Ken Roberts Chat

Let's Talk Trading (tm) with Ken Roberts
from June 11, 2002

As we begin this evening’s session, let me state the reason I conduct these monthly 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 TWMPMM Manual. 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 COHIBA Esplendido fired up, here’s our plate of freshly baked ranger cookies, the coffee’s poured, so let’s talk commodities!

BuyItNow!!! asks:
Hi Ken and gang! Thanks for doing this. Ken, do you apply your TWMPMM II principles in the NASDAQ market? I've calculated a very high profit potential based on a weekly 50% of 2990. However options are expensive and I can't seem to get filled. What do you think?

at 6:09:27 PM
Don't chase it, BuyItNow!!! Let those premiums simmer down and come your way, or forget it! Thanks.

zap asks:
How long can the coffee chanel last?

at 6:09:44 PM
Okay, I give up: How long can the coffee channel last?

mb45vt asks:
I would like to know if your book, A Rich Man's Secret, is still available through Llewellyn Publications?

at 6:10:06 PM
Yes it is. And thanks for asking!

erickjsi asks:
Ken, when options trading would you recommend going out to the farthest contract month possible (which has a good selection of strike prices) even if that means paying alot more than $150.00 each on the premiums?

at 6:11:56 PM
Yes, I go as far out in time as possible, BUT --- I do NOT pay "a lot more" than $150 each. Price all the contract months and bid on what appears to be your best value. Good question.

Bigguns asks:
Hi Ken, Bigguns from Alberta, Can. Thanks for these chats they are truly awesome. My Question is- You often say in these chats that you take all your cues from the front month. What does this mean exactly, because most times you say you trade the next contract month past the front month? Thanks!

at 6:13:53 PM
(I thought guns weren't allowed in Canada . . .) Yes, Bigguns, I TRADE a farther-out month, but I enter and exit based on my price targets on the FRONT month contract. Good question.

Chris asks:
Do you ever purchase options with about a year until expiration, if the price is right?

at 6:14:33 PM
Yes, I LOVE doing that! (It's not possible, however, in all markets.)

Deskboy in Miami asks:
I just made my first futures trade and cleared $5,400 in July Rice. I learned to wait for a break above # 2, to averge down when the price first goes against you and to pillar not pyramid. I also learned that if you get out, YOU LOSE. I used STOPS only to protect my profits as I was up nearly $10,000 but the next morning it opened much lower. I still got out with $5400 like I said. I owe it all to you. I have been a course meber for three years now. I have all of your products, especiall Rich Man's Secret course. It was amazing how calm I was in that short week only ten days ago. Thank you Ken, you have made the future very bright for me and many others.

at 6:15:32 PM
Thanks, Deskboy. Trade on!

Truckin in Texas asks:
Although you're a technical trader, will you get in on lumber based on the recent forest fires?

at 6:17:11 PM
No way, Truckin. That, too, is "stupid news." As a matter of fact, the lumber we trade in the Chicago Merchantile Exchange's futures contract is on CANADIAN plywood! Thanks for joining us tonight!

Phillipgs asks:
Ken, Say you have 50 futures long in coffee and you wanted the ultimate protection using put options. Would you need 50 put options or a 1:1 ratio to give you that ultimate protection? Also doesnt that get expensive to buy so many options opposite your futures just for protection purposes?

at 6:19:23 PM
Yes, Phillipgs, that's what it means: one option per futures contract. It CAN get expensive, but the idea is to shop and find an option that costs less than the amount of risk you would undertake if you simply used a stop-loss order. See any TWMPMM II monthly newsletter for examples. Thanks!

Irvine Dave asks:
Hi Ken: When shopping for far out options such as cheap coffee calls, do you use the technicals, ie, 50% retracements, of the far out contract or the front month when determining which strike to choose?

at 6:21:22 PM
I use 50% target points from the monthly, weekly, and FRONT-month charts and then adjust those targets to the farther-out month I wish to trade. For exact instructions, please refer to the Two-part Newsletter in your Course. Thanks.

DavidM asks:
Hi Ken, When you bid half for an already cheap option, are simply waiting for the price to get that cheap or does someone just sell you one for half price even though the going rate is higher?

at 6:22:44 PM
The price HAS to drop to your bid (and even below) before your order is filled. Be patient. That's the key.

BuyItNow!!! asks:
Hey, my dad smokes COHIBA's! I bought him a box last year for Father's Day. What's the "Esplendido?"

at 6:23:33 PM
Nice son! Your Dad's lucky! The Esplendido size is a Churchill-size cigar (the one David Letterman used to smoke on his show). Good goin'!

