Let's Talk Trading (tm) with Ken Roberts
from October 12, 2004
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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
Course 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 Trinidad Robusto fired up, heres our platter of a freshly purchased assortment of cookies (from The Chocolate Affair restaurant and dessertery next door to our office building), 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.
Joshua in Florida asks:
Hi Ken, This has to be the largest get together of Ken Roberts students at one time. I really look forward to picking your brain every month. I'm watching the lows on Cotton, Corn, and Soy Mean. Can you tell us the prices your waiting for to get long in these markets? Also, if your waiting for Tovi to change in these markets, what would you look for?
at 6:24:55 PM
I may have been born at night, Joshua, but not last night! I'm not doing your homework for you! You sound just like my daughter Chelsea, but as I tell her, "You can only fool me twice . . . ."
Thanks for joining us this evening, and yes, this is the largest gathering of KRC Members at one time!
David asks:
Hey, Ken!
Aloha from the North Shore! It's 88-degrees with a sweet little 2-to-4 foot northwest swell rolling in... and I'm sitting inside on the computer with you guys. You should be here instead, kicking back on the lanai with a cigar and a mai tai....
My dad's family's from Grants Pass, by the way. We used to head down there every holiday when I was a kid. Do they still have the big caveman out there on the highway?
Anyway, one (more) comment and a couple of questions. First, I just wanted to tell you that out of your various writings, tapes, videos, and the novel, what I always enjoyed the most were your promotional booklets you sent out free in the mail. Hey, one of 'em got me to sign up for the course! I kept that one, and the later version where you added the bit about the driving school and keeping your eyes on where you WANT to go. I find those little booklets to be miniature inspiration guides in themselves, containing a lot of valuable information about trading,
at 6:30:36 PM
Thanks David --- and aloha right back! Yes, you ARE dedicated to be online live with us this "evening" (on the Mainland) rather than on that beautiful Hawaiian beach.
Yes, the caveman's still here, but he was blown up last Fourth of July by a bunch of (smart) teenagers and has been successfully repaired. By the way, the Grants Pass Mayor told me once that three towns had ordered the Caveman as their town mascot, but when they received them, two of those three towns sent their Caveman back!!! (So guess which "brilliant" town kept theirs . . . ?)
Thanks for the kind words regarding those old salespieces. I love writing them too. But don't worry: Keep your eye on the Trader Library archives on the KRC website for little gold nuggets. (Just don't confuse them with little brown nuggets . . . .)
stephanie_in_tn asks:
Good Evening Ken! "Shopping for Options". With TOVI, that almost seems contradictory. I follow your charts and when you see a buying opportunity, you say that you will begin shopping for options. With TOVI, I just enter some simple information when I'm ready to buy, and "poof" out comes some results from which to choose. Hardly seems like shopping. So, after you have done all of the hard work of deciding when to buy, is there more analysis that you personally do besides looking at the TOVI results? Which leads to my second question, I feel that I am really learning to recognize buying opportunities from the charts, but with TOVI, I am just learning to use a tool. What if, heaven forbid, TOVI goes away? Thanks so much, Stephanie
at 6:41:06 PM
Keep your subscription going, Stephanie, and TOVI will never go away! Yes, Heaven forbid that . . . .
You're right, TOVI makes "shopping" just that easy, but it is important to learn when and why you WANT to go shopping. It's kind of like using an autopilot when flying. Since you have it, why not use it? You already know flying's basics, so put that autopilot to good use!
All that said, however, what's your EXIT strategy. Don't fall into the trap of jumping INTO a trade without knowing where you will EXIT that trade. (See my "lecture" last Tuesday, October 5th, on the TOVI Chat archives page.)
Thanks Stephanie!
ranger06 asks:
What is the most important rule to follow with respect to stopping a loss on commodity options.
at 6:42:18 PM
To have one in place BEFORE you enter the trade! For example, are you using CHART POINTS, a percentage-loss figure, or a dollar-loss figure?
Good question. Thanks!
Jacques in Montr�l asks:
Ken, can we pyramid Option like we can with Future ?
at 6:43:47 PM
No Jacques. The Exchanges do NOT allow us to "spend" open profits in options as they do with open profits in futures contracts. I don't agree with this policy, but enough of us haven't griped enough for them to change it yet. Let YOUR opinion be heard and write, call, or email them!
letsgo asks:
How do we get into this room?
at 6:44:10 PM
You're in it, letsgo! Let's go!
