Commodity Chat With Trader Jim! (tm) with Jim Prince
from April 10, 2007

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Good evening everyone! Trader Jim here. . .

Thanks for joining me this evening. I’m very excited about tonight’s chat. Several markets have been on fire since our last chat, so we have a lot to discuss this evening.

May Corn, May Soybeans, May Soybean Meal, and May Wheat futures have all had impressive moves during the last month! And of course we can’t forget about April Live Cattle, June Canadian Dollar, May Coffee and May Sugar. All these markets have moved nicely, and we’ve outlined and followed them in our nightly Premium Alert Service™ (PAS) videos.

If you’ve had a successful paper trade or real money trade in any of these markets (or others), please feel free to reveal your trade details to fellow Course Members.

Discussing your market experiences lets others know they are not alone in this business. So please feel free to share your exhilaration, passion, and dedication. It provides others hope and optimism of what’s to come.

I’d like send a big “Thank You” to Ken Roberts. Ken started introducing folks 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.

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:
Do you ignore all market news- trading only the chart formations-based solely on price movements? I seem to possess this curiosity to know “why” a market moved today. Last Summer I made about $4,000 profit in Wheat call options, as I got in before it “took off” due to the world-wide drought I had been reading about in the Market News. It takes TOO MUCH of my time to read the Market News. Will I be ready to trade more markets, if I allocate my limited time to do ONLY technical chart analysis? Have you found it profitable for yourself, to trade only formations, not even knowing why the market is moving up or down? Thanks for your wisdom on this!
at 6:16:09 PM
Hi Mike in NYC! Nice to see you this evening. I only follow the chart patterns. I just can't follow all the news, even if I could I don't see how I could possibly interpret it!?! Plus how much of that is real news or "stupid" news? I figure most everything is built into the charts. I've found that if I focus just on the chart patterns I can look at a lot more markets - not really caring what moves a market up or down. As my kids say. . . that's how my Dad rolls!
bill asks:
This may be rudimentary, but I'm confused by the quotes for options, calls and puts, concerning the amounts required for a trade. Can you advise?
at 6:18:40 PM
Hi bill, I'm not sure I understand your question, but I'll try anyway. Each call or put option is quoted in both points or cents (depending on the market). That's the premium. We also quote that premium in US dollars. That's typically what the option would cost at the time of that quote. I hope this helps, if not be sure to call a Course Counselor in the morning. They can be reached at 541-955-2885. Thanks!
Andrew from Pacific Grove CA asks:
Do you use silent stops in your trades or do you put your stop out there and risk it being taken out by "gunmen." Thanks!
at 6:22:03 PM
Hey Andrew from Pacific Grove CA! I actually will do both. Since I'm able to watch the markets all day I will often just keep a mental stop. Other times, when I'm away from the charts or busy, I'll place a physical stop. I'm not too worried about "gunmen." If I'm gonna get stopped out, I'm gonna get stopped out. If the physical stop is not in place and the market moves to the level of my mental stop, I'll liquidate the trade on the spot -- either way I'm out. Hope this helps.
russb asks:
How do you judge or find a reputable broker?
at 6:26:42 PM
Good question, russb. The best thing I can tell you is to "Google" commodity brokers. Then contact these firms and ask for a starter kit. Then interview the broker. Find someone you're comfortable with. Remember, they ultimately work for you. It may take some ground work but remember, it's your business! If you owned a retail biz you'd be very careful as to who you might hire, do the same for this biz. Remember too that all brokers are overseen by the governmental agency known as the CFTC. We cover "brokers" in more detail at the Trading Camps, but for the limited space I have here I hope this helps.
rookie asks:
Although I purchased Ken Robert's TWMPMM Course about 6 years ago, I am just now getting back into it and hope to begin paper trading soon. I'm confused on couple of unfamiliar terms: What's a "pennant formation"? What's a "front month"? Also, you say to watch for a paper trading opportunity with a 1-2-3 top formation and "put" options, if it's a 1-2-3 top, aren't we expecting bear market anyway, why a put and not a call??
at 6:31:10 PM
Hi rookie, all of the terms you mentioned are covered in our "World's Greatest Business" Course and strategies. You'll find pennant formations and the front month topics covered in the Weekly Training Videos I do at US Charts Online as well. These videos are free to all US Charts Online subscribers and we have hours of them cataloged. If you're not a subscriber be sure to contact one of our Course Counselors and ask about our 2-week trial. Btw, a 1-2-3 Top formation is a trend reversal pattern, so we'd be looking for the market to be headed down. Thanks for stopping by tonight.
Bill in NC asks:
Hey Jim....What are your personal feelings about offering 1/4 less than the going point price for an option? Your lessons are EXCELLENT...Thanks!!
at 6:37:05 PM
Hi Bill in NC! Thanks for the nice words. If you're comfortable offering a 1/4 less then I say go for it. Remember though, many times your order won't get filled as the market will move without you. Personally, since I like to use options as a trading vehicle basis the various chart patterns and want to get into the market, I'm willing to actually pay a "tiny" bit more to make sure I get in. I also to the same on exits. . . I'm willing to take a "tiny" bit less to get out. Anyway, great idea and if nothing else be sure to paper trade it and let me know how it works for you.
OnionCreekMall asks:
If CZ7 is the front month due to OI, are the nearer months un-advisable to trade for options having only 9000+; or is 9000 just to small a number for Corn OI to be considered?
at 6:40:32 PM
Howdy OnionCreekMall! Not at all. If other trading months have formations on the charts, I say why not trade them!?! Why limit yourself if an opportunity is presented. The front month designation is simply to let you know that that contract has the most volume and open interest. Usually it's the "driver" of the bus so to speak. But don't let that limit you. I learned to trade years ago without ever knowing what the official front month was all about. Personally, I don't think it matters especially with all the tools we have available at US Charts Online.

