Ken Roberts Chat

Let's Talk Trading (tm) with Ken Roberts
from July 13, 2004

As we begin this evenings 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. Its not the highest and best use of our limited time here together for me to define basic terms and explain introductory principles taught in your Course materials. Thats what my Counselors are here for... Now is the time for you to use me to help you apply the basics youre learning and to prepare you for what to expect once youre 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... Ive got a Zino Platinum Double Crown fired up, heres our plate of Krista's famous, freshly baked almond stars shortbread cookies (with chocolate chips)(her Swedish Grandmother's recipe!), the coffees poured, so lets talk commodities! NOTE!!! When commenting on one of my Courses, please identify WHICH ONE. Also, when relating trading experiences and/or results, please give details: Futures contracts, options, options AND futures, etc. This helps others follow along and learn from your experience too.

machotrader asks:
Redondo Beach, CA: Before TOVI you used to leg into your long term positions as prices moved against you, a little bit at a time (as in roundtable videos). Now since you wait for TOVI to get you in do you still leg in or do you establish your full (large) position all at once?

at 6:17:37 PM
Good question, machotrader. Since TOVI, I typically wait longer before entering a trade and I'd say that I now enter with a larger number of contracts and/or options than I used to. Thanks!

Tonight's chat features my powerful new WGB Hi-Lo Breakout Strategy!

(Opens in a new window, requires Adobe Acrobat 5 )

This strategy will also be available for download at the WGB Member Center .

Not a member?
Click here to find out what you're missing!

Do you get that?! You should have seen what that looked like when I pasted it into the window for posting --- like a plate of Chinese spaghetti! Sure hope it looks better to you . . . .

bwarn001 - Springdale Ar asks:
Hi ken, do you still try to buy options under $250 like you used too? I'm not sure since you're using Tovi. I just became a wgb member, tovi, and us charts. love your stuff and it is still the best! thanks

at 6:22:31 PM
Thanks bwarn001! (I don't think I've ever met anyone named bwarn001 before!) No, I pay MUCH MORE for options than I used to. It was difficult to do at first until I saw how buying VALUE paid off so much more than buying CHEAP. So now I'm buying options much closer to-the-money than ever before. Glad you joined us this evening.

Eve asks:
Hi, Ken! Over the years I have learned a lot from you both about trading and how to live life (Rich Man's Secret). I am curious as to how crucial to one's long term success as a trader one's mental attitude about trading and money is.....

at 6:25:19 PM
It's not only crucial, Eve, it's crucial! Yes, attitude is everything. Most people want more FROM life, right? What they don't realize is that you must GIVE to life before life gives back. Think about it. It's like priming the pump (that only requires a small amount of water) which then yields abundantly. Great question. Thanks!

Dick Waldren asks:
Do you now just specialize in options?

at 6:27:11 PM
No, Dick, but I DO trade many more options now than I used to. And for anyone just beginning, I believe it's imperative that he or she learns to use options in trading. Remember: When I began way back in '83, there were no options! Now, Open Interest in options multiplies over and over each and every year.

Chamous asks:
What happened to the 1-2-3 formation, do you still use it?? What is the best case scenario in a 1-2-3 formation time-wise?

at 6:28:48 PM
Great question. See our new "Hi-Lo Breakout" Strategy I just posted. Thanks!

Jim asks:
Ok Ken. . . good evening. So let's get on with this great trading strategy with the #1 tops and bottoms. I am getting anxious for some great information! Thanks!

at 6:29:10 PM
Well, what'd'ya think?

dtdmother asks:
Ken- I am trying to decide what are the best markets to be in right now with the most potential for profit. I like the way OJ and coffee look and I am thinking that soybeans and rough rice must come back down soon. What do you think?

at 6:32:27 PM
I agree, dtdmother (and so does TOVI's Trend Tracker in OJ, Beans, and Rice). Good eye (you Chartist, you)!

Saved One asks:
Good Evening Ken, Are you long in Cotton yet, or are you waiting for lower prices? Thanks for the chats. I love em !

at 6:33:34 PM
No yet, Saved One, but that's the way to watch 'em!