Apilgrim asks:
What advice do you have someone (me)who seems to be paralyzed by indecision and fear?
at 6:52:09 PM
Great question, apilgrim. You're learning the powerful and valuable lesson that legendary trader Sir John Templeton has spent the latter part of his life preaching and teaching: That the spiritual is more important to study than the physical.
You could be the greatest trader of all time, but if you, as you say, become "paralyzed by indecision and fear," what good are those great skills?
So keep paper trading, paper trading, paper trading, and studying, studying, studying. (Check out the gems at Four Star Books too --- this is exactly why I started this unique bookstore!) That's the surest way I know to break through the mental barriers that plague us all.
Thanks!
Jersey Girl asks:
Ken: I just read Ted Warren's book and thought it was fascinating. Do you think the strong hands manipulate commodities as much as they do stocks?
at 6:54:05 PM
I really don't know, Jersey Girl, but if there is manipulation in commodities, it's certainly more difficult to pull off, since the futures markets are so vast.
Mr. Warren's story is a great one, isn't it?
Thanks!
NICKDOGS asks:
EUROYEN HAS A VALUE FACTOR OF 3.289, DO YOU THINK IT WILL EVER MOVE?
at 6:58:23 PM
You sound like me, Nickdogs! Yes, it WILL move, and I'll be there too (even if I'm over 100 years old) and it'll be worth the wait!
Yes, that's the highest Value Factor I've ever seen on TOVI. (Everyone: Check out the ONLY Euroyen put that exists. I began talking about this put several months ago when its Value Factor was actually 4.142 and cost $200. Today it costs $37.50!!!)
Papa Smurfs Stunt Double asks:
Hi, Ken: Have you ever looked into Forex trading? If so, what's your opinion on it versus the futures markets? Thanks...
at 7:00:37 PM
The futures markets are all I can handle, Papa Smurf! I'm not straying. Thanks!
PatientlyPersistent asks:
Ken, How did your TOVI seminar in Newport Beach go? I had a booked trip to Anaheim the weekend of Oct 2nd and couldn't change it. What would it take for you to do another TOVI seminar? Next time, please employ your psychic power so that you'll do it in the city where I'm scheduled to go, will you?
at 7:03:22 PM
Money, lots and lots of money. That's what it'll take . . . .
But seriously, the TOVI seminar went GREAT! Anyone out there this evening who attended? How about giving PatientlyPersistent some of your comments and thoughts on how it went?
I'll remember to tap into the Big Brain and check out your whereabouts next time!
Did that hieroglyphic make it too? By the way, as I suggested on last week's TOVI Chat, if you want to save $52 on the Ted Tesser tome, you might try Sneaky Sam's tax "guide" titled "How to Beat the IRS at Its Own Game" by sending a carton of cigarettes and a file to Sneaky Sam, c/o Cell Block "B", San Quentin, CA. He'll send you an autographed copy by return mail.
paul asks:
Aloha Ken, When I am paper trading with TOVI I get confused sometimes when my charts say it is breaking out of a formation and TOVI goes from strong back to moderate. Should I stay with TOVI or trust my charts in this situation. I am talking about short - term trading in this example. Keep up the good work !
at 7:14:08 PM
(Hey Paul! Do you know Course Member David who's also in Hawaii this evening? Maybe you'll bump into each other surfing!) Great question. Experiment, but my experience with charts and TOVI is to let TOVI confirm your chart formation. I would only enter when TOVI went Strong on any short-term trade. (And, it goes without saying, you must have an EXIT strategy in place and in time with your SHORT-term strategy. As I mentioned in my "lecture" on the TOVI Chat last week, don't go to sleep on your short-term trades. They require possibly even MORE vigilance than long-term trades!
NOTE!!! Have you entered our new Chat Photo Caption Contest yet? The deadline is this Sunday, 11:59pm. Don't miss out! We give GREAT prizes too!
And we love receiving YOUR photos too! Lots of great ones coming in. What's Chat Night like at YOUR home or office? Show us!
Thanks in advance.
Jersey Girl asks:
Ken, one more question, I promise! Do you keep track of open interest and volume in order to determine whether a market is overrbought/oversold and can't go any higher or lower?
at 7:16:19 PM
Okay, one more:
I don't, but TOVI does!
Thanks again!