Long Ashes asks:
Long Ashmes from Tampa, the cigarcapital of the world: Ken thank you for having these chats and for all you have taught in your courses. I have 7 cent calls in October Sugar, 100 cent calls in December Coffee and 1100 puts in December Cocoa. I also grabbed a couple of 280 puts in October Gold. That 70 dollar drop in cocoa was a thrillyesterday.

at 6:24:40 PM
Good for you, Long Ashes. (See: Only patient traders can have long ashes!)

zap asks:
do you think cotton has made it's top?

at 6:25:27 PM
Wait a minute, zap, let me get out this old dusty crystal ball here . . . .

HJgodwithus asks:
Hi Ken, I am a new trader and have been trading since May 3, I wanted to take the time to say thank you for caring about others and their wellbeing by sharing such important information. I wanted to let you know even though I've been trading a little while I have made a lot of money in a short amount of time. I was in sept wheat with 5 130 calls. Thanks so much!

at 6:26:06 PM
Thanks HJ. Stay the Course --- and stay in touch!

cactus jack mason tx asks:
how bout them oct hogs and bellies?

at 6:27:28 PM
Are you long, cactus jack?

arby asks:
arby from texas ken is it better to paper trade on paper charts or online starting out???

at 6:28:34 PM
Strictly personal, arby; it's all up to you.

Delmiaster asks:
Hi Ken: Del here from Lakewood, ca. my question is, three times now I've tried mulitpling using internal financing on (3) different commodities, and everytime all (3) went against me the same day I got filled. Is there a certain spot on the chart that you look for when multipling?

at 6:31:21 PM
No, Delmiaster, pyramiding is an art, not a science. Some use dollar amounts (profits) to pyramid and others use chart points. Personally, I load up at the bottom and peel away profits as prices rise. I don't pyramid or pillar at all. This is where paper trading and trial-and-error pays off --- determining your own trading style. Thanks.

Ninja asks:
Hi Ken, Last month someone said they are placing their trades without using a protective stop. Can you offer some tips on trading this way without increasing the risk? Thanks for all the courses and help in this perfect business.

at 6:32:27 PM
Yes, Ninja. There are three ways: 1) Have enough cash to back your position all the way down to zero. 2) Hedge a futures contract with an opposing option. 3) Trade using options only. Thanks.

Rich asks:
Can you get historical options prices to save you a fortnight of price checking before entering a market?

at 6:32:53 PM
Yes, Rich. That's what we offer at U.S. CHARTS!

U.S. Charts ON-LINE, that is . . . .

vball asks:
vball from ct hi ken: do you ever get long or short after the #2 has been surpassed AND then the market turns back below/above the #2 but resists breaking the #3 and ultimately breaks the #2 again for the real. what i mean is if i didn`t catch the initial break past the #2 point, getting in on a second or third break is just as valid. what do you think? thanks

at 6:34:18 PM
Yes, vball, lots of traders do that. But paper trade it first to get the hang of it.

sillyhere4fr asks:
hello!

at 6:34:27 PM
Hey!

SoccerLover asks:
Last month you said you would be selling some of your Cotton contracts at the Monthly 50% = 73, some at the Weekly = 5550, and some at the Daily (July) = 42. Can you tell me where you bought these in the first place.

at 6:36:51 PM
I'm long on all my cotton contracts from an average of approximately 35, SoccerLover.

toothdr asks:
Am long silver options through December. What are you using for daily, weekly and monthly 50%. I'm getting frustrated with silver.

at 6:39:43 PM
Hello, toothdr. July Silver (front month) has surpassed its daily 50% and hovering near contract highs. the Weekly 50% target = 565. Monthly 50% = 2675. Don't get discouraged --- that's usually exactly when prices take off!

