Commodity Chat With Trader Jim! (tm) with Jim Prince
from August 14, 2007

Return to archives page

Good evening! Trader Jim here. . .

Thanks for joining me tonight. I’m sincerely excited about this evening’s chat. Quite a few markets have been on the move since our last meeting, so we have a lot to chat about.

For example, December Wheat, September Australian Dollar, September British Pound, December Cotton, December Coffee and the September Dow Jones mini contract have all been great movers during the last month! In addition, quite a few other markets are in the process of triggering potential paper trades too!

To top it off, all of the markets mentioned above have, at one time or another, been featured 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 excitement, enthusiasm, and interest. It give others hope and confidence 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.

webullient asks:
Jim, the DOW dropped 207 today. We are in a very volatile period. Is there a safe play here via an index?
at 6:12:10 PM
Thanks for joining us tonight, webullient! You're right, this market has been extremely volatile. There was a play when prices retraced back to the bottom of the old channel (resistance at 13315). My downside target was the daily 50% level. While the target hasn't quite been hit yet, the retracement has already happened, so that's come and gone. For now I'm sitting on the sidelines.
Tigger_T_Bounce asks:
I wish to offer Ken Roberts a big Thank You too. He's changed my life in so many ways
at 6:14:07 PM
Nice to hear Tigger_T_Bounce! Ken introduced so many to the biz. Glad you've had success!
Lew from New Hampshire asks:
Hi Jim. I tend to paper trade options because that is what I can afford in real money. However, many times the target price based on the futures market will result in only very small profits in the options, unless one is purchasing expensive, close-to-the-money or at-the-money options. As an alternative to using futures market target prices as the sole exit strategy, how about waiting for a down-grading of the Trend Seeker Ranking? Any other suggestions?
at 6:20:28 PM
Hi Lew from New Hampshire, It all depends on your trading style. It sounds like, you're probably purchasing inexpensive options, therefore you need to see a pretty big move in the market. I suggest you consider altering your profit targets, vary the chart patterns you're trading, or purchase options that have a little better chance of acting like a futures contract. Not sure what you mean about Trend Seeker, I base all my exits strictly on the chart patterns. Maybe try looking at major support or resistance points on the weekly or monthly chart as targets. They could be more up your alley. Just make sure you give the market plenty of time to try to reach your target. In any case, continue paper trading to see what works best for you. Let me know how it works out. I wish you the best!
Hopeful asks:
Dear Jim: Thanks for the way you teach. I find you are quite easy to follow and learn from. Would love to hear a recap of why it's usually not advisable to short options positions.
at 6:23:51 PM
Thanks for the nice words, Hopeful! In a nutshell. . . the idea behind our option strategies is to know your maximum risk going in to a trade. You'll know this when buying an option because it's the premium you play plus commissions and fees. Shorting, writing, or selling options (all the same) don't offer that feature. In fact, you have unlimited risk potential. That's not our interest here. We're all about preserving capital, and if you don't know what you're doing you can really get hurt writing options. Hope this helps. Thanks!
ferg-gb asks:
Jim, thanks for these talks. Do you have a favorite tool that you use when deciding what markets to trade. I find that just using my "eyes" with the 1-2-3 tops/bottoms is best but I'm wondering what you look at first...thanks
at 6:28:38 PM
Hi ferg-gb! My favorite tools are the charts and Trend Seeker. I'll scour the charts for patterns, then confirm the trend and the direction of the potential breakout with Trend Seeker. I like 1-2-3 patters, pennants, triangles, channels and the Hi Lo Breakout strategy. Sounds like you're on the right track, i.e. knowing what you like! Good job!
ready2win asks:
Hi Jim, I have a stupid question and if I should call Counselor please feel free to direct me there. I noticed that when I do not look at your pennants, triangles, channels, etc I can see the chart and see where to draw the lines. However when I just look at the chart without help I am having trouble seeing where to place. Am I hopeless?
at 6:31:20 PM
Ahhhh, heck no! You are not hopeless. It simply takes practice. I didn't learn to identify the patterns overnight, and neither will you. So you shouldn't get down on yourself as you're learning to do so. Give yourself some time, practice, keep doing what you're doing. Eventually you'll have an ahhhhh moment. It will leap off your computer screen at you and you'll say. . . ahhhhhh, I get it! Keep practicing and watching the videos etc. It will come!
John from Farmington Hills, Michigan asks:
Good evening Trader Jim & Friends, I would like to take this opportunity to give a Great BIG111 Thank you to Ken & Co. , you Trader Jim for all the fantastic information you have provided to me and Im sure I speak for all my fellow course members thru out the many years. You are one of my mentors & have changed my life!!! THANK YOU ALL!!!
at 6:33:43 PM
Thanks John from Farmington Hills, Michigan! Very nice words indeed. The pleasure is all mine. I love sharing my interest in the markets too. As the popular saying goes. . . we're just living dream! If you ever get out this way be sure to stop by our office and say hi. Keep on keepin' on!

