed or should I wait for the change from up to down or down to up?
at 7:06:33 PM
Hi Smokin Joe! The crew here is fantastic! And you're right, the charts just keep getting better and better. I'm not sure I completely understand your question, but I'll give it a shot. Whatever the trend rating is rated by Trend Seeker, that's the current trend -- per Trend Seeker. If the trend is rated as neutral then that means TS is undecided. Basically we want the trend to either be rated up or down and to coincide with the chart pattern we're trading.
Bonita Joe asks:
Trader Jim!!!!! Great Job with your trading perspectives every day. I watch with respect your one main ingrediant (other than your obvious talent as a great trader) and that is PATIENCE !!!!If I ever had one MAJOR flaw, in my opinion and we won't ask others, and that is patience. I see the trade; I want to get in....so I get my feet wet with just a few futures or options, but I have to sit on my hands to keep from jumping all the way in. You showed, a few weeks ago, that buying an option in the right direction is one thing, but buying too soon eats up later profits. Thanks Jim!!! Hope to meet you someday! Bonita Joe
at 7:09:08 PM
Hey Bonita Joe! Thanks for joining us tonight. Glad you're enjoying the videos too. Yep, patience is a real key. It helps squash the fear and greed most traders let control them. I look forward to meeting you someday too. Stay in touch!
tom asks:
Hi Jim I have been a trader for a couple of years but to not much avail. I have been following your premium alerts for 3 weeks and have learned a lot. What is your opinion on hedging a futures contract?
at 7:12:30 PM
Hi tom, I don't like hedging with options if that's what you mean. Here's why. First of all - 99% of the time the option expires before you have to be out of your futures contract. So your position is left naked, without protection if you're still holding it. Second, the cost of the option puts your trade in the red from the get go! Your futures position has to make up the cost of that option just to get your position back to break even. In my opinion, it's hard enough to make money in this business without starting off with one foot buried. I hope that helps.
jim asks:
Jim--I have been papertrading options for a couple of months now with some success. I'm learning more everyday -- thanks in large part to the Premium Alert Service. I have also done some outside reading and have come across the "Greeks" (e.g. Delta/Theta/etc). Do you recommend that we concern ourselves with these concepts?
at 7:14:55 PM
Hi Jim, Not really. The delta is a good measuring stick to help you determine if you're getting some value considering the purchase of an option. That said, I put the charts first and foremost. Learn to master the charts, doing so will do a lot more for you in the long run. Thanks for the question tonight.
2860060 asks:
Hi Jim Do u teach somthing special in trading camp .Because I miss this time
at 7:17:05 PM
I cover a boat load of material at the Trading Camps, 2860060. Some old, some new. But it's my feeling if you can take at least one or two (actually I hope you get a lot more) new and good ideas home with you -- I've done my job. Hope to see you at the next Trading Camp.
uncle fudd asks:
Hello Jim;
It's a rare thing for me to be here on a tuesday night. I'm glad I was freed up. My question tonight is; Since I'm not a subsciber to the premium alert service yet, is there anyone makeing money using it. Thanks
at 7:23:34 PM
uncle fudd, that's a good question. I'm not going to pull your leg and tell you everyone is making money from the PAS. The fact is I don't know. What I do know, however, is that we've had some very, very good opportunities presented since we began the service in early January. But keep in mind, everyone's results will vary. As a teacher I hope that folks are able to learn that money management and stop placement is key. These two points, which I talk about a lot in the videos, will help so much. Anyway, as I said, the opportunities have been there. Take a search through the chat archives. I think the subscribers provide the best testimonials. And they offer them up freely. Good question and thanks for stopping by on your free evening.