Howard from Austin Texas asks:
Ken, I am finding more success in my trades this year. Still have a lot to learn, but it feels like I am getting there. It seems like whenever I get in a trade (futures), it always goes against me for a while and about the time I can't stand it, it then starts going the way I thought it would. Is there any way to avoid this ? I am in Corn, Wheat and the Australian dollar and that is what's happening now. Thanks for all your input, it helps tremendously !!

at 6:40:39 PM
No, I don't know a way, Howard, but if you find it, let us all know! Thanks!

bluerose asks:
California, Hi Ken and all, I thought that future contracts were wonderful, since last chat I got the option course and I think is marvelous. I have worked the different exercises in the workbook and I have done good in some and better in others. I have gone over my last week’s charts and done the 50% retracement, prioritized the markets that I would like to buy options for, and worked on my budget. Would you consider these exercises part of my paper trading?

at 6:41:43 PM
Yes, absolutely, bluerose. Now keep charting/pricing those options every day and watch them pan out. You're on exactly the right road. Thanks.

alc asks:
Hi Ken...greetings from Toronto Canada..where south is North (Subway Joke....Big Board Room Seminar in Toronto). Ok....I need you to assure me that I am not crazy for not liquidating my Rice contracts when it spiked up to 4.80. My target was 5.13....it was not hit and my mind is driving crazy.

at 6:44:59 PM
Yes, alc, I'm still having nightmares about that Toronto subway system! Kinda like Elvis' "caught in a trap . . . ." You did exactly right on your rice trade. Hang in there for 513. I'm able to state this with such certainty because I lived through the anxiety you're experiencing so many time. Thanks. Great comment!

mwgrady54 asks:
Ken, do you use any other market indicators such as Stochastics, MACD, RSI's with the current channel and 1-2-3 systems recommended in the course in your day to day trading. I started the course in January.

at 6:45:33 PM
No, no, no! (Review my "Paper Trading" video.)

truckstop asks:
Just love these chats. Can't wait to get on line and read as they come up. My observations are that there seems to be a lot more profit in futures than in options, but am afraid to take the risk. My kitty is gettin low now. What futures contract would you buy in a case like this? I'm ready to go for broke. Thanks Ken

at 6:46:41 PM
Pull back and take a breather, truckstop. Start watching those calls in Coffee as they get cheaper and cheaper.

erickjsi asks:
When it appears that there is no decent-sized recent move on a weekly chart, would you say it is ok to go all the way back to a large move that started five years ago (on the weekly chart) to calculate a weekly 50% target when options trading? Or is that too risky when buying options a year or less out? This isn't easy to figure out...

at 6:48:21 PM
That's fine, erickjsi. As long as you use points on a chart, get the BIGGEST move you can. Sometimes, you have to back off a weekly chart (such as the Canadian Dollar) and get a wider view from its MONTHLY chart to determine a 50% target. Good goin'.

DanG asks:
should I buy options on a 123 break or should I fish the bottom for a good price.

at 6:49:07 PM
If you wait for the break of a 1-2-3 formation, it'll be too late --- that's when options get expensive. You must fish BEFORE the turnaround comes . . . .

future man asks:
I have seen the term "averaging down" in recent literature. What does this mean?

at 6:50:19 PM
It means I get long a market at 20, it drops to 18, I buy more at 18, then it drops to 16 and I buy more still. As I buy lower and lower, my AVERAGE cost drops too.

needtheinfo asks:
When purchasing an option, after the trade has been made if I profit do I get what I paid for the option back?

at 6:51:34 PM
You'll receive what that option is worth at that time. Hopefully, it's worth MORE than you paid, but no one goes back and reimburses you for what you paid originally.

Chuck asks:
Are you long rice? What's your analysis of last ten days in Rice? How could one exit at last weeks peak?

at 6:52:55 PM
There's been a rally and a setback in rice the past two weeks. Yes, many people exited their positions on that rally by telling their broker to "sell."

Chris asks:
When shopping options out about a year, in your eyes, do you still try to keep the premium below $200?

at 6:53:49 PM
Yes, always. But what's "cheap" is always relative. So this is why it's so important to shop, shop, shop and not just jump on board.

toothdr asks:
My focus is OPIP. Is it realistic to expect to bid 1/2 for an option 1 year out without waiting forever for a fill and being unprocted?

at 6:55:24 PM
Yes, toothdr. (And be careful not to fall into that trap of your mind telling you "It's going to take off! It's going to take off!") Take your time, price those options, place your bids, and wait. (Sometimes I wait four weeks or more to get filled.) Thanks.