NYTRDER asks:
Hey Ken. Just wanted to say thanks for the new perspective on (financial) life. What's your opinoin of the coffee market??
at 7:17:00 PM
I love it! I drink it! I recommend everyone drink it! And I'm long and waiting!
TOVIJUNKIE asks:
Hi Ken & crew TOVIJUNKIE from Cuyahoga Falls,Ohio,I love the new TOVI charts but wonder how I can learn more about the oscillator and how to use it.My brokers are great guys and very helpful but they refer to the oscillator a lot and sometimes I feel lost.I can't wait to hear how to talk cool when trading so I can keep up with the brokers. As usual,thanks for all you do and come to Ohio sometime to give a class. TOVIJUNKIE
at 7:19:25 PM
Thanks TOVIJUNKIE. We're doing a separate module/manual on the oscillator (and ALL of TOVI's new features). Stay tuned.
Oh, one more bit of great TOVI news: In two weeks or less you'll be able to name and create an unlimited number of ACTIVE Portfolios to use with all of your paper and real trading strategies! I love it!
PatientlyPersistent asks:
Ken, is there an ethics guideline or rule of thumb in giving a tip to one's broker? I'm not yet there to afford to give one, but I can see bright lights ahead with my 5 Coffee, 3 OJ, 2 Euro$, 3 Wheat, 2 Corn and Oat futures. When I reach my goals, I would like to show a token of appreciation to my broker. Do you give tips to your broker?
at 7:22:19 PM
Great going, PatientlyPersistent. Always be appreciative of great service, and don't hold back the praise, but no, we don't tip brokers per se. Good question . . . .
m asks:
hi ken robert from gulfport. what do you think of crude oil prices? I'm looking for cheap PUTS. what you think?
at 7:23:34 PM
I love that contrarian thinking, m! It's GOT to come down sooner or later! Lay out a plan and keep us posted! (How'd you fare in the recent hurricanes?)
tonytenn asks:
oh the 'how to talk cool when trading commodities' is for members only?!
at 7:24:49 PM
Yes, tonytenn. Sign up for that $1 Trial and it's yours (even if you decide the WGB isn't for you). Thanks for joining us this evening!
Russ asks:
Hey Ken, Just wanted to say I think your a Great Coach. and I wanted to Thank You for the Great Course. Been out of town this last week but I should be back home by Thursday. New Orleans,La. RUSS
at 7:26:11 PM
Hey, Russ! Been out of town?! You missed all the fun with the weather! Thanks!
FLASH!!! I've just now been told that TWO new features have been added to U.S. CHARTS ON-LINE during this Chat:
1) You'll now see "Active Futures Month" and
2) DTCP (Dynamic Trend Change Point)
on the TOVI Trend Tracker!!! Boy, we just keep getting better and better and better, don't we?!
ML asks:
Isn't Coffee taking forever to move? When was the last time you had to wait this long for a market to take off?
at 7:31:52 PM
Yes, ML, it is, but it'll be well worth the wait! (By the way, are YOU doing YOUR PART by drinking, bathing in, baking, gardening, stuffing, roasting, toasting, and boasting coffee???!!!)
The last time I waited this long? Silver, euroyen, sugar, palladium, . . . .
Dave asks:
"How to Talk Cool..." So, finally, the REAL scoop on how to impress women at parties, without mentioning the word s-t-o-c-h-a-s-t-i-c-s....
at 7:36:01 PM
Dave, you devil you! Yes, "How to Talk Cool . . ." is WAY beyond simple stochastics! You will be DA MAN now!
Brenda From Quebec Canada asks:
Brenda from Quebec Canada
Hi Ken, Thank-you for your help on exits. I am taking profits real money. I just entered a Sugar Oct 05 Futures at 8.60 and purchased a Sugar Oct 05 850 Put. My question is what is the best way to handle this situation. Do I get out of My Sugar Futures when the trend changes back to down strong and hold onto my put to profit eventually as I have time on my side.
at 7:37:23 PM
That sounds sound to me, Brenda! This can be one of those perfect situations where you profit on both! Let us know how it turns out. Thanks!
Terri in AZ asks:
Hi Ken - thanks for the chats. I always get "picked-up" after them. We are still kind of starting out - papertrading and real trading - and while we're learning a lot it seems like it's taking awhile to get consistent. How long did it take you to really feel comfortable trading consistently? (I know this is going back aways . . .)
at 7:42:01 PM
Oh thanks, Terri, like when I was trading brontosaurus bellies with Fred Flintstone on the Bedrock Commodity Exchange?