How To Master The Chart™ Video Series: 1-2-3 Top Formations


Click here to learn all about our brand new
Video Training Series!

ChampaignChad asks:
Thanks for taking time to do this. Trading psych question; do you ever get discouraged with trading? :) I'm in that groove of one step forward, two steps back. Also, has this ever happened to you? When you're looking bearish/bullish on a market and then it turns around and breaks resistance to the up side, you find it hard to be bullish/bearish? Or is it just me? :) I'm addicted to WGB. Just going through a slump like batter in baseball.(figured you would like the reference) Chad
at 6:39:52 PM
Champaign Chad, this is something all traders go through. Sometimes the best medicine is to simply take a step back and get away from the charts/markets for a few days. This allows you some time for your head to clear. When you return, you'll find that you're often refreshed and looking at the charts from a new and different perspective. I also suggest you check out one of the best books I've read on trading psychology. It is titled "The Disciplined Trader" by Mark Douglas. I highly recommend it. Find it at your favorite book dealer. Hang in there and take it slow. Don't try to out think the market. Go with the flow. . . . good questions/comments.
Sam asks:
Hi, Jim What time was the chat to be?
at 6:40:08 PM
We are rolling now, Sam!
leon from St. Pete asks:
would you suggest becming familiar with the differint features offered with online charting before subscribing to premium alerts?
at 6:44:13 PM
Hi leon from St. Pete! Thanks for visiting tonight. It's entirely up to you. Knowing how to read a chart is extremely important. And when I produce the Premium Alerts (PAS) I use the charts. So it is imperative to have a good, basic understanding of chart reading. That said, you can always sign up for a two-week trial. So if you're interested consider calling a Course Counselor (or clicking on the graphic within this chat) and signing up for the PAS trial -- before you sign up for a subscription. That way you can determine whether or not you're ready for a subscription.
Smokin Joe asks:
Hello Jim, I'm happy to be back for another chat with you and fellow course members. TS says that Dec. Soybean Oil is down with a rankin of neutral. Yesterday the trend was listed as down with a ranking of weakest. Would you clarify for me which ranking indicates a stronger down trend?
at 6:48:53 PM
Welcome back, Smokin Joe! Trend Seeker currently is in the second day of a down trend rating for bean oil. The strongest down trend would have a Trend Ranking of extreme. Here are the five readings from strongest to weakest:

The Up/Down direction can be one of the following five readings:


An Up Trend with an "Extreme" ranking is a Trend which is becoming a stronger Up Trend. Similarly a Down Trend with an "Extreme" ranking is a Trend which is becoming a stronger Down Trend -- the direction goes with the Trend.
Hope this helps.
eddy asks:
Hi Jim, Thanks for all you do. What indicators does Trend Seeker use?
at 6:52:40 PM
Trend Seeker contains several different algorithms and uses those to analyze the trend. Once it does, it deciphers the trend direction and strength. You can find out more about it by watching the 12 min Trend Seeker video posted under the Trend Seeker Help tab at US Charts Online.
carlt asks:
Hi Jim. Question: Once a trigger has been hit, what would you consider the best way to enter the market: 1)place an entry stop order before the market opens,in anticipation of the market going in your direction,2)place a limit order before the market opens,hoping for a better price,or 3)wait a while for the market to settle,see which direction it's going and enter a market order. I seem to have problems with timing. Thank you.
at 6:57:53 PM
Good question, carlt! I typically like to wait 5 Min's or so until after the market opens. The biggest reason for this is I don't want to have an order waiting only to see the market gap open beyond my price. When this happens I usually will get a terrible entry fill. I'll wait and watch the market and then try to place my order according to where the market is trading. Typically, I try to enter as close to the trigger point as possible. Therefore the type of order I use will depend on where the market is trading shortly after the open. This is something I chat about quite a bit at the Trading Camps. BTW, we are editing the Trading Camp DVDs right now. Hopefully they'll be good to go in the fall.
ashere asks:
Do you given the hurricane season , that the foods and softs , specifically OJ rice will be going up ?
at 6:59:55 PM
Hi ashere! I only pay attention to the price charts. Trying to trade based on how you might think the markets will or won't act toward particular weather systems is very, very difficult to do. Frankly, I don't bother. The charts tell me all I need to know.