Mike in IL asks:
Hi Ken, First loved the article about your historical trees. Now my question- please explain what "pillaring" is compared to a "reverse pyramid". I think I have the answer,but; "The only dumb question..."

at 6:58:06 PM
Thanks Mike. Glad you saw the Peter Jennings story. He did a nice job, didn't he? Now, let me see if this clears up your question:\ Pyramid = 1 + 2 + 4 + 8 + 16, etc. Pillaring = 1 + 1 + 1 + 1 + 1, etc. Reverse pyramid = 20 - 5 - 5 - 5 - 5

Phil T. Palmdale Ca. asks:
I have 2 sept 9575 put options in eurodollars and 2 sept 290 call options in corn. When should I shop further out options to to stay in the markets?

at 6:58:54 PM
At least one month BEFORE those options you already have expire.

wealthy asks:
Hi Ken, What do you think are the most extreme markets that you would like to be trading right now?

at 6:59:39 PM
There are SO many, wealthy (see any recent Newsletter). But THE MOST EXTREME of all is the Euroyen market.

RON FROM ALASKA asks:
Ken: 2 weeks ago, I was kicking myself for being in rice and considering bailing BUT I have a plan (in writing) and I am married to my positions for better or worse, till profit target do us part so I left it alone and within days, rice blasted off and my 2 contracts hit my modest profit target for an overall profit of about $2500. It is true what you say about it never being the one you think that blasts off next. (I was convinced that sugar or coffee w/b next.) P.S. I paper traded a few months and have been trading real money since Nov 2001. Started with 16K and account is now about 25K. Still in Sugar, Coffee, Eurodollars & Hogs. Thanks Ken for all you do. Ron

at 7:00:33 PM
Thanks, Ron! You da man!

Jim from Kalamazoo, MI asks:
What is the 50% daily and weekly target for Eurodollars now?

at 7:02:04 PM
Daily (front-month June) = 9655. Weekly = 9565. Thanks!

JimmyJ asks:
Hi Ken. I'm from Alberta, Canada and thought your first course was fantastic!! Now I am not sure if I am better off with the TWMPMM Workshop or the TWMPMM II course next. Any advice???

at 7:02:49 PM
Try TWMPMM II, JimmyJ. Thanks for joining us.

Kens_neighbor_in_merlin asks:
If you have limited funds what contract would you buy? Coffee, Corn, or go short Eurodollars?

at 7:04:16 PM
I'd place (LOW) bids on options in each of those three markets and let the market itself tell me what to trade as those/that order got filled. That's the best way I've learned to decide which market(s) to enter. Thanks neighbor!

erickjsi asks:
I'm sorry Ken but I'm a bit confused after your previous answer to Irvine Dave. I remember you saying in one of your videos from 1998 (I think) in Marina Del Rey California that we should shop for our options trades on the WEEKLY charts, and even then only from "recent" moves. But it seems like you actually shop for options targets on monthly charts too. Did I understand that right?

at 7:05:14 PM
Yes, erickjsi, especially if there is no 50% target on a weekly chart (such as the Canadian Dollar now). Thanks!

Ninja asks:
Hi Ken, Are you still long gold & silver? Any positions in crude oil? Just curious cause the crystal ball says they are going up!!!

at 7:05:36 PM
Yes, I'm long all three, Ninja.

Randy from Florida asks:
Hi Ken. Thank you very much for the time you devote in this monthly chat. Will you please tell me your thoughts on the 'Olivia's', and also, when can I expect your next meeting in Florida? I'm looking forward to Ken Roberts "LIVE" ! Thanks again.

at 7:08:13 PM
The only "Olivia" I can think of, Randy, is Olivia Newton John (are "Olivias" cigars?). Come on out to my Birthday Bootcamp in August, Randy. I'm introducing a whole new methodology to trading.

bigmac asks:
Hi Ken, this is Will from Colorado Springs. Been looking at a few charts lately and thought about your OPIP plan that you talk about at the end of TMPMM2 and I wanted to ask if you thought coffee would be a good candidate for this plan right now? Thanks.

at 7:09:03 PM
Absolutely, Will, absolutely.

gowheat asks:
Hi Ken, what months are you looking at for wheat

at 7:09:57 PM
I'm looking at December 2002 Wheat now.

Die Hard Cocoa Trader asks:
I'll pry myself away from the big grin I have on my face with all those September 1200 cocoa puts long enought to buy puts at the 50% level of the Sept. British Pound and Japanese Yen puts at a strike of 7500. All these options are cheap, about 150 bucks......sound like a plan or what. I started with your courses in 1998 and I am in my fifth year. Your strategies work well, thanks for changing my life from ratrace to commodity trader.....never give up.....never......

at 7:10:54 PM
Thanks, Die Hard, for the words of wisdom. Trade on!

