Commodity Chat With Trader Jim! (tm) with Jim Prince
from September 11, 2007
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Good evening! Trader Jim here. . .
I’m so glad you’ve joined me this evening. I’m genuinely thrilled about this evening’s chat. Both Chicago and Kansas City Wheat are in full fledged bull markets, plus several other markets have been quite volatile, so we have a lot to chat about.
For example, the major decline that occurred in the September Australian Dollar, and the drop that took place in the September British Pound were something. November Orange Juice and Lumber both recently broke to new contract lows. Plus the September Dow Jones mini contract has been extremely volatile during the last month!
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 shout out 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.
4 Aces In Chandler asks:
What technical logic do you use to determine that a megaphone and 1-2-3 formations indicate a trend reversal and channels, triangles, pennants etc. indicate trend continuation?
at 6:11:14 PM
Hey 4 Aces In Chandler, There really isn't any specific logic other than learning about these patterns (I didn't invent them) and studying how they respond to price action. It just comes from review of thousands of charts over the last 20 years and hours of study. You see an event occur enough times it then becomes logical that it might continue. I'm no rocket scientist. I keep my charting as simple and straight forward as possible. These are chart patterns Study the markets enough and you'll be better able to draw your own conclusion. It's all about paper trading. Thanks for joining us tonight.
carlt asks:
Hi Jim. When you have a long channel chart pattern such as the current gold market, would it be a good strategy to buy the lows and sell the highs within the channel, or is it better to trade the breakouts of the channel? Thank you.
at 6:12:41 PM
Hi carlt! You can do it either way. I just prefer to trade the breakouts. I like the momentum on my side with that pattern. You might give it a shot in your paper trading and let me know how it works out for you.
tradetracker asks:
Thanks for sharing Sir James - leader of the pack! I am most satisfied with the Premium Alerts. Also, I believe a continuation of the "it's about to happen" would further enhance the Alert program. What say you Sir James astute trader of the Commodities?
at 6:15:00 PM
Thanks for the nice words tradetracker! The Premium Alerts cover a lot more info. and markets than the It Just Happened (IJH) does. But I plan on doing the IJH's more often. So look for more of them down the road. Thanks for your interest.
walter asks:
Jim,
Walter from NJ. I can't thank you enough for the PAS alerts and training videos!! I would be lost without them. You have an incredible ability and gift to take a complex subject and make it simple. Thank you again....
at 6:17:30 PM
Wow, that's very nice of you to say Walter. I just try to explain things based on what I know and try to do so in a way that will make sense to others. No rocket surgery here, just good ole' common horse sense. Guess we should thank my parents for giving me a clue (LOL).
efutures2 asks:
Hi Jim! efutures2 here from Lebanon, Tennessee. When waiting for a pullback on the day after a trigger and the price never really comes back to the breakout point, is there a rule you use to decide if the price has retraced close enough to enter the market?
at 6:20:26 PM
Good question efutures2! My rule of thumb is 1/2 of 1 percent. That's not written in stone though. Sometimes it may be a bit more or a bit less. I encourage you to use that number as a starting point and then do some paper trading with it. Let me know how it works out for you.
I just had a brainstorm. . . I'll do a video on it this Friday. Thanks for the idea!
Bekah asks:
Am I doing this right? Is there anyone in here yet?
at 6:21:10 PM
Hey there Bekah! You are here and we are rollin'!
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TedCC asks:
Hey TJ.. Learning much from your Premium Alert.. I have one ?? --> What price (Hi, Lo or Close) do I use to determine that I've been stopped out? Example: Say I own a futures contract current price is $100 in a bull market. My stop is at $95. Price falls. If the Daily Lo went to $94.5 but it closed at $95.5.. Am I stopped out? Is there a general rules(s) when to use close vs Hi vs Lo prices as the trigger price?
at 6:28:30 PM
Hi TedCC! Yep, you're stopped out. That's how you do it. If prices touch your stop price you're out. Not sure about your second question. But just to reiterate, if the market hits your order price you're out. Btw, I cover many examples of this in the new Master the Charts Series DVDs = Paper Trading: How to Develop An Unfair Advantage. Good question.