Premium Alerts


Click the above link for more information or call 800-230-2427 Monday through Friday, 8:30am - 5:00pm PT!

david e asks:
for those of us with failing eyesight, would it be possible in the near future to offer U.S. charts in a large print format, say twice the current size?
at 6:44:02 PM
Hi david e! Are you referring to the paper charts or the online. If you're referring to the online charts you can actually make the text in your web browser larger. If using Microsoft Internet Explorer, click on View, then click on Text Size, then click on Largest. See if that doesn't help you some. I'll also pass your wishes on to the programmers. Thanks!
Pete from San Francisco asks:
Hi Jim. Do you use "combination" option strategies very much ~ such as "Credit Spreads" and "Straddles?"
at 6:46:46 PM
Not very often, Pete from San Francisco! I do some credit spreads in my stock account from time to time, but it's been sometime since I've initiated one of those. I can't tell you the last time I did any "exotic" option spreads with futures options. Straight puts and calls seem to work just fine for what we do in these markets.
dwt asks:
If one were looking for a place to begin, could you suggest which futures have the "best" options plays to study?
at 6:49:39 PM
dwt, there really isn't a "best" place. I would, however, suggest that you paper trade. Practice on paper and take it slow and easy. Don't be in a rush to give your money away -- that's what greedy folks do. Learn the business and paper trade, paper trade, paper trade. By doing so you'll discover that there really is not a good answer to your question. But paper trading will open your eyes to the various opportunities out there.
Dr Dave asks:
Jim: This is Dr Dave from LaPlata, MO. I have returned to trading after taking Ken's course about 14 years ago, and it all different. What happened????
at 6:54:49 PM
Hi Dr Dave and welcome back. Ken moved on and sold US Charts to CRB about a year ago. However, the same core crew is still here helping "edumicate" you folks. We changed the strategies over to trade with the trend about three years ago. That's the biggest difference in regards to the trading apect of things. Find out more about Ken and his moving on -- in his own words by going here.
russb asks:
With upcoming ethanol prices expected to rise what do you think that will do for corn?
at 6:56:37 PM
I don't pay any attention to the news, russb. I let the charts do the talkin' for me. In addition, I learned a long time ago to trade what I see rather than what I think. I'm not a rocket scientist so it's what works for me.
Michele asks:
I'm new and just getting started and confused most of the time. So I hope I don't break any of the rules. A question I have is about how thw value of an option is sometimes show in trade traker. Sometimes I see a value like 21-6. Not 21.6. What does the "-" dash mean?
at 7:00:17 PM
Good question, Michele. That is typically how one of the grain options are quoted. Corn, Oats, Wheat, and Soybeans are no longer shown as a full fraction. Instead we are using the industry standard of –2, -4, and –6, which is representative of eighths. What this means is that ¼ is shown as –2 (2/8); ½ is shown as –4 (4/8); and ¾ is –6 (6/8). For example, 369 1/4 is now displayed as 369-2. (The –2 representing 2/8)