JOEUBET asks:
HEY KEN I HOPE YOU PRINT THIS LITTLE NOTE . IT MIGHT HELP SOMEONE ELSE.I DID'T KNOW THAT WHEN YOU USE A STOPLOSS IT IS LIKE A REGULAR ORDER AND YOU HAVE TO CANCEL IT WHEN YOU LIQUDATE YOUR POSITION. I DID'NT CANCELL MINE AND GOT A NICE MOVE AGAINST ME AND I WAS EXPOSED ABOUT 500.00 BEFORE I GOT IT STRAIGHTENED OUT.

at 7:11:50 PM
Thanks, Joeubet. Sorry you had to learn this the hard way, but keep on keepin' on!

bluerose asks:
California, Ken I enjoy this opportunity and look forward to these chats every month. A couple of weeks ago I received information about your new course “An Amazing Technique for Success” Your other courses are helping me to learn how to stay awake, to watch, & not follow the crowds, just doing this takes a lot of my effort, and you were right it does make me hungry. Sounds from the interview that your new course has the same principles that I’ve learned, I can afford it right now especially since I lost $500 on my first trade, learned a good lesson from it. Thank you for sharing your financial and psychological knowledge with me.

at 7:13:10 PM
Thank YOU, bluerose. Yes, success is NOT common (and never will be). This is why An Amazing Technique Course has got to be my most powerful.

BBQMAN asks:
BBQMAN From Tx Hi Ken, Missed the last chat but glad to be back, love these things. Are you still long beans? I have monthly 50% at 660 is that what you have? Also wanted to know if you received my letter/cd. Keep up the good work.

at 7:15:14 PM
Monthly 50% = 750. Weekly 50% = 630. Some good Texas BBQ sounds real good right now . . . .

gford asks:
from San Pedro,CA. Ken- when you hold options in two different months and the daily 50% level is hit, would you liquidate all of the closest month or half of the options held in each month?

at 7:17:06 PM
All of the closest month, gford. Time is your most expensive variable in options trading.

bert_the_loom asks:
hi Ken,I,ve been paper trading on my own for about a year now.My question is should my broker update me on the charts that are making 123 formations,p.s. I don,t have a broker yet.

at 7:17:39 PM
NO, bert! Never! YOU decide what's happening on your charts.

Nicole--IOWA asks:
Ken...can you give me your 50%'s on Corn, Jap Yen, and Rice. THanks

at 7:18:02 PM
WHICH 50%s, Nicole?

alc asks:
KEN, The world borrows funds to invest in Franchises, start up all types of businesses. The success rate is dismal. Despite the stats that 90% of franchise businesses succeed. ( I don't believ this stat...I think it means the franchise stays open..but could have many different owners) Trading commodities seems to offer a better guarantee if one is prepared to wait. Could one not borrow funds to invest? One could develop a business plan..taking into account risks (ie. how much they can afford to back a futures to zero) and if they are prepared to borrow funds and take into account interest payments.

at 7:19:38 PM
It would be a great business plan, alc, but I don't think you'll find any banker who'd go along with your plan.

shades asks:
Greetings Ken & co. Allan here in Dubai , where its 05:30 , love this business, even though I have only been paper trading so far, making some mistakes but took some good profits in July & Sept. Rice and others. I use on-line charts from way over here works good, paper does give that extra option of being able to "take it with you". Just comments this time questions next. Tks

at 7:21:22 PM
Thanks shades! Dubai --- isn't that where you have lotteries at the airport for new Porsches? (One of the Prince's head commodity traders is a Course Member!)

Tahoe Clay asks:
Hi Ken and Crew!! I just got off work (remodeling a 30 yr old bathroom on the lakefront of Lake Tahoe, yuck, except the world class view) and I am looking to quit doing this for a living, so let's have some good chat. I have looked forward to this for the last 2 weeks. I am two days away from rolling my July o2 coffee futures contracts (2), and I am going to take a good hit to the minus side, my question, and or comment is: Did you see September Soybean Oil hit it's daily 50% target of 18.12 (5/22/02) a few days before front month July hit it's daily 50% target of 18.02? Does this happen much in your experience?

at 7:22:58 PM
Thanks, Tahoe Clay. Glad you joined us tonight. Frankly, I don't know if it happens much because I ALWAYS just watch the front-month chart and take ALL my cues from that.

mrosner asks:
Hi Ken. What do you think about hedging a long futures contract with a short contract of another month? This could be cheaper than using an expensive option. ??? Thanks for your thoughts. Mrosner in Hollywood, Fl.

at 7:23:56 PM
To my mind, mrosner, that simply limits my profit potential. (What you're describing is technically a SPREAD trade.)

pedaler2 asks:
Hi Ken, I was uncomfortable with my broker after loosing $2100 on my first trade, so I closed that account. Is it ok to use a local broker?

at 7:24:56 PM
Absolutely, pedaler2. Use any broker YOU'RE comfortable with and who gives you the service you need.