MinnesotaMan asks:
Good evening Jim! Have you ever ignored your technical analysis and sort of gone with your gut? If so, did it payoff or teach you a lesson??? I am just wondering how much intuition and instinct play in this business.
Thanks! Jair
at 6:32:43 PM
MinnesotaMan, Any time I follow my gut I get an upset stomach. It rarely, if ever, pays off for me. I believe you have to stick to the chart patterns and chart analysis and learn to interpret them. Most folks try to outsmart the market and place their opinions upon it. I believe that's the wrong thing to do. The market is way smarter than any of us will ever be. So instead of trying to outsmart it, why not ride its coattails? Thus the reason for following the trends.
wink asks:
Hi Jim,Wink here of Hyattsville,md. tell me why is it that the daily chart,wkly,and monthly charts sometimes have differant trend rating ?
at 6:34:57 PM
Hey wink, It's because they follow different time frames. There's a lot more data that's analyzed in the Weekly and Monthly charts. The trend rating for the daily charts is based on the last six weeks of data. For the Weekly charts it's the last two years. And for the monthly charts it's the last six years. The bottom line is more data = possibly different results.
Dean asks:
Hi Jim!! With regard to recent movement in the November orange juice contract, I'm curious as to whether the chart is showing a new #1 point around 111 or an opportunity to open a short position at 120. Thanks for your help!!
at 6:37:44 PM
Hi Dean, It is a new number one point (at 110.80) because it is a 12 month low. Trend Seeker says the trend is still down, therefore, I'd watch to see if the recent low is broken. If this happens, a paper trade based on the Hi Lo Breakout strategy will be triggered.
Mr Oldguy asks:
Just wanted to start off by saying I really appreciate the Premium Alert Service and the valuable insight you give into trend following. My question is related to the explosive wheat market that has recently run up to all-time highs. Would it be reasonable to expect the market to correct itself by eventually changing trend- like retracing to the daily or weekly 50% level?
at 6:41:05 PM
It is defiantly a thought. But right now the Wheat market is in a run away bull market. If you'll recall, we've been following this market on the PAS since the Aug. 22 trigger at 714-4. This market has moved nearly $2.00 since then! As of today's action there is not a sign of a reversal in the works. So don't try to outguess the market and fight the trend. Remember the old saying, the trend is your friend until it ends!
Bekah asks:
Thanks so much. I am new with this and I have a question about Mini contracts. Is the only difference that they are smaller quantity, or is there a difference in payout? Also, how do you feel about trading mini contracts?
at 6:44:39 PM
Glad you're with us Bekah! Yes, mini contracts are of smaller size, which in turn, means smaller winners or losers based on a one point move. For instance, a one point move in the full size Dow Jones contract is $10. In the Dow Jones mini contract it's $5. When you look at a chart be sure to examine the point value for the contracts. Hope this helps.
Tre-Tre from Toronto, Ontario Canada asks:
Jim how many topics will mastering the chart series cover just curious.
at 6:47:24 PM
Hey everyone Tre-Tre's in the house! I have a big list of topics Tre-Tre! However, I don't want to let the cat out of the bag, but I will tell you the current short list is about a half dozen. Thanks for joining us tonight!
BCtrader asks:
Good enening Jim. As a previous student of Ken's from way back, I'm glad to be back in the saddle again. I have really enjoyed your Friday night training video's. Did I miss the one last Friday? I couldn't find it anywhere on the site. Thanks again. Really enjoying my fresh start.
at 6:49:45 PM
Hi BCtrader! Glad you enjoy the videos. I decided not to do one last week. But will resume this week. If you, or anybody else out there, have some ideas for videos please call a counselor and let them know. I've been doing them for about a 14 months now and the well is starting to go dry. Thanks!
billy boy asks:
Hey there Trader Jim. My hats off to you for the great advice! What is the Trend Seeker based on?
at 6:51:38 PM
Hey billy boy! In a nutshell, Trend Seeker (TS) is a propriatary mathmatical program that analyzes the trend. Take seveal markets and find the TS trend and follow them for a while and see how accurate it is. Don't take my word for it though, check it out for yourself!
panhead asks:
panhead asks
Jim I hear you mention the doji, so you must be somewhat versed in candles. Any plans to offer a choice at USCharts after the survey.