Boomer/Sooner asks:
Jim, May 12 you looked at May corn chart indicating it broke support down with trend seeker indicating down neutral. Today it was also down with t/s still saying down neutral. Should t/s indicate something different to enter this on future or option trade.
at 7:29:02 PM
Hi Boomer/Sooner, Two things to keep in mind. We want a chart pattern to be in place and we want Trend Seeker's trend rating to agree with our proposed entry out of the chart pattern. Right now I don't see a chart pattern on the May Corn chart, so I'm not paper trading it. Be sure to double-check Trend Seeker. It currently says that May Corn is in the second day of a down trend. Also keep in mind that when I do the PAS videos I'm using the Trend Seeker rating that was updated the night before. TS is updated each trading day around 5:00pm PT.
kazdad asks:
Do you ever set targets or do you always depend on a trailing stop to exit a trade?
at 7:31:08 PM
Hi kazdad, I always do both! I always set profit targets and I always trail a stop. Remember, there is NO guarantee that a profit target will be hit. So it makes good trading sense to help protect as much of your accumulating profits that you can.
thunley asks:
Jim,
I just wanted to share some excitement about a paper trade I did with May Lumber. I bought one put with a strike of 2600 using the hi/lo breakout strategy. When I finally got stopped out I had profited a little over $740 in just one week's time. Looks like I might get another opportunity in this market again. Thanks for all of the great information. Do I trade it the same way?
at 7:32:46 PM
Nice job, thunley! Thanks for sharing your excitement too! Yep, May Lumber is on the verge of triggering another Hi Lo Breakout entry. Keep up the good work, you're on the right track!
Ed in Windsor, Ontario asks:
Hi Jim and crew, I really appreciate the improvements in the charts and also think the Premium Alerts are really helpful and I'm learning a lot from them. Would it be possible to have a "Save to my chart book" button in "Ken's chart book" in order to transfer your info from them to our chart books?
at 7:34:10 PM
Hi Ed in Windsor, Ontario! Thanks for the nice words. I'll pass your suggestion on to the programmers. They're the ones that will do it if it can be done.
katguy asks:
Hello Jim,I am at the paper trading stage and wonder,what is the advantage to trading with a futures contract verses a less risky option? Secondly,what causes a market to be listed in Trend Seeker?
at 7:38:52 PM
Hi katguy! We have roughly 52 markets listed in Trend Seeker. This covers virtually all major markets. A contract month listed on the Trend Seeker page is found there because it is the front month market -- the one with the most volume and open interest. When trading futures contracts you will get a the true value of a move. For example, if May Corn moves from 406 to 410 that's 4 cents or $200. But just because it moves four cents doesn't necessarily mean your option will do the same. The good thing about trading options is the known limited risk. Worse case scenario. . . if the option expired worthless, you can only lose what you pay for the option plus fees and commissions.
atlast9 asks:
Hi Jim, I've noticed that you always pass on a flat bottom triangle if it breaks to the upside. at one time didn't we also make trades to the upside when a strong breakout occurred even though it was said that the downside was the stronger move. What has motivated you to pass on the upside move.
at 7:43:26 PM
Good point, atlast9. Yes, I will pass on a trading opportunity if the breakout is in a different direction than what the formation says it "should" be. For instance, flat bottom triangles are bearish chart patterns. If prices breakout to the upside, I'll pass on it. I want the formation, Trend Seeker, and breakout all to line up. If they don't, I pass on the proposed setup. Experience has taught me that trading as outlined above provides an a "better" opportunity to be successful. That said, there are of course no guarantees.
tigerbg asks:
Hi Jim: When you put your stops in when trading options (when you first enter the market) how do you estimate or figure the loss in value of your option at that stop/loss point to determine whether you want to luiquidate or not?
at 7:48:02 PM
tigerbg, Technically speaking you can't place stops on options. But you might be able to work something out with your broker so be sure to ask if they can place alerts for you and then exit your liquidation order at that point. Anyway, you could consider risking a percentage of the option premium or exit the option regardless of the value once the underlying futures contract moves to a certain point on the chart. There really is not an exact method that determines the value of an option if the underlying futures market moves against you to a certain point. At least not that I know of. Good question.