Joel asks:
Ken, I noticed that when you decide to buy a call or put option, you typically do so when the prices break out of a consolidation pattern in the directon of the prevailing trend. But what if the break creates new highs or lows (or just very high or very low prices), isn't your opportunity minimized since the markets are already trending very high (for calls) or very low (for puts)? Doesn't this go against being a contrarian?

at 6:39:29 PM
What you say is true if talking about LONG-TERM trades. But short-term trading in these markets (trading with momentum/trend) can still spell profits. They just typically won't be as large a move. Now, as far as "going against being a contrarian?" . . . . I'll have to think on that one a bit . . . . Let's see: Contrary to being a contrarian . . . .

jeff moormeier asks:
Has this started yet?

at 6:39:55 PM
Yes! Welcome aboard, Jeff! (Remember to hit those refresh buttons . . . .)

For new visitors to our monthly Chat, please remember to hit your REFRESH button periodically.

williamasundquist asks:
do you use momentum indicators?

at 6:42:18 PM
The ONLY momentum indicator I use is TOVI's Trend Tracker/Short-Term Momentum Rating.

Phoenix_Rob asks:
Hi Ken, I was TWPMM member. Fell away, but now I am a GWB member with US Charts online and TOVI. I contacted a broker today and they are sending me a starter kit!

at 6:44:30 PM
Welcome back, Phoenix_Rob! The futures markets (and us too!) have just been getting better and better since we saw you last. Glad you're with us.

Beaner asks:
Hi Ken! Beaner from chicago here! I posted on your last chat regarding my contracts in OJ.I got in a little early and was waiting through a large drawdown,but had total faith in the charts.Well we know what the juice is doin' now!Lookin for the retracement at around 75 cents for my first target!I find it very interesting how NOW I am hearing the bullish funnymental stories coming out.(lower stockpiles,brazils exports down 8 percent,ha ha ha ....I only listen to them when i need a good laugh) Thanks Ken! Cha-ching $$$$

at 6:46:43 PM
Good for you Beaner! This makes YOU a contrarian! (Are those real Cha-chings or paper Cha-chings?)

JOSEPH asks:
Ken, just finished -- easy to understand--WGB manual, thank you. Do you follow comercials positions & open interest to make decisions? What would happen to options values in the case of another 9/11?

at 6:51:15 PM
Welcome to the WGB! Don't you love it?! JOSEPH, I pay no attention to commercials' positions and Open Interest to make decisions. Who knows what would happen? Last time, the markets shut down for awhile, then began staggering their hours of operation, then a general bull market began (see weekly CRB Index chart --- looks like 9/11 was the #1 bottom)! Thanks.

jules asks:
Hi Ken I am very intereseted in TOVI. Can you give some more information.

at 6:52:18 PM
TOVI is the "trading template" everyone's been asking me for for the past 20 years! Take my personal tour at www.tovitour.com. Thanks for joining us!

kurt asks:
ken since sugar is approaching the resistance of 9 would it be wise to start looking at puts that are far out I see that Oct 05 6 at 12pts.

at 6:54:05 PM
I'd stick with TOVI's Trend Tracker, kurt.

DAVE asks:
Do the seasons of the year have a lot to do with the commodity pricing?

at 6:54:31 PM
Not that I've ever figured out, DAVE!

Mike in NYC asks:
Ken: Thanks for the article What a Difference 15 Minutes a Day Makes. Has your experience proven that Trading is that simple? That prices go up and make new highs, they go down and make new lows, or they move sideways before they continue up or down? If so, has your success been realized by indentifying The Trend and Trading along with it to create profits?

at 6:57:04 PM
You're welcome, Mike in NYC (what did Donald Trump say when you told him "Hi!" for me?)! Yes, I've found that trading IS that simple. To make it more seems to cause a lot more trouble than it's worth. Yes, I'd have to concur: The Trend Is Your Friend! Thanks.

wputnam asks:
Ken, I'm sitting on 4 OJ options, and its my first real trade. Its nice to score on your first attempt! Thanks for TOVI, its a great way to help select and track my trades.

at 6:57:37 PM
Good goin', wputnam! Squeeze out those profits!

smyers asks:
Ken, When entering a market when TOVI goes from moderate to strong, can you enter on say, the 2nd or 3rd time the market gets it's moderate to strong rating? Or is it best to enter the market the first time it goes to strong? Thanks for TOVI! Rice and cotton are making me a lot of money.

at 7:00:01 PM
I'd say you'll have better results entering just the FIRST time TOVI's rankings go from moderate to strong. Congratulations on that rice and cotton (you sound like a Southern farmer)! (My Grandfather was a Southern farmer too --- soybeans.)