Jobie asks:
Ken, coffee is so cheap now. What would have to happen in that market to drive the price up, and why is it languishing for so long? Jobie, Ca

at 7:25:37 PM
I don't know, Jobie. Those are fundamental questions which I have learned to block out of my mind.

fuertu asks:
Hi Ken Do you ever get frustrated in trading? We've only been trading since April & it seems like every market we've got in has gone against us. Lost money in July Rice holding out for 50% retracement. Long in July coffee w/puts as protection & also some december calls. Also lost some in Oats. Is that they way it usually goes when you get in? Thanks for the chats they are very informative. By the way where do you find cheap cofee options. I havent found any yet. Thanks

at 7:27:34 PM
Yes, fuertu, we all experience what you're describing. But the more you trade, the calmer and more patient YOU will become (the markets don't change; you do). There are cheap coffee calls in July and September 2003 months right now. I just placed some low bids for these yesterday. Thanks!

Mi cin asks:
Hi ken when your future contract is ready to expire but not yet reached your 50%daily target and you do have some profit do you roll over to the contract or just take the profit that you already have and move on to something else.

at 7:28:22 PM
I roll that contract and take my profits in the process. But I remain in that market until my target is finally hit. Good question. Thanks!

Nicole--IOWA asks:
Ken...I know you are a position trader now...what kind of trader were you with that first $600...or what did you do, pryamid, pillar, or what?!?! Can you think back that FAR!!!! Just kiddin

at 7:30:25 PM
It is a long, long way to think back to, Nicole, but let me try to get these old brain cells fired up . . . . Okay, it's coming back to me now . . . . Yes, I'm recalling that way back then (in the good old days) I traded just one contract at a time and used a stop-loss to exit the trade. (Wow, I think I'm getting a headache . . . .)

Eric in Fort Worth asks:
In response to Howard in Austin's anxiety, I've found that confidence in sticking to my plan during adverse market movement grows with time and experience. Right now I'm down a bit in Corn and Sugar, but am holding on to long positions because I've learned to trust the charts and a market's tendency to correct. Markets almost never seem to move as quickly as we would like, but in the long run patience does pay off.

at 7:31:02 PM
Beautifully put, Eric. Thank you!

dontnoyet asks:
I have been viewing the charts for a while and I am comfortable with it, but I am uncomfortable with commmodity brokers. Is there a way to know if they are not trying to run a scam on you?

at 7:31:49 PM
If a broker tries to sway your thinking in any way, clear out!

trw trader asks:
Ken, If you were pricing cheap options now, what markets would you be looking at. Also, if I put in a bid at 50% of the premium what are the chances of it being filled?

at 7:33:11 PM
I'm trading all the markets that look LOW on their monthly charts. My experience tells me that you would be filled over 80% of the time if you bid LOW. Paper trade it and find out!

DavidM asks:
Hey Ken, what do you do if your next round doesn't get filled before round one expires?

at 7:33:58 PM
I don't think that's happened, DavidM. Which market are you looking at?

Tahoe Clay asks:
Ken is there any way to keep my big brain out of all this? I mean I am up when I am making money and then when I am losing money I get real quiet and just try to have faith in my charts because I have seen this before, and I know my targets are being hit.....I just need a dimmer switch for the lows when I am losing $$$, I really like the way I feel when I am making money!!! Finally a way to make money where I don't have to sell my soul and energy for some one else!!

at 7:34:43 PM
You're on the right track, Tahoe Clay. Welcome to the human race!

Buck asks:
Ken, you seem to know exactly how I'm thinking. Its scary! You have changed my life and I can't wait to meet ya. First two trades have been succussful. Are still you long in bean oil, as I am? THANKS!

at 7:35:10 PM
Thanks Buck. Yes I am.

SAnderson46 asks:
Ken, I know you have stressed the value of working with a full service broker in the past. I am stressed with the high fees when purchasing far out options at low prices. Any advice short of dumping the broker? Have asked for a lower fee, but to date no go!

at 7:35:40 PM
Then I have to repeat: Dump the broker!

