Follow up Questions and Answers from our September 21, 2006
Commodity Chat With Trader Jim! (tm) (Jim Prince)
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Hi everyone, Trader Jim here. . .
Below are answers to questions I wasn't able to get to during our September 21 live chatroom discussion. Enjoy and if you ever have a question that need assistance right away, please feel free to contact one of our Course Counselors at 541-955-2885, Monday through Friday, 8:30am to 5:00pm PST.
Enjoy!
I was wondering why you haven't commented on Unleaded Gas lately in the chartbook?
As of today, we're following about 27 different markets in the Chart Book (not including weekly and monthly charts!) If a market is making a formation taught in the WGB course, there's a great chance you'll see it in the Chart book. We don't include every single market, however, especially when several markets from the same group (metals, energies, grains) are doing the same thing.
How can I find a broker in Canada?
The internet has really leveled the playing field when it comes to finding a broker. Most brokerages these days are standard when it comes to services and commissions. A good start would be to go to your favorite search engine and type the words "commodity broker Canada."
Do you have an archive for your Friday video lessons?
We sure do! Links to all previous videos can be found at US Charts Online. Locate the white text at the top of the home page after you've logged into the site (right after the disclaimer page). The new site will also have a video archive, including a brief summary of each video and the video duration! Stay tuned!
To protect my capital, I will normally exit an option trade if it loses 25% of the value I paid for it. Is this a good way to trade, or am I getting out too early?
Keep track of the markets after you exit the trades - will the majority of them turn around, or continue moving against your position? Let the results speak for themselves. We will often risk up to 50% of what we pay for our options, which usually keeps us in markets that experience smaller, temporary moves against our positions. Ultimately it's up to you to decide the best way to handle your trades and paper trading is a great vehicle for doing so!
I watched Live Cattle make a 1-2-3 top formation, but the Trendseeker rating has changed three times in eight days. Could this likely not be a true 1-2-3?
A 1-2-3 top or bottom formation signals a potential trend reversal, and it's natural for Trendseeker's Trend Signal Rankings to fluctuate during this time. The key is to make sure that the Trend column agrees with the direction we wish to trade AFTER the market breaks past the #2 point. We're not concerned with the Trend Signal Ranking as long as the Trend column agrees with the break.
Do you think Silver has a good chance of going back up? I bought three December Silver options just before it dropped like a rock.
December Silver formed a small channel the past two weeks before breaking to the upside. Trendseeker showed Silver was still in a downtrend, however, which prevented us from paper trading call options. Sure enough, prices dropped right back into the channel shortly thereafter. We'll be watching for a new formation to develop before considering a paper trade in this market. If you're already in, stick to your original entry and exit plan (are you willing to risk a certain dollar amount on the option, or are you basing your exit on support/resistance on the chart?) By the way, what was your plan? Did you buy based on a chart pattern or did you buy on a whim? Having a plan is key!
What did the corn farmer say to his contact at the local grain elevator? "I hedged my crop, so if prices drop, I need not worry, my future's not blurry." Be proud to be a speculator in the commodity markets, as you provide liquidity to the farmer and grain elevator operator, so they can sell short and buy long the grains they produce and process. The corn market then returns the favor with trading profits. Everyone wins. It is the world's greatest business!
Thanks for the comment! While no one makes money every trade, we certainly have a chance to use our skills and experience to trade these markets for personal gain - while helping those involved with the physical commodities!
In response to "Ronald," and Jim's reply concerning the 50% rule, I have found that Dobson's book "The Trading Rule That Can Make You Rich," points out that 50% is not an absolute. He mentions several times to consider 40% to 60% as a retracement range before committing to a new trend. Often, Trendseeker is helpful to determine whether a trend is confirmed.
I would highly recommend "The Trading Rule That Can Make You Rich" by Edward D. Dobson to anyone who wants their Ph.D. in retracements! The book is available at http://www.4starbooks.com, or as a free gift when you purchase The 50% Retracement Rule DVD through the U.S. Chart Company.
What is the new website? Thanks for being here.
We have created a totally new U.S. Charts website filled with the features you have asked for! Be on the lookout for an announcement during the next few weeks!
I just wanted to say thanks for all your help and for everyone there in Grants Pass. I just exited an OJ trade and made $600. I'm currently up $300 on corn. Take care!
Thanks for checking in! It's always nice to hear feedback from Course Members on how they're doing, and it's great to see that you're willing to take profits. Staying in trades too long seems to be an unfortunate trap for many traders.
When I'm long a market and the Trendseeker Trend and Signal Rankings both change to Neutral, is it a good time to exit.
We primarily use Trendseeker as a filter to enter markets. We normally exit trades when our options lose half their original value, or when prices break a pre-determined point of support or resistance on the chart. We're not too concerned about Trendseeker's rankings once we're in a trade.
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 lesson at: www.uschartco.com . This is a fantastic teaching tool and free to all Online Chart subscribers! (The video link is in white text located at the top of the very first page you see after the disclaimer when logging in.)
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 17, 2006. God Bless and I look forward to seeing you then!
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