juniegirl asks:
Does TOVI make the OPIP obsolete? I think it is harder to unlearn the old than to learn the new!

at 7:03:42 PM
No, I'm an old dog who's learning ALL the new trading tricks! Anyone can do it. TOVI's Long-Term Rankings page and Budgeted Option Search feature replace the OPIP technique (and make it so much easier)! Thanks.

harold storie asks:
I have been rec. your commodity e-mail for about a month. About how long would you recommend a person to paper trade before going with cash? I still feel nervous about using cash now.

at 7:08:50 PM
Welcome Harold! You have already partly answered your own question. You shouldn't be trading with real money until you are completely comfortable doing so. The way to do that is to paper-trade until you are confident about your trading decisions and are confident about implementing your plan. When you're ready, you'll find yourself saying "I'm tired of being right and not making any money on it" a lot. Good luck!!

Joel asks:
Ken, I've had it asked of me if it is counter-productive when so many people are in the markets utilizing the same profit making strategies? What if half of all traders use your techniques, for example? Does that adversely effect the markets or your opportunities to make money?

at 7:11:01 PM
If half of all traders used the techniques I teach, Joel, I would be bigger than Trump! No, Joel, take a look at the stats the various commodity exchanges publish and you'll begin to realize how VAST the futures and options markets really are. But I'm flattered you would ask!

AK John asks:
I've been looking through your chart book but I don't see an example of the Hi-Lo Breakout strategy. Could you point me to the right one?

at 7:12:45 PM
Check it again, AK John. You'll find at least several charts marked with the distinctive #1 marked on them. Thanks, and good huntin'!

still tryin asks:
Thanks for these great chats Ken, I really look forward to them. Do you still consider the best strategy to first find a formation which shows a change in price direction, preferably in a market which is really high or low, and then to wait til Tovi verifies the trend--as opposed to just trading the trend from Tovi?

at 7:14:44 PM
Yes, these are where I believe you'll find the potential for the greatest price moves. But try both, (since you're still tryin!), still tryin. Thanks!

BB in PC asks:
Thank you for all you suggest & teach. The front month Rough Rice contract dropped way down today. Sept dropped about half as much. Question: if you were trading a futures contract would you have used the front month or the second month? I am making money by trading the second, but would have done much better using the front month.

at 7:19:29 PM
It's impossible to be long the July Rice contract now, BB in PC, because FND on the July contract was June 30th! Now, don't you feel better?! In general, when first ENTERING a market with a futures contract, I'll trade approximately three months out (sometimes that's the front month, and sometimes that's the second contract month out). Congratulations!

Socrates asks:
Hi, Ken, from sunny Fountain Valley, CA! I've noticed that throughout my trading over time, I've never missed making money when investing in a market that has just moved past historic lows or highs (long in the case of resistance/short in the case of support). Have I just been lucky or is this a trading strategy that, in your view, proves successful? Thanks for all you do! We love ya', man.

at 7:22:13 PM
Thanks Socrates! See our new "Hi-Lo Breakout" Strategy posted here this evening.

Here, I'll post it again:

palmharborflorida asks:
not much to brag about but i made 200 on the 65.00 oj call i purchased after it started to move but i got out thinking its going to come down,and not much time left on a sept option

at 7:27:15 PM
Good going, palmharborflorida, but let me ask you this: What was your EXIT plan going into this trade? In a September OJ option, you had until 8/20/04 before expiration, right? But take comfort: As I always say, You can't lose money taking profits . . . .

BLueCobra asks:
Hi Ken & all! BlueCoBra from Buffalo, NY here. Just wanted to thank you for giving me the opportunity to be a successful options trader. Utilizing GAB and TOVI I am $20 away from doubling my June 8th starting balance of $5000. The option responsible for most of my gain is 2 Dec '04 Cotton puts with a strike of 51. Go Cotton! Many thanks Ken! (BTW, this is real money)

at 7:28:27 PM
Thank YOU, BLueCobra, and congratulations! (What EXIT strategy do you use?)

anaitis asks:
Hello Ken, John Templeton said "A person is more likely to be successful managing money if she/he uses SPIRITUAL Principles. The more you practice spirituality, the more your learn." Can you help us a few hints to understand this sentence better and tell us what you think those SPIRITUAL principles are and how to work on them to get better at trading? Thanks a bunch.

at 7:31:08 PM
Sure, anaitis. "Spiritual" is not "emotional." Does this help? Thanks.