Russ - Malibu asks:
Ken, welcome back to my little deck on the sand. It's always fun to participate in these chats. Dude, I gotta tell you, it's really hard for me to just sit around waiting for the Eurodollar to turn down. It's been almost a year and it still is going up...so when it made a little 1,2,3 formation on May 22 and broke out above on May 30th, I bought 5 contracts. Each one is up a little over $400. I know this is not the big bonanza we are all expecting some day from this commodity, but it sure beats the heck out of counting grunion.

at 7:36:54 PM
Hey, Russ! Where have you been? You da man! I can't argue with a thing you said. Surf on, Dude!

REMARJR asks:
Hello Ken. Great to get encouraged by these chats. Thanks. Would like to know on Eurodollar put options looking out at March 03. Is 94.75 going too far out? They are cheap now (about 90 dollars) Would you still bid half of that?

at 7:38:29 PM
That's just fine, Remarjr. Bid $45!

Quick break. Gotta tend to this headache. I shouldn't have thought back so far. Be right back . . . .
Just a quick comment: I'm selling my 1998 750il BMW ("President's Car" security/luxury package) and realized that a Course Member on this chat may be interested. All my cars are always pampered. If interested, call a Course Counselor.

erickjsi asks:
Ken, do you have a rule of thumb you go by in deciding how close you can go when deciding how far out to purchase options? Does it depend on how recent the moves are that the targets are based on? or is this more of a art form that can only be learned on ones own?

at 7:47:16 PM
Go as far out as possible and practical. For example, right now coffee calls in December 2003 are quadruple the price of those in September 2003. So that steers you to bid on the September calls. Does this help?

Ohio Ron asks:
Ken thanks for the chats, they are great! You say you place bids for cheap options that may take 4 weeks to get filled. What if these markets are only taking day orders? Do you still call every morning and place the orders?

at 7:48:19 PM
Yes, Ron, that's happened (especially since 9/11). So every morning my broker re-places my orders. This is how a good broker SERVES YOU. Good question. Thanks!

future man asks:
from phoenix. Are the trades you discuss on the alert line just a small part of your total trading activity? After reading some of the chat, I get the feeling that the alert line is just the tip of the iceberg.

at 7:49:21 PM
That's correct, future man. The Alert-Line! consists of real trades that demonstrate the principles I teach in my Courses. My personal trading account is managed much differently.

GENERAL asks:
I Still do not understand the daily 50% and how to calculate. Even without this knowledge, I ended with $3,000 in April with Pork Bellies but have been afraid to try it again. I was down to $944 in my account when I suddenly ended with a profit in Lean Hogs and Sugar. On paper, I make big money. But actual trading, I'm ahead $3000. Any advice?

at 7:52:21 PM
Sounds like whatever you're doing works great, General! But you should be comfortable and confident in your planning/trading, so maybe it would be wise to back off awhile and paper trade some more. Take and highest and lowest prices on a daily chart, compute 50% of that, and that's your daily 50% retracement target. Example: July Rice. High = 6.65. Low = 3.60. Fifty percent of that = 5.125.

ironhat asks:
Good evening, Ken and folks. I began this course 4 years ago and had about $3K in profits before I (sob) took the brokers advice on Yen and my entire accout was wrecked. DO WHAT YA KNOW, FOLKS !! Anyway, I see that there are large variations on the width of 1-2-3 formations. Is it safe to say that we should determine the worth of such a formation based on the possible profit based on the current month 50% level?

at 7:53:05 PM
Yes, ironhat. That's exactly right. And thanks for the great advice!

Nicole--IOWA asks:
Ken...you KNOW what 50%'s...ALL of 'em! Daily, Weekly, you can leave out the monthly's to save time. Corn, Jap Yen, and Rice. Picky, Picky, Picky! :)

at 7:56:05 PM
Nicole, I'm a TRADER, not a CALCULATOR! Okay, I'll do one: June Yen Daily = .8125 (just recently hit). Weekly = .8725.

Diamond Dave asks:
Ken: Have you disclosed the site of the civil war cemetary in Rich Man's Secret yet? Any hints?

at 7:57:03 PM
No I haven't, Diamond Dave, but it's there. Several readers of my novel have sent me photos of themselves standing in it! Keep at it!

Chris asks:
I haven't been to a chat in a loooong time. I am amazed that so many have the same questions that I do! Thanks for answering so many Ken!

at 7:57:59 PM
You're welcome, Chris. Glad you joined us again. (And I could answer so many more if people wouldn't ask me to calculate 50% retracements for them!)

musicman1 asks:
Ken, are double bottoms the same technical analysis as tyhe 1 and 3 in 1-2-3?

at 7:58:48 PM
Yes, musicman1. Just remember Lawrence Welk: "...a one an' a two..."