You will also notice a similar change in the display of the 30-Year T-Bond. Instead of displaying a trade as 113-28/32, we now display it as 113-28. I hope this helps.
Craig asks:
Jim, Why didn't the 4/9/07 move down for May KC Wheat stop at the daily limit of 25 cts? Craig
at 7:03:50 PM
Good question, Craig! Apparently the KC Wheat limit has changed. I just looked it up on their web site and it says the limit is now 30 cents. You can find it here.
Todd in Brigham City Utah asks:
Hi Jim What about the OJ. It had broke down from a nice 123 top. I Placed an order the second day of the break, with a limit order. The market had already opened and headed down. I placed my order above the market for a limit order of 190 or better. Later it came up to 189.80, but then headed back down for a close about 2 cts. below were I wanted to get in. The next trading day, down about 6 cts. I mised out on over $1000. real dollars. Do we wait and see if it comes back, or forget about it? Todd
at 7:08:37 PM
Hey Todd in Brigham City Utah, This is a market I chatted about a lot on the Premium Alert Videos. I also wrote about it in the chart book. We never had all of our 1-2-3 strategy criteria met, so we never placed an order prior to the breakout. Once the criteria was met the market was well below the breakout point. So we passed on the setup. Take a look at the May OJ chart in the chart book. You'll see my newest paper trading approach to it. As a side note. . . I try not to ever chase a market. If it takes off without me, so be it. There are always other opportunities.
Jim from Boulder asks:
Hi Jim & crew. I want you, and everyone else, to know how great the March Trading Camp was. I came away feeling solidly grounded in the 'business' aspect of this business, as well as a deepened knowledge of the fundamentals. Thank you all. I've got positions(6)in several different markets and they're all on the plus side. One comment about stops...I've found that I haven't paper traded enough to get a good feel for setting them close enough to protect capital but not too close to prevent getting stopped out too soon. So I'm still trading on paper, and with the real stuff.
at 7:11:06 PM
Nice to hear from you Jim from Boulder! Thanks for the nice words too! Glad to see you're having success and I encourage you to always paper trade. I still do, and can't ever seeing myself not doing so. Keep on keepin' on and please stay in touch.
50% Retracement Video
gail asks:
hi jim like what all you done in the past couple of months my question is this i singed up for the premim alert service and when i did i thout it said i would be getting a cd of watching ken trade first hand did i read it wrong?and also when will the cd of the traning camp be ready
at 7:14:21 PM
Hi gail. I'm not real sure what you're referring to so I'd encourage you to give a Course Counselor a call. They can be reached Monday through Friday from 8:30am to 5:00pm PT. Dial them at 541-955-2885. Thanks for stopping by this evening.
Larry asks:
if options are so eazy to liquadate tell why 80% of all opitions expire worthless
at 7:18:06 PM
Hey Larry. 80% of options expire worthless because folks by the wrong ones. Usually this happens because folks buy options that are so far out-of-the-money they don't have a prayer of ever increasing in value. Therefore, the premium depreciates and the option expires worthless. It has nothing to do with being able to liquidate them. You can liquidate an option at anytime -- you can even use a market order if you like ... guaranteeing an order fill!
Marco from Egypt asks:
Hi Jim..This is Marc from Cairo, Egypt & am really thrilled to chat with u. I have 2 questions: 1) First, I was an old course member (back to 2003) & studied TWPM1 & 2; doing some unsuccessful options trades. As I want to join you back; pls tell me if there are any changes in the courses, techniques, etc..& what shall I do to reenter again successfully in the game? 2) I'm planning to come to Oregon bet. 20th July to 10th August 2007. I would be very happy to participate in a trading camp; as I'll be flying from Egypt specifically to meet you & visit some friends as well. How can I get the utmost benefit from my visit? Thanks for everything & hope to c u soon in Egypt or in Oregon!
at 7:23:27 PM
Hey Marco from Egypt! Wow, I'm always amazed at the number of Course Members we have spread all around the World! Marco, I'd recommend you take the Premium Alert Service trial. It will help you get back on the right track. I'd also contact a Course Counselor and ask about our WGB Course special (541-955-2885). It came out about three years ago and will lay the foundation for what we do now. I'd be happy to meet you and perhaps we'll have a Trading Camp when you're here in the states. Take care and see you soon!
Marsha asks:
Hi Jim, I first took Ken's courses in 1996. When I began trading I had a huge satellite dish in my back yard so I could access the markets and an order for charts from US Chart Co. I traded for a few years, then due to changes in my life, got out of trading. I am now getting back in and just want to say how amazed I am at the tools that are now available thru US Chart Co and WGB! Thanks for all the effort and time. It is truly amazing when I compare it to what I had before. Best Regards, Marsha
at 7:27:36 PM
Hi Marsha! Aren't all the tools wonderful? I'm amazed too! We have a great crew here at US Charts and do our very best to bring you the best goodies we can without overwhelming you. Thanks for the nice words too, we all appreciate them.
willardwjmt asks:
Hi Jim, wink from md, How does a future and option differ in premium or price?
at 7:30:06 PM
Hey willardwjmt, they are completely different animals. A futures contract has a margin that is set by the exchange and is a deposit you must provide your broker to trade that particular futures contract. Options have a premium and the premium is a cost that you must pay to trade the particular option. Hope this helps.
coyotee asks:
Good evening, What has happened with the chart for the US dollar Index?Do you have any information? thanks
at 7:31:49 PM
Howdy coyotee, Yes, the way the data from the exchange is quoted has changed. We are working on the challenge and hope to have it fixed in the next day or two. Thanks for your patience.
tom1 asks:
Hi Jim. Love the daily updates. I was curious about dealing with brokers. If i want to make a trade do i just call my broker and tell him to exit or enter at the current price?
at 7:35:24 PM
Yep, that's exactly what you do tom1. Or you can tell him/her the "exact" price you want to enter or exit and they'll place the order accordingly. Folks tend to get hung up on talking with a broker. It's really no big deal. As long as you know whether you want to buy or sell and the price you want to do it at, you're set! Just tell the broker and they'll place the correct order(s) -- that's what they are there to do! Good question.
Student Trader asks:
Trader Jim, Thank you for the Premium Alerts and the recent Strangle Strategy. I know you have addressed this in the past but I must have been asleep. You have said there are no 'stupid questions' so here goes. What exactly do you mean when you say that you are moving your stops to the 'break even point'? Thank you in advance.
at 7:39:50 PM
You are right Student Trader, there are no stupid questions. Moving a stop to break even simply means to move your stop to your entry price. Some will even add their commissions to the entry price and adjust accordingly. Really all we're doing is trying to prevent a winning trade from turning into a losing trade. So if we move our stop to break even (a.k.a. "BE") the theory is we can't have a losing trade because we'll get stopped out at the same price we entered the market. Thanks for the kind words about the Premium Alerts too!
Bob asks:
Bob from Huntsville, AL I have PUT options in July Soybean and Soybean Meal. Can you give an explanation as to why the Soymeal is moving more than Soybeans?
at 7:45:14 PM
I can, Bob. It's simply a matter of supply and demand and the traders expectations of that supply/demand. If there is more supply in the minds of traders then prices are going to go down (and vice versa). This must be the case with the "Meal" market versus the "Bean" market. It's really that straight forward.
Craig asks:
Would you consider it an advanced strategy (or just much more risky) to place resting orders waiting for the break out of a formation, given that Trend Seeker is already aligned with the direction of the break? Do you ever use resting orders to catch a market move in this manner, thereby not needing to wait for a pullback to the trigger level?
at 7:49:11 PM
Yes Craig, you can do that. I just prefer to wait for confirmation from both price and Trend Seeker. One problem you'll come across by doing this is when a market gaps out of the formation and you're order is filled at a much "worse" price than it might otherwise be. This exact thing happened in the Euro FX not too long ago. Then you're basically left holding the bag. Imagine getting your order filled 70 pts above where you wanted to in the Euro FX. That's $875 higher per contract! Just something to think about.
invntx asks:
Sometimes I'll call my broker to make a trade, but other times I will place an order to trade online. Is one more likely to fill my order more quickly? Ron from Cleveland
at 7:51:40 PM
Well invntx, I guess it depends on how quickly or slowly your broker places the order and the order type you're using. Just be careful and make sure you're indeed placing the correct order from your online platform. Remember, you're completely liable for your own mistakes when placing your own orders.
sabrena asks:
Good evening Trader Jim & Fellow course Members, My question tonite is,Do you or anyone out there trade or have any trading experience with either credit/debit option spread strategies. Any comment is appreciated. Happy Trading!!!
at 7:58:12 PM