Krispy Kreme asks:
Ken, I just wanted to say thanks for providing Ted Warren's book. After 5 years of trading i've never had a clearer understanding of why formations act the way they do! It has boosted my confidence 10 fold and I highly recommend it!

at 7:32:29 PM
Thanks Krispy Kreme! (I was just telling a non-financial person all about Ted Warren today. What a story . . . .)

Nelson asks:
I have a set of your boardroom videos, about 6 years old, where you emphasized never to write or go short options. Do you still follow that rule, or do you now have any strategies using short options?

at 7:35:23 PM
Yes, Nelson, writing options is NOT for beginners. That said, there is a Writing Options module coming out on TOVI by the end of the year. Thanks.

NorthShoreTodd asks:
Hi Ken! I Took Your Greatest American Business Course And TWMPMM. I Love The Futures Contracts More Than The Options! Before I Join Tovi & US Charts I Was Wondering If These Two Sites Are More For Options Traders, Or Both Futures And Options Traders? Thanks A Million!

at 7:37:04 PM
Both sites are for both kinds of trader, NorthShoreTodd! (And after you've been on TOVI awhile, I'll bet you change your tune re: options!)

chartech asks:
Chartech From Southern Ohio; Like your new photo on the chat. Is this part of the new addition you built on for course members. Love TOVI still making money in O J up $705.00 from when TOVI told me to enter using its stragies. Got in at 63.40 on 6/30/04 first day it went to strong close today at 68.10. Thanks to you and all your staff for making this THE WORLDS GREATEST BUSSINESS. Your The Greatest.

at 7:39:06 PM
Thanks, Chartech! That photo was taken in our new Boardroom/Classroom. Come on out to Oregon and see us! Go OJ, go!

juniegirl asks:
Would Krista share her recipe with me if I asked her kindly and sent her my email address?

at 7:41:09 PM
Yes she happily would, juniegirl! Send her your email address at "feedback@kroberts.com" and please type KRISTA's KOOKIES in the subject box. Thanks! (You're gonna love these shortbreads . . . . Wait!!! They're all gone!!!)

jen asks:
I'm confused. As a former student of yours (back with the first course One and Two) and before Tovi, Do I now forget all that and go with Tovi and if so, what courses should I take now or do I just become a member?

at 7:44:01 PM
TOVI and the WGB are the BEST I know of trading today. As an experienced student, jen, I'd recommend U.S. CHARTS ON-LINE (which includes WGB and Ken's Chart Book) and TOVI. That's what I use. Thanks for joining us this evening.

Randyone asks:
When it's time to exit a trade...do you sell at the Market or do you use Limits???

at 7:45:32 PM
Limit orders ONLY, Randyone, whenever possible. Thanks!

deet asks:
From San Francisco, California Regarding the Hi-Lo Breakout strategy, how often would you say these opportunities occur?

at 7:46:33 PM
Every 2.37 days, deet. No, I don't know exactly, but more often than you'd think. Give it a try! Thanks.

nosajlleb asks:
Hello Ken, just read thru the new strategy and am wondering why TOVI was not used in the picking of the option?

at 7:49:46 PM
Not all WGB Members subscribe to TOVI, nosajlleb, for those who do, yes --- use TOVI's Option Search feature to find the best option for your money! If you're not on TOVI, use the option selection process described in our Strategy. Thanks!

nick asks:
Nick - Edmonds, WA Hi Ken...compliments to you on a 1st class program and outstanding U.S. Charts site. Do you have any resources (books etc) that can help me determine how my trading can be conducted as a business for tax benefits. I am trading on an individual account and since this is the Worlds Greatest Business how do I set this up as a business?

at 7:53:54 PM
Thanks for the kind words, nick! Funny you should ask, an erudite tax attorney is sitting here right next to me right now. He says you should look into a tax tome titled "The New Trader's Tax Solution" by Ted Tesser AND, my attorney adds, "Always consult with your tax advisor . . . ." (Oh brother . . . .)

nyc kidd asks:
ken wanted to let you know that my wife turns out to be a better trader than me. She naturally knows how to spot great bargins with tovi! she paper traded a $1700 profit in cotton and 2k in rice!

at 7:55:29 PM
Thanks, nyc kidd! And congratulations to your wife too! You two keep in touch. (My wife Krista's sitting here next to me too, and she agrees with your wife!)

