Commodity Chat With Trader Jim! (tm) with Jim Prince
from October 17, 2006
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Howdy everyone! Trader Jim here. . .
Thanks for joining us this evening. I'm very thrilled about tonight's chat. Many markets have been on the move since we last chatted, so there's lots to talk about tonight.
Corn, Oats, Wheat, Soybeans, Canadian Dollar, US Dollar Index, Japanese Yen, and Feeder Cattle (to name a few) have been on fire this month! If you've had a successful paper trade or real money trade in any of these markets, please share the details with your fellow Course Members.
Discussing your trials and tribulations in the markets does wonders for others. So please feel free to share your excitement, enthusiasm, and fervor. It gives others hope and optimism of what's to come.
I'd like send a great big "Shout Out" to Ken Roberts. Ken began introducing individuals to the World's Greatest Business over 20 years ago. I was privileged 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.
Make sure you take a peek at Ken's Ultimate Technique for Success Course too. Find out more information by clicking here.
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 and active trader.
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
ONE. Also, when relating trading experiences and/or results, please provide details: Futures
Jeff asks:
If I am late entering a trade, for instance now in December Corn, what would you recommend as a strategy to re-enter this market-wait for a consolidation or a flat top triangle in the future?
at 6:05:35 PM
Hi Jeff! Good question, I would wait for a chart pattern to appear. I won't chase a market, if I do Murhpy appears. You know Murphy don't you? From Murphy's Law? Anyway if I chase the market I will usually buy right at the top or sell right at the bottom -- because of Murphy's Law. So I wait for a chart pattern to appear and go from there.
Land Man asks:
Is there a quick way to describe hedging or make it as simple as possible to understand?
at 6:07:46 PM
In a nutshell. . . hedging is taking some sort of position to help protect or offset the potential loss of an existing position or holdings. Hope this helps.
William asks:
Question
I was looking up Mexican Pesos because of trend seeker. However, it didn't look like any options were available. Does that mean there weren't any available at that time, or there aren't any available, period?
at 6:13:23 PM
Answer
I just took a peek at Pesos options and it appears that there are only quotes listed for the December options right now. For options to appear in other trading months someone is going to have to throw a bid out. This is actually something you can do with your broker. You can make a market in any option market by throwing bids out. If a seller takes the other side you're in business!
bob asks:
hi jim
at 6:14:12 PM
Hey, Bob! Thanks for joining us tonight!
biga asks:
what do you think is support for dec corn 06 and resistance?
at 6:17:34 PM
Thanks for joining us, biga. Support would likely be the May and July highs just below 290 found on the daily chart. Resistance can be found on the Weekly chart. Look for the highs in the spring of 2004 near 335-1/4. Be sure to take a look at our Weekly Video Trading Lessons at US Charts Online. I've done several videos that will help you to be able to easily recognize support/resistance.
Jeff asks:
Ok, about a successful trade, it looks like December Soybean Meal hit a 50% retracement, so I sold my positions today for a $22,000 profit!
at 6:18:24 PM
Nice! Was that a real money trade or a paper trade? Any other details you can provide would be great!
bob asks:
Jim, just want to thank you for a wonderful time at Grants Pass, lots of great information for paper trading and working the markets, Everyone should attend, Thanks again
at 6:19:36 PM
Thanks bob! It was great having you here for our recent October Trading Camp. Practice the things you learned