It tooks me several weeks of paper trading to get going (chiseling stone tablets as we did back then, but it took months (maybe over a year) before I felt "smooth" at trading.
Good question.
frankie asks:
hi ken, been in the market, haven't had much success, so i've been out for a while. thinking of getting back in, just trying to get more cash together. what's your recommendation for getting back in? what did you do & how do u get your spirits up again? thanks
at 7:43:37 PM
Just start working with your charts again, frankie. Mark those 50% Retracement levels on your Monthly, Weekly, and Daily charts. That'll get you going!
And don't miss these Chats. They're the greatest!
traderdave asks:
First of all thanks for everything you do! Started real money trading in July and suffered from the EXIT strategy malady. I'm still holding 2 JAN. '05 85 Orange Juice calls and noticed today that although the commodity went up, my options lost ground. How does that happen?
at 7:47:05 PM
Your question is simple, traderdave, but the answer is very complex. Just realize that futures and options on those futures are two distinct markets and, as you found out, can travel in opposite directions. It's unusual, but I suspect that what happened in the case you asked about is that volatility dropped (even though futures rose), but hang in there. That's the beauty of options: You can ride through those storms.
Great input. Thank you!
floridaray asks:
Hi Ken greetings from florida Ray, Did your courses a few years back and getting more serious now at semi retirement age.Hit good on a Sweet crude option, but would have doubled if I didn't listen to my broker. However I'm into call options for Silver, Gold, O.J. and corn. Thanks for getting me into the World's Greatest Business.
at 7:48:38 PM
Thank YOU, floridaray! You did well, and you also learned a valuable lesson that all traders must learn: Make your own decisions. Don't listen to your broker!
Onward and upward!
JoJo asks:
Ken, when you have an exit strategy do you keep to that or is there a time you would adjust the strategy to another exit point?
at 7:50:34 PM
I keep my original loss-limit EXIT plan in place until (and if) prices rally to where I have growing profits. Then I can readjust that loss-limit EXIT upwards (if I'm long), and so forth.
Hope this helps. Thanks!
deds asks:
Hey ken would you say a lot of what you do in the commodities markets is similar to trendfollowing.
at 7:51:14 PM
Yes, deds, exactly! The Trend is your Friend!
CURLY asks:
How do you view the erratic behavior of silver during the past couple days?
at 7:52:46 PM
Volatility, Curly. That's exactly what it looks like! (And options can help us survive such times.)
Thanks.
dax asks:
Hi there Ken! At the last chat, you suggested that I try entering markets the DAY AFTER they move from Moderate to Strong, and you said I would likely be happily surprised. I have done almost exclusively that in my paper trading since that chat, and the hight point of what happened is that I caught the recent Energies sky-rocket trends that took place!! I got in on Crude Oil, Heating Oil, and then Unleaded Gasoline! On mostly those trades alone my profits went from something like $2,000 up to over $8,000!! I was nervous because during that trendy movement, they broke through like 30 year highs!! I wasn't sure when to get out! On a particular day Crude Oil and Heating Oil had moved from Strong to Extreme, AND I saw them dip a bit. I took those as my signs and remembered something you said years ago - that you can never lose money taking a profit!!
I did this, EVEN THOUGH Unleaded Gasoline was still in a solid Moderate to Strong trend and I know that the Energies generally all
at 7:58:43 PM
Grasshopper: Listen to me now; believe me later . . . .
jack asks:
Hi Ken. This will be my first question since becoming a member in 1997! Regarding your new tax book, would it be applicable in Canada too? If you don't know, any idea who would? Unless my accountant reads it, I doubt he'd know either! (Kinda like yor lesson, may as well ask the jeweller about jewels, not the brick-layer).
at 8:02:07 PM
Welcome Jack! Glad you finally asked your first question! Now I expect to "see" you here every month and submit a question . . . .
I don't think Tesser's book will help you in Canada, but check with one of your tax attorneys (rather than a tax preparer) for guidance. If you find something valuable, please let us all know!