Brian asks:
Just a note of thanks for the "Historic Tree Nursery" book you sent to us with your feature on page 17! Sure shows that Commodities really can be a means to an end. Good luck with your Heritage Trees in Oregon and per your note...yes...we will continue to grow...and we already have... with Otions... in North Vancouver BC...thanks to you!! This is a truly great business!!

at 7:59:31 PM
Thanks Brian for going out on a limb to say this!

Howard Stammen asks:
Lowdown asks: Hi Ken, These chats have been a great help for me.I've been in coffee and cotton for quite a while now. Both commodities are very low when looking at a 20 to 30 yr. history, Is there any correlation between how fast a commodity rebounds and how low it gets.

at 8:00:07 PM
Thanks, Howard. No, they're all different . . . .

Stan the Man asks:
Hi Ken Got a question. I have some rice options and was tempted to liquidate, but I have 4 more months on my options. If I liquidated, I figured/estimated the costs of going out, cost going back in, Commissions, higher option premium, or going for a higher strike price. By the time I did that, my modest profit would have been more modest. So I figured that I still have several months left for my options to work for me, I left them alone. Is this bad thinking? Also I have some Sept coffee calls, and I am thinking about getting some more for May 03 now while they are going down in price. Got some cotton calls that are showing some black ink now. Look forward to your chats. By the way, on your last chat, one member said you had 2 Gulfstreams. WOW!! I am a old DC-10 driver, plus 7 other "T" category transports, pistons, turboprops and jets. A Beech KingAir adorns my computer screen. I can dream, can't I?

at 8:01:59 PM
Absolutely, Stan, keep dreamin'! You did just right with your options (I assume you're waiting because your target wasn't yet hit?). Keep the greasy side down!

Mike in IL asks:
Me again Ken, March 03 180 coffee calls @ 56 pts., Dec 02 60 cotton calls @ 36 pts. Does this sound good?

at 8:02:34 PM
I'd look farther out in time, Mike . . . . Always go for TIME.

Trips22 asks:
Hi Ken, Thanks for all these chats. They certainly help me get through the tough times when the markets are moving against me. What do you think about Lumbar. I want to get back in after the recent 40 point drop. But it has not made new contract low as yet. I think it should retrace the 50% of the last move. What do you think.Thanks

at 8:03:58 PM
Sounds like a good plan, Trips22. But don't rush in: Price those calls and get them CHEAP (or forget the trade). Thanks!

susan asks:
Hi Ken; What do u think about opening an account with $1500?

at 8:05:04 PM
I know a lot of Course Members have done this, Susan, and done very well trading options only. Have you paper traded to where you're often saying "I'm tired of being right and not making any money on it!"? Thanks!

Reb from Sacramento asks:
Good evening Ken! Hoping to see you at "Talks in the Pines." My question is about "types" of orders (for contracts). I use an online broker and my choices are: market, limit, stop limit or OB. (No choice of "on a break over".) When placing my buy and sell orders for OJ, which is in a channel, what type of order should I use? With appreciation, thank you.

at 8:06:56 PM
I don't trade on-line, Reb, but I'd say you'd want to place a "stop limit" order at your price (above or below the channel). Thanks!

Stacy asks:
After looking at sugar's weekly and monthly charts, is this a good time to start looking at call options? What strike prices would you look at?

at 8:08:36 PM
Yes, Stacy, sugar looks GREAT for pricing call options now. I think you're trying to trick me into computing Sugar's 50% retracement figures, aren't you?! So I'll just say "Base your strike prices on Sugars Weekly 50% retracement target"! Thanks!

Duke asks:
Ken would you mind answering my question before you go? Thanks!

at 8:09:18 PM
Okay, Duke, ask away . . . .

Well that's it for another month. Here are my favorite web sites if you're interested: www.guyfinley.com ;www.wildlifeimages.org; www.LP.org ; www.uschartco.com ; www.fourstarbooks.com. ; (new!) www.historictrees.org. My next chat will be Tuesday, July 9th. Also remember Matt's stock and commodity chat next Tuesday, June 18th. And join Guy Finley's chat Thursday, July 4th at 6:30 PM Pacific Time. (And visit his site at any time to read inspiring quotes and sign up to receive a free spirit-lifting weekly Key Lesson by e-mail.) As always: Use these newfound powers only for Good. Good night!

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