Good question though. Thanks!
Mike in NYC asks:
I purchased a 13000 Put in the Dec. E-Mini Dow, for 225 points ($1,125), a week ago on Aug. 7th. Today it closed at 350 points, or $1,750. Each point is worth $5.00. The market was so volatile, that going short a Futures contract was too risky for me. I'm not comfortable seeing the 200 point up/downs with an open Futures contract. Looking for the strong support at 13000 to be broken, and then going to trail a close mental stop to lock in profits.
at 7:02:58 PM
Nice job, Mike in NYC! That's how ya do it! Sounds like you had a plan and you stuck to it! I can't congratulate you enough! Great job, and keep up the good work!
schweetie asks:
Hi Jim, I have noticed that trend seeker will show a new trend well before a chart patern forms. This happened with sugar in the sideways channel. Trend seeker showed the sugar market in an uptrend before the breakout above the channel. Should trend seeker ever be used as an early entry tool for a trade without a chart pattern having formed? Dean.
at 7:06:19 PM
Hi schweetie! You can do that for sure. Just keep in mind that you won't/don't have the confirmation of the breakout of the pattern. I teach the conservative approach. Meaning to have the confluence of both the Trend Seeker trend rating and the chart pattern breakout direction prior to entry. I encourage you to paper trade both methods and find which works best for you.

Premium Alerts


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

Sam asks:
Hi, Jim - in response to your reply to Lew from New Hampshire - what's the optimum length of time if you've bought an out of the money option to wait before the time part of the premium starts to decay and eat up profits?
at 7:12:04 PM
Hey Sam, Time is the biggest enemy of an option trader. Remember, an option is a wasting asset. So. . . generally speaking you'll find that the premium really starts to decay the last 30 days or so prior to expiration. I encourage you to paper trade several different option positions and you'll see what I mean. By that I mean to paper trade in-ther-money and out-of-the-money options. By doing so you'll see how the premium reacts to the time factor.
leon from St. Pete asks:
Jim- When entering a paper trade, do you just arbitrarily pick an entry price near the breakoiut point and assume to have been filled?
at 7:17:27 PM
Hi leon from St. Pete. I write down on a piece of paper (ahead of time) where I want my order to get filled. Then, if the market trades through my price I assume my order is filled. I don't do it after the fact. When you take a paper trading entry after the fact it's too easy to cheat. And paper trading is not the time to be fudging. In my opinion you actually hurt yourself by "entering" after the fact. That's why I say it's vitally important to have an entry, stop, and profit target determined ahead of time. That way, if prices trade through your orders they will be filled.

I hope this makes sense.