THANKS
at 6:53:19 PM
Not at this time, panhead. While candlestick charts do offer some neat things, I don't trade the candle patterns. So I don't see us implementing candlestick charts anytime soon.
leon in st. pete asks:
Jim - I'm filled with excitement and confusion simultaneously. I became a student of Ken's in 1998 but always felt something to be missing. Ken's Richman's Secret coarse and Mark Douglas'Disciplined Trader have had a life-changing effect on me. Now that I'm back,and see all the wonderful tools with which to work, I'm excitedly confused as to how to put it all together.I'm also a premium alert member. any suggestions?
at 6:57:08 PM
Glad you've joined us tonight, leon in st. pete! Do this, read the manual. Watch the training videos starting at the beginning. Review the charts in the Chart Book at U.S. Charts Online). Check out the trial for the Premium Alert Service and then call a Course Counselor to help get you focused. Finally take it slow! How do you eat an elephant? One bite at a time!
Mike in NYC asks:
Trader Jim: Do you look at an extreme market like Wheat, making all-time highs, and begin to buy some cheap Put options? Or do you wait until the final top has been identified with the charts? These extreme markets seem to drop like a rock, like what you can see in the Monthly wheat chart, back in 1996. Do you have further insights about such an "all-time" high market, like Wheat? Thanks for sharing your trading knowledge.
at 7:00:50 PM
Hi Mike in NYC! No, I'm a trend follower. So I don't buy cheap puts. They are cheap for a reason. Wheat could drop like a rock but until that happens I prefer to follow the trend. It's impossible to try to outguess the market on a regular basis. For example, I'm sure there are folks out there that began buying cheap put options on Aug. 22 when Dec. Wheat was at 714-4. Well today it's almost two dollars higher! Would have been a real waste of capital in my mind. Just keep saying this over and over. . "the trend is my friend," "the trend is my friend" . . .
Ed in Windsor, Ontario asks:
Hi Jim and everyone. The Premium Alerts have been a great help. Do you always wait for a fish hook, or only if the breakout is too far away from the entry point? P.S. Go Blue Jays! Maybe next year, but at least they swept the Mariners recently, eh?
at 7:04:35 PM
Hi Ed in Windsor, Ontario! I watch for the fish hook only in the advent I can't get an entry at the original breakout point. Ahhh, Ed, my Mariners are having a tough enough time without you rubbing in that recent thrashing they took at the hand of the Jays. Thanks a lot. :(
luckpup asks:
luckpup here , Hey Jim great work with your "it just happened" on wheat unfortunately I let someone talk me out of my long position because of "gaps" that should fill. Needless to say I relearned an important point "never listen to anyone if you know what you see!! anyways - that was 100 points ago and I have never gotten in it (not wanting to chase the market) Any advise on how many points past a break out point you would consider "chasing?"
at 7:06:46 PM
Glad you learned your lesson luckpup! Now just don't repeat it! Trade what you see, not what you (or anybody else) thinks! Check out my response to Efutures2 at 6:20:26!
johnh_2007 asks:
Trader Jim,
You are correct 100% of the time. If you aren't, you have great explanations. Why don't you get a show on CNBC like Cramer's Mad Money?
at 7:10:59 PM
HAHAAHAHAHA, that's funny johnh_2007! No, I'm not the least bit correct 100% of the time (except this time of course (hehe)). I guess the price would have to be right. . . My wife is a tough, tough negotiator though, so any TV exec's would have to do battle with her. LOL. Thanks johnh_2007!
Boomer/sooner asks:
Hi Jim and Gang! I just want to say a big thanks for making your programs so educational. I just finished reading 50 Winning rules for Futures Traders. This sure points out how you can get trapped in your thinking and how important it is to have a trading system that you stick to.
at 7:15:40 PM
Awesome Boomer/sooner! Glad you enjoyed the publication. By the way for those of you that don't know what the Boomer is talking about. Simply take our survey and it's yours free. Click here to take our survey
traderphil asks:
Hey Trader Jim! You've shared in the past that you like trade pennant breakouts in the direction of the prevailing trend provided TS agrees. Does the same hold true for channels or will you consider trades in the opposite direction of the prevailing trend if TS is confluent?