Thanks again. And welcome.
trwtrader asks:
Ken,
Ted Tesser's book is fantastic even if you are just starting out with little $$ in your account. It's a great tool if you intend to trade for many years.
at 8:03:03 PM
Thanks trwtrader. Now, help me (and millions of others) abolish the IRS by logging on to www.fairtax.org. It's the SANE thing to do! Thanks!
cantig61 asks:
Hello Ken, from the windy city. Was that you frnt row for John Mellencamp Saturday @ the Riviera Theater? Would you recommend taking smaller profits and trading more contracts? Or trade for the most profits on one contract moving your stop loss along. I am trading small and making small profits W/r m
at 8:07:37 PM
No that wasn't me, cantig61. It was probably Sean Connery or Tom Selleck you saw. People often confuse us! But thanks for asking.
Ideally, we would take the MOST profit from the LEAST amount of contracts, but that's an ideal. Boil it all down, and it's whatever works best for YOU.
Great question.
mrcodes asks:
Sir, do you have a magic formula for determining whether or not an option is affordable? For example, I started paper trading with a mythical $3000 - I figured I shouldn't spend more than $750 for an option so I would have at least 4 opportunities to trade.?!?
at 8:12:57 PM
(Merlin, is that you?) I'm sending my response through the ethers . . . .
If this isn't you, Merlin, paper trade SEVERAL approaches: 1) $200 each on 15 markets, 2) $300 on 10 markets, 3) $500 on 6 markets, etc.
Thanks!
Texas TOVI asks:
Good Evening Ken & Team, How do you get your broker to provide a silent stop, and what our your thoughts on coffee I've been with it over a year open to some insperation as I've had a few loses lately.
at 8:15:38 PM
Yes, Texas TOVI, Coffee's been rough on us all. Hang in there! I've even heard long-time, well-seasoned, highly successful professional traders whimpering more than I've ever heard before over Coffee!
Simply ask your broker to note that price you wish to have entered as an order and then enter call it to the trading floor at the appropriate time. (And tell him or her to drink more coffee while you're at it!)
Thanks! (Coffee WILL rally!)
Mode asks:
Hi Ken,
Do you do any trading at all the TWMPMM way, or is it strictly WGB and tovi?
at 8:16:17 PM
Hello Mode! WGB and TOVI ARE "the TWMPMM way" --- evolved!
George asks:
To PatientlyPersistent, Newport Beach was awsome! it was great to see Ken's routine using TOVI and meet the "other guys"(Steve and Mike)in the panel also full of wisdom and knowledge. You missed it PP. Let's hope Ken does it again, we just have to be patient and persitent.
at 8:16:45 PM
I will! Thank you!
dax asks:
I have to tell you that it is just AMAZING all of the information contained in these chats and in the chat archives! I think I am going to convert all of them to audio and then play them to myself at night while I sleep!! :) Seriously though, like in your answer to paul, I learn so much just by being here on them. Last night I composed an email that I'm sending to all of my friends on how well my paper trading is going, so that they too can become WGB, chart service, and TOVI members - I think everyone should come on in, and just STAY until as you have said - they are sick and tired of being right all of the time and not making any money. I tell every one of my friends that they need to give it a BARE MINIMUM of 3 months, with several hours per day before they even CONSIDER trading with real money! I consider this similar to when you used to do the "Going Fishing with Options" - it's an investment that I know will pay off HUGE, and I am in no hurry - I'd rather get it right this
at 8:17:22 PM
!
JoJo asks:
Ken, tell us your 'ritual' every morning when you begin your trading. Do you have a check list to make sure you have everything in order?
at 8:17:43 PM
I'm making a video to SHOW you!
David asks:
Brontosaurus bellies? So you were trading oil futures before there was, like, OIL futures, huh? Guess that's why you keep that Caveman around in Grants Pass.... But I'm glad Terri asked the question, I was wondering myself.
at 8:18:22 PM
Yes David . . . .
Eric in Himeji, Japan asks:
I noticed a couple weeks ago online that Forbes had listed their 400 wealthiest people in America (or something like that). Two things I noticed: I STILL wasn't there, and a few listed "commodities" as the source of their wealth.
at 8:18:52 PM
Thanks Eric. You'll make it too!
tonytenn asks:
my broker criticizes me about trading sugar, euro$, and oj, he calls them exotic markets and he says not a lot of people trade them. i had a oj call at 80 that i liquidated right after the last hurricane hit florida for for about $1600, i bought some corn options with that, (ten), i think i did pretty good.
at 8:20:09 PM
What does your broker say now, tonytenn?
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!); www.vote.com (Make your voice heard!). My next chat will be Tuesday, November 9th (The next TOVI Chat is Tuesday, November 2nd!). As always: Use these newfound powers only for Good. Good night, God bless, and watch where you step!
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