Hi sabrena, I just don't see the point with debit/credit spreads for most folks. It's hard enough for folks to learn to read charts and decipher market direction. In my mind, why make it more difficult? Most folks don't completely understand spread trades and thus don't have any idea how to initiate them. Usually it's a broker that will suggest the spreads.
Sneak Preview My Favorite Market Now
Smokin Joe asks:
Hi Jim, I read that you are rarely involved in a trade that lasts longer than 2 days to a month. If so, is it still important for you to only buy options with at least 90 days left before expiration? July Canadian Dollar call options have less than 80 days left. Would you consider trading this market based on the current formation?
at 8:04:25 PM
Typically I don't stay in positions longer than 2-30 days. Actually that's a long time if you really think about it. I'll bet most folks out there don't stay in trades much longer. Typically I like to see 90 days left prior to expiration but that's because I've found options with that amount of time tend to generally offer good value. But I'll trade those with less (or more) time available too. There's no July Canadian Dollar chart so you'd have to make your decision on the June contract. The July options are serial options which means they'll have less volume/open interest than the June or September options. Prices have already broken above the #2 point on the June chart so that boat has sailed. Thanks for the questions, Smokin Joe!
Andrew from Pacific Grove CA asks:
What are the chances of having all 3 online charts on one page. IE monthly, weekly, daily?
at 8:06:36 PM
Not very likely, Andrew from Pacific Grove CA, at least not in my mind. There's already a ton of info on each page, so they'd be pretty cluttered. Personally I prefer clicking the little icon at the top of each chart to access the other charts. Pretty easy and the charts load quickly.
Hope in Oregon asks:
Hi Jim! I've got a question about May Corn movement on May 30th. It looked like it gapped down and did not move from that point. Can you explain what happened that day to the corn market? Was it a limit move? (ps - love the premium alert service!!)
at 8:09:27 PM
Hi Hope in Oregon, On March 30 May Corn was locked limit down for the day. The daily limit in Corn is 20 cents. On locked limit days that means the market moved down 20 cents and that was the open, high, low and closing price for the day. Glad you're enjoying the Premium Alerts, they're a lot of fun to do.
tomkas asks:
why didnt you anticapate atrend chage when oj broke below #2 pt?
at 8:12:53 PM
We waited for it, tomkas. But it didn't come until quite a bit later. My trading plan says for me to wait for TS and the breakout to concur. If they don't, I wait or pass altogether. I don't try to outguess the markets or my signals or force myself into a trade by breaking my plan. I teach the same way. If the setup is there, then great. If not, oh well. There are always opportunities out there so why break my plan? Good question.
OnionCreekMall asks:
Hello Jim; Noticed you stated to Bill that you were willing to take a little bit less getting out, Do you use a Limit order or call the broker and get a confirmation of price then go at the market?
at 8:16:45 PM
I will find out the current price from the broker and then place a limit order that is a little bit higher than the last trade. For instance, if a corn option is last quoted at 10 cents and I want out of the trade, I'll place my exit order at maybe 12 cents or higher. That way, worse case I should get filled at 12 cents. Best case is my order would get filled at a lower price. Hope this helps.
beefman asks:
Beefman- Kirkland, Washington- Hi Jim, Thanks for all the great premium alerts. Question on Pork Bellies- It formed a 1-2-3 broke below the # 2 and headed down steadily about 2 cents or so- but Trend Seeker never turned over to a downtrend- seemed like a pretty big move- is this a rare occurence ? Made $ 1400 in the corn move !
at 8:19:49 PM
Hi beefman! Trend Seeker actually analyzes the last six months of data -- not just the last few days like a lot of folks think. So there's a lot to consider when it's doing the calculations. This will happen from time-to-time as it did in OJ, for example. Nice trade in Corn....... congrats!
Barry asks:
from WV, Jim, Love your weekly videos, they are very informative. my question is how hard is it for you to (keep your powder dry) and wait for the right set up before you enter a trade. I find it very hard and sometimes i enter a market way to soon and get stopped out. thanks.
at 8:30:00 PM
Barry, patience is a key. It takes a lot of practice and hard work. Teach yourself to look at it this way. . . "do you want to get beat up by jumping the gun, or do you want to have a chance at being profitable?" Ask yourself that question whenever that little voice starts talking to you. Trade what you see, not what you think.
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, May 8, 2007. God Bless and I look forward to seeing you then!
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