Eric in Fort Worth asks:
Jim, I don't seem to hear you talk much about 50% retracements. Do you use them (find them valuable) in your trading?
at 7:50:43 PM
Hi Eric in Fort Worth, I use them and have even been adding them to more and more of the Premium Alert video messages. They are valuable and are often hit. I believe this to be the case because it's almost like a self fulfilling prophecy because so many traders know about it.
trwtrader asks:
Jim,
I just wanted to thank you for all and your crew are doing at US Charts. The PAS is awesome and I look forward to it everyday. Thank you for sharing your knowledge and at the same time making it affordable. From your teachings I have made a sign that I look as a reminder. PATIENCE = PROFITS and STOPS = CAPITAL PRESERVATION. Thank you!!!
at 7:51:53 PM
Very cool, trwtrader! I like the content of your sign. Good idea! Thanks for the nice words too.
The Premium Alert Service
Click Here or Call a
Course Counselor at
800-230-2427
To Sign Up Today!
Bonita Joe asks:
AKA, "Trader Jim"..Bonita Joe saying that "if I was a lazy person", I could sit back and let you tell and show me where to trade, put my stops, and dress.....no, wait....actually, it is great to such "hands-on" trading. Do I dare ask what your favorite market and least favorite markets are? My brother and I were saying this morning that we sometimes wish there weren't names on the charts...just the formations so our trading wouldm't be influenced from a farm boys perspective!!!
at 7:57:41 PM
You can ask, Bonita Joe, but I can't tell. LOL. Seriously, while I do have my favorite markets and my least favorite markets, I wouldn't want to dissuade anyone from wanting to trade a particular market based on something I said (at least not in this forum, LOL). The reality is a chart is a chart is a chart. I understand your comment about not having names on charts too.
mike320 asks:
Jim, for somebody just getting started after a 2 year "absence", and with an account of $3500, what markets would you STAY away from?
at 8:02:28 PM
mike320, while I can't give you direct advice I can suggest you stay away from the highly volatile markets. Sometimes folks get a wild hair and make crazy decisions. For example, a person might hear a new story about oil. So they invest their entire $3,500 into one option. The market doesn't do what they expect, the option loses value, and the person loses all or most of their money. Very silly and not necessary. Stay with the slower movers if you can and consider "grinding" out those trades. Try to methodically build up your account balance, building good habits along the way.
greenhorn asks:
JIM IS THERE ANY WAY TO PUT A STOP LOSE ON AN OPTION
at 8:05:44 PM
Not that I'm aware of, greenhorn. Be sure to check my response to tigerbg's question that was posted at 7:48:02 PM. It may help.
Investolator asks:
Hi Jim, in your opinion is your trading style similar to Kens? or diferent, and do you ever pillar or piramid contracts?.
at 8:08:43 PM
Investolator, Ken really enjoys long-term trading. I, on the other hand, am what I consider to be a short-term trader. I never pillar or pyramid contracts. I purchase all of my positions at my initial entry and liquidate positions as my targets are hit. If you happen to be attending the Trading Camp this weekend you'll discover that I cover this in detail. Good question.
Mike in NYC asks:
Will you add Option Delta's to the listings soon? Or do you figure them manually. For example, if the underlying Futures went up one dollar, and your Option went up 70-cents, then that is a Delta of .70.
at 8:11:42 PM
Mike in NYC, the delta is already contained within our brand new Option Search feature. You can view it right now, just click on the Option Search tab within US Charts Online. They are calculated automatically by a computer program. I don't have enough calculators to do it by hand.
Well that's it for this month. Keep in mind, that you're not alone in your trading journey. US Charts Online, myself, and our wonderful Course Counselors (541-955-2885) are here to help you become the best you can be. On that note, be sure to check out
our weekly video trading lessons at: US Charts Online. This is a fantastic teaching tool and free to
all WGB Members and Online Chart subscribers!
Finally, make sure you have a plan prior to entering any trade and use stops to
protect your trading capital. As a trader your capital is THE most valuable asset you
have!
Plan your trade and trade your plan!
My next chat will be on Tuesday, April 10, 2007. God Bless and I look forward to
seeing you then!
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