TOVIJUNKIE asks:
Hi ken & crew, Many times you talk about working an order,I understand getting your desired fill price in futures but I thought "the"price of an option was what you had to pay. As always I hate to sound too green to all online tonight,but I need to get my mind around this,can you elaborate? Thanks for all of the fantastic things you do for all,TOVIJUNKIE

at 7:57:54 PM
It's not easy being green, is it, TOVIJUNKIE? Yes! You certainly CAN underbid any option's listed price. Remember: all trading is based upon bid and ask. So bid less and "work" those orders. This is where a broker earns his or her commissions from you. Great question, greenie! Thanks!

Liftlock City asks:
Ken, I studied your courses, started paper trading and now wonder whether paper trading options is still as important as paper trading futures. I feel quite confident, and how much can I loose anyway? (Only what I put in plus commission.)

at 8:02:01 PM
Great question, Liftlock City, and I'm glad you asked! Yes! Paper trade those options too. Try different strategies. Learn about YOU and your trading style in the process. Your goal is to learn how to PROFIT, not just limit your losses. You have a great attitude. Please stay in touch.

Vegas asks:
What reading material would you recommend for a solid understanding of options trading? Thanks.

at 8:03:02 PM
In addition to the WGB Course, please see our new Trader's Library for Course Members. Thanks!

Tre-Tre from Toronto, Ontario Canada asks:
Ken just looked at the strategy or should I say skimmed it you out did yourself now that's trend following and I love it the best way to trade bar none.

at 8:03:39 PM
Well said, Tre-Tre!

truckerbuddy asks:
Ken, why are there not many commodity brokers on the east coast? I have been thinking about getting out of trucking and getting my license. I have been trading about 7 years and I'm hopelessly hooked. What do you thing about me getting my license?

at 8:04:54 PM
Follow your passion, truckerbuddy. (Last time I looked, there were LOTS of brokers on the East Coast . . . .) Thanks!

Peter asks:
Master Ken, I started small with 2K, made 7K, increased to 25K of my money, made 25k, put in another 50K of my money, with trading increased my portfolio to 160K. Ken- I let it ALL slide away over a two month period. I have T1, T2, have used uscahrts online and most recently TOVI. I know the power of trading and feel it deep within me. How can I break in again with at the money options for 5k-10K for two months with minimal trepidation?? 5 year dedicated slow-start to every week 6K profit hopeful trader Pete

at 8:08:41 PM
First of all, Peter, looking back, do you know what went RIGHT and what went WRONG? There are powerful lessons in your experiences. Be certain you learn them. If you're starting again, I'd begin slowly. (Why only $5,000 - $10,000 options? There are plenty available for much, much less than that.) Stay the Course, and stay in touch! Thanks.

traderdon asks:
Ken, My $9200.00 is real Green Backs.

at 8:09:30 PM
Thanks.

Chumstick asks:
Thanks Ken for finally embracing technology. As an old TWMMP member and and a really old (67 yrs) technology geek I always hoped you would get 'round the online charts and I was an early subscriber. I love the new look and this new Breakout strategy looks great. Thanks for TOVI it gave me a shot new energy. I've been watching coffee for 3 yrs and I'm finally about ready to trade, thanks to TOVI!

at 8:10:29 PM
Thank YOU, Chumstick! Sorry it took me so long to catch up with you!

lohijim asks:
lohijim thanks for USCHARTSONLINE,TOVI,CHATS and all the rest of the good stuff. i am long oj and sugar. your best advice is papertrade,papertrade,papertrade the patterns of the past are the roadmaps of the future.

at 8:10:46 PM
!

Well that's it for another month. Check out my favorite web sites: www.tovionline.com (Have you taken my personal tour yet?) ; www.uschartco.com ; www.fourstarbooks.com ; www.historictrees.org ; www.billoreilly.com ; www.wildlifeimages.org ; www.salestax.org (Let's abolish the IRS!); www.LP.org (Take The World's Smallest Political Quiz and see where you stand politically). My next chat will be Tuesday, August 10th (The next TOVI Chat is this Tuesday, August 3rd!). As always: Use these newfound powers only for Good. Good night, God bless, and watch where you step!

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