Btw, I have a major announcement about paper trading coming in the next few days. Keep an eye on your email box for more info.
traderRich asks:
Do you do any tracking of the win / loss ratio from the premium alerts ? I follow every evening and paper trade many of the markets you show plus some I see chart paterens in. Since June 1st, I have completed trades trades with more than $6000 in papaer profits and another $5000 in unrealized paper profits. You have been a real inspiration on trading !!! Thanks
at 7:20:06 PM
Hey traderRich, I'm glad you're watching and learning from the PAS videos. That's really what those videos are all about. Keep up the good work and remember to protect your trading capital!
Fatboy asks:
Jim:Do you ever use options for protection instead of a stop loss?
at 7:24:11 PM
I don't, Fatboy. For two reasons, 1.) The options will many times expire prior to the underlying futures contract. Then your futures position is left naked. 2.) Buying the option is an expense. Let's say I spend $500 for an option to use as a stop. That means my futures position is actually starting in the red by $500. In other words, my futures position has to make $500 just to get me back to break even. I don't like starting a trade in the red. I'll use a futures stop. If I'm wrong about the trade, so be it. I don't want any part of it and will take the loss and move on. Hope that helps.
swede asks:
Goodevening Jim; Minn. swede here. I have a couple questions for yoy, What does rbob satnd for in gasoline ?
at 7:26:56 PM
You can find out all about the RBOB Gasoline contract at the NYMEX exchange's web site by clicking here. Enjoy!
Dennis Young asks:
hi jim,i want to say you are doing a very good job here for everyone keep up the good work and god bless.
at 7:28:26 PM
Thanks Dennis Young! I really appreciate your kind words. Thanks for joining us this evening and God Bless to you too!
TedFromFla asks:
Can a Trend Seeker change be reason to get out of the market. For instance I paper traded a Oct sugar call (Jul 17, I entered after a break above a channel and ranking was up.) and on Aug 07 the ranking went to neutral. I was not yet stopped out according to my predetermined stop price.
at 7:30:58 PM
You bet TedFromFla! A lot of folks will exit trades when there is a change in the Trend Seeker trend rating. The bottom line is it's all up to you. That's why I can't say enough about how important it is for you and all your fellow Course Members to paper trade. It simply helps so very much in building a quality understanding of the strategies and market mechanics. While you don't have the same emotions as you do with real money on the line, the big benefit is you can learn the mechanics as I mentioned. This will hopefully help eleminate a lot of mistakes. Keep on truckin'!
traderphil asks:
Hey Trader Jim! The Mariners are in a tight race...looks like they might need to win their division to make it to the playoffs..that AL Wild Card race is going to be a tight one. Per your advice, I have been taking my time with paper trading over the last few months and it's paying off big time. I've had a chance to work on my strengths and to learn about my tendencies...such us fighting every ounce in my body to not move my stop when I'm wrong on a trade. I've found that when I have a plan and trade my plan, my successes are greater and my failures are smaller. One of the strategies I've been using is to plan my exit points when a trade moves in my favor...say, $150 to $250 away from my targets. This seems to fit my style, but I was curious to find out if you plan an exact exit point with your winning trades or do you use more of a gutt feel when your targets are reached?
at 7:35:23 PM
Nice to hear from you traderphil! The M's got it going on this summer. I think I'm going to try to catch a game or two next month. Anyway. . . Great to hear you're taking your time and finding and developing your style -- and not moving your stops further away! As far as targets go. . . I always have my profit target in place ahead of time. From there, I simply trail my protective stop loss based on the price action. Generally I use natural areas of support and/or resistance for stop placement. My gut feeling is always wrong, that's why I have to rely on the charts!
2595089 asks:
Jim,thanks for all the great help!Do you see anything leading to a short in Oct lean hogs?Thanks,Jazman
at 7:36:46 PM
I don't see anything as of yet, 2595089. I'm watching for a chart pattern to develop. Until that happens, I'll sit and watch from the sidelines. Thanks for the nice words.
gail from pa asks:
hi jim want to know when the dvd you made at the last trading camp is commimng out. also why does it take trend seeker so late in the day to update.
at 7:42:00 PM
Hi gail from pa, we are currently editing the Trading Camp DVDs. We are hoping the Trading Camp DVD package will be available sometime in the late fall. As far as Trend Seeker goes. . . the last markets, the stock indices, close at 4:15pm ET each day. Trend Seeker then has to analyze price data for every market listed at US Charts Online. Right now I believe there are 52 markets. But it doesn't stop there. It not only analyzes the data for each market but also for each trading month within that market! So there is a ton of data to be verified, analyzed and posted to the site. It just takes a little time. The process actually goes pretty quickly in the big scheme of things.
johnh_2007 asks:
what is a triangle chart?
at 7:44:48 PM
Johnh_2007, I encourage you to review all the Training Videos at US Charts Online. Particularly the 08/11/06 and the 10/06/06 videos. They'll be a big help for you.
atlast asks:
Hi Jim, I feel very lucky that I have an excellent broker. I have reviewed some of his recomendations and many of them have been excellent and very profitable. Obviously, he has a good track recor, but what I find interesting is that he recommends a good number of Spreads. Many years ago, I weakened and bought into a Spread that had been successful for the last 15 years and was a sure thing. I found that I had sweaty palms night and day because of the unlimited risk. Fortunately, I decided to take a small loss and liquidate. I have no desire to get into a spread, but I do wonder if you use some of them for your trades. I am holding firm to developing my own trading plan. Your Premium Alerts are outstanding and I have benefitted greatly. Thank you so much for making them available at such a small cost.
at 7:47:17 PM
Howdy atlast! Every once in awhile I will put on a spread, but they are few and far between. In fact, I haven't put one on in over a year. Sounds like you're on the right track by sticking to and developing your own plan. Keep up the good work. Thank you for the nice comments about the PAS too. Glad you find them helpful.
Eric in Fort Worth asks:
Jim, do you favor markets that are extremely high or low, or do you basically trade formations that appear among the various markets regardless of price?
at 7:49:56 PM
I look for the patterns, Eric in Fort Worth! Patterns form when prices are high or low. To me it really doesn't matter how high or low a market it. I simply want to find a pattern and see if it's something that can be traded.
Good question.
traderphil asks:
Hello again Trader Jim! Great words of advice for ready2win...If you don't mind I'd like to add one thing...I was very frustrated early on because I had a real hard time indentifying chart patterns. Then I decided to just connect the dots (or tick ends) and the patterns started revealing themselves to me....
at 7:51:04 PM
Sounds good to me, traderphil! Thanks!
Lew from New Hampshire asks:
Hello again, Jim. I just want to thank you and your entire crew at U.S. Chart Co. for the awesome service you provide. I've been working with commodities since 1994, and since taking your Trading Camp in April, and using all the tools you provide, especially the Premium Alerts and the weekly training lessons, it is amazing how much I have learned. Although I am just paper trading at the present time, my paper account is up over $5000 just in the last 2 months. That is with very conservative trading, using the formations and strategies you teach. Not a day goes by that I do not learn something new, and loving every minute of it. Again, thanks.
at 7:52:24 PM
Great Lew! Thanks again to you too!
jstcpa asks:
Hi Jim, I've been subscribing to the PAS since May 1 and I just wanted to let you know how tremendously helpful the alerts have been for me. The alerts have enabled me to see the weaknesses I had in my own trading plans. I can see the value of protecting one's trading capital so that one can come back and trade again another day. Thanks again.
at 7:54:36 PM
Awesome, jstcpa! Glad you're benefiting from the PAS videos and most importantly protecting your capital!
ChampaignChad asks:
Jim, Sept Euro FX...do you consider that a channel. It just broke to the down side, if it is. With TS saying it is in a 'down' trend, is this a trigger?? Also, with it 'gapping' open, is this a potential setup for the 'fish-hook'??
at 7:58:59 PM
Nope in regards to the channel. Take a peek at the chart in Ken's Chart Book. I've outlined a 1-2-3 top formation. Prices are currently too far from the breakout point. So I'll watch to see if this market is going to retrace to a level near the #2 point and form the "fish hook" you mention. If it does, I'll consider a paper trade at that time.
Mike in NYC asks:
I realized I made a typo. I purchased the 13000 Put in the SEPTEMBER '07 contract, not the December '07 contract. The option will expire in 37-days, on Sept. 20th. Going to keep to the plan and trail a close mental stop. It is very close to being "In the Money" so it should hold it's value if the market closes below 13000 and keeps going down. Sorry for the mistake.
at 8:01:42 PM
Thanks for the correction Mike!
brassonly asks:
Hi Jim , this is my first time posting on a chat since you have taken over the reins since Ken's departure. I have been involved in commodity trading for over 7 years now thanks to Ken. I have found that things have really changed since the good old TWMPMM days.I probably own most of the courses that Ken offered back then & still enjoy them tremendously each time I get into them. Your doing a great job Jim , thanks so much for all the support you give us all.
at 8:05:37 PM
Glad you're with us tonight, brassonly. Nice to hear from another long-time student. Glad to help and thanks for the nice comments.
Tre-Tre from Tornoto, Ontario Canada asks:
Jim I'm late today but still here thanks for all you do the premium alerts are awesome, now my question is it common for markets to pull away just before hitting the 50% retracement then falling through it like the dow futures about a week ago.
at 8:09:25 PM
Hey Tre-Tre! Great to see you hear! Yep, it's quite common for markets to bounce at the Daily 50% level. Remember, the 50% level is a major area of support/resistance. Markets rarely go through major levels like a hot knife threw butter. Be sure to join us next month too.
7FORGIVES8 asks:
Jerry in Rock Hall: Jim, Thanks for the integrity you bring to this business. It provides an anchor of objectivity to what could otherwise be a series of subjective "tossed and blown" emotional experiences.
at 8:10:48 PM
You are welcome 7FORGIVES8.
Tre-Tre from Tornoto, Ontario Canada asks:
jim the 50% i was referring to was the true 50% on the dow futures just to clear that up.
at 8:11:35 PM
Thanks for the clarification, Tre-Tre!
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, September 11, 2007. God Bless and I look forward to seeing you then!
Return to archives page