at 7:20:28 PM
Yo traderphil! Yep, I always filter my trades with Trend Seeker, so I want the breakout of the pattern to be in the same direction as the TS trend rating. This goes for pennants,channels, flat top triangles (in uptrends), and flat-bottom triangles (in downtrends).
greg in arizona asks:
Hi Jim, When a market breaks out of a channel or other chart formation, and TS shows it going from Neutral to Extreme, is this market moving too fast? Thanks for keeping these chats going, they're a great help!
at 7:23:26 PM
Hi greg in arizona! Glad you enjoy the chats. They are a lot of fun to do. When a market goes from neutral to extreme it means the market moved from a stand still to full speed ahead. Compare it to your car. . . you've got your car in neutral, you put the pedal to the floor and put the transmission in drive. All of a sudden your going 80mph! That would be a good representation of TSs Trend Signal Ranking going from neutral to extreme. Just remember, extreme is the strongest part of the trend.
wink asks:
wink ask, is there any more 123 formation CDS ? (lession)
at 7:24:06 PM
Hi wink, I plan on doing another one probably after the first of the year. Thanks for your interest.
Boomer/sooner asks:
If you are trading mini contracts can you put them in trade tracker and if so how do you do it? Also, if you are selling options is there a way to enter these trades in trade tracker?
at 7:27:00 PM
Hey Boomer/sooner, you can only enter those markets listed within the chart site. That means if a mini contract like the S&P 500 or Dow Jones is there you can enter it in Trade Tracker. No other mini contracts are available that I can think of. As far as selling options, just enter the option as "short" when inputting it into trade tracker. That'll do it for you.
Dixante asks:
Hey jim, dixante here from Alberta Canada. I was wondering if you still support the "Strong 1" Strategy. I don't really ever see you use it and to me it doesn't really look like the best of strategies to be entering a market with. Thanks US Charts are great.
at 7:29:37 PM
Hi Dixante, I prefer to use chart based or chart pattern strategies. While it works pretty well, that's why you don't see me mention it much. That said, some folks wanted an automatic method. So we provide the Strong 1. That's it in a nutshell.
VallartaRedhead asks:
Hi Jim - I'm also a re-starter (previous student from awhile back). Out of all of the DVD's and on-line materials, what do you recommend we start studying first?
at 7:31:15 PM
Howdy VallartaRedhead! Start with the Training Videos first. They are available to all US Charts Online subscribers. Watch them all, then follow along with the charts in the Chart Book. Then take the trial of the Premium Alert Service videos. That should keep you busy! Welcome back!
Click here for more information or
call 800-230-2427 Monday through Friday,
8:30am - 5:00pm PT!
dirtfarmer asks:
Jim,
I'm trying something different on my exit plan. I'm only using trailing stops. When a price gets near an area of resistance (where most profit targets are placed), I will bump the trailing stop real close. Most of my trades bounce at that area of resistance and I will get stopped with a little less profit than using the profit target stop. However, some trades bust through that resistance, going to the next area of resistance. The extra profit from these trades seem to more than offset the loss of profit from the trades that bounce at the 1st profit target area. Will this plan hold out in the long run?
at 7:35:47 PM
I don't know dirtfarmer! That's a good question. I think a better question is; will YOU make it hold out in the long run? The best thing I can suggest is to paper trade it and see if it works for you. I can say that for me I prefer to have targets in place. I think most folks should. Otherwise they let hope, fear, and greed get the best of them. I feel my protective stops and profit target orders are my "employees." Thus I gotta put them to work. If one is missing, then it changes the whole approach.
Prime Time asks:
JIm, is your projection calculation another form of a measured move ? I have now began to incorporate that procedure into my trading it has been very accurate.
at 7:37:00 PM
You got it Prime Time! Just another method you can use to calculate a possible price target (i.e. measured move). Glad you find it useful. Pretty simple to use too, isn't it?
Another Jim asks:
Hi Trader Jim,
It is a great job that you and the crew have done on the U S Charts Online. Do you ever wonder if the subscribers are just using the multitude of information without really learning the great stuff available?
at 7:40:09 PM
Hi Another Jim! (Cool name, hehe) Sure, I guess that's one of the reasons for us putting together the recent survey. We want to know more about what folks are doing etc. I think the survey is a great idea. It allows us to find out how to best serve you folks.
Gary asks:
Do you ever use any other patterns like the diamond pattern or the saucer pattern? I am a long time watcher and sometimes trader. I just subscribed last month and when I saw the premium alerts and what they taught, I had to have it. Thanks for a great job. Gary
at 7:43:22 PM
Hi Gary, Yes I do use them. However, I haven't mentioned them yet. I prefer to introduce a little bit at a time. That way folks tend not to get overwhelmed. There are many other chart patterns and approaches that I feel are fantastic. Eventually my favorites will be part of the How to Master the Chart video series. Btw, from this point forward all of the How to Master the Chart videos will be on DVD. Glad you enjoy the PAS. Thanks!
mookie asks:
hi jim do you think it would be a good idea to bye a put option in feeder cattle based on passed years movements
at 7:48:43 PM
Hi mookie, I don't approach the markets that way. I prefer to trade chart patterns that appear on the Daily price charts. If there is no pattern, I ignore the market until there is one. This is what I prefer and what I teach in our newsletter and videos. Hope this helps.
LKP asks:
IS IT TO LATE TO ENTER THE WHEAT MARKET?
at 7:51:25 PM
Currently there is not a pattern in place that we paper trade. So based on that little bit of criteria I have to say no. Again, we don't just jump in a market because it's moving. We have to have a legit reason. For me a legit reason is a chart pattern. Don't let fear of missing a move make you enter a market. You're sure to get destroyed if you do.
Mr.Oops asks:
Hi Jim, Mr Oops here do you know or think that there will ever be another egg market like years ago?
at 7:54:48 PM
No sure Mr. Oops, that market all but disappeared because it's all scrambled. It never did go "over easy." But let's look at the "sunny-side up." If you don't trade it you won't crack under pressure.
ChampaignChad asks:
Hey Jim, Just wanted to relay a great paper trade profit. I had two Dec Aus. Dollar puts from late July. 8400 and 8450, I believe. The morning it gapped down I immediatley liquated those options giving me just over $8k in profits. I was also short Sept. Soy oil. That week I had over $10k in papertrade profits. Last month I asked you about dealing with being discouraged with trading. Well...nothing like a big profit to boost one's moral. :) Maybe next time it will be real money.
Thanks
at 7:57:00 PM
Very nice, ChampaignChad! Just remember trading, as with all things in life, cycle! You'll go through both good and bad stretches. In trading the key is to limit your losses when you're going through a bad stretch. Good job, keep on keepin' on!
Michigan Ed asks:
The October lean hog chart shows a very large 1,2,3 top formation, moreso than one usually sees. Would you trade this market if it closes below the #2 point?
at 7:59:21 PM
Hey Michigan Ed, personally I'll pass. The daily 50% level is right at the #2 point. Plus the difference between the #1 and #2 points is HUGE. I'll watch for better looking patterns. Good question though.
KEN SOUTH asks:
DO YOU ADVISE TO BE IN MORE THAN MARKET AT THE SAME TIME
KEN FROM TEXAS
at 8:02:50 PM
Hi KEN SOUTH! No advice here. However, I generally suggest to folks to focus on a handful of markets. Otherwise it's difficult to stay on top of your setups/trades if you have too many on your plate. Ultimately it's up to you to determine the amount you're comfortable with. And the best method to use to find out is paper trading.
BCtrader asks:
Hello again Jim. In regards to Bekah's question on Mini contracts, are you planning to add them and the TS analysis of them to the US Charts site at some point in the future? Thanks again.
at 8:04:30 PM
I'm not sure, BCtrader. I'll pass your question on to the programmers. Thanks!
thelineman asks:
hi JIM . i have been paper trading for 3 months and i only entered on retracements , missed a fiew trades this way , do you think this is a bad ideal, now i am waiting for O.J and the dollar to retrace any comments would help me and my nerves.
at 8:08:03 PM
Continue paper trading, thelineman! That's the only way you'll be able to discover what works for you. Take it slow and easy too. Don't be in a hurry. Personally I prefer the chart patterns, but I discovered this through my very own paper trading.
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, October 9, 2007. God Bless and I look forward to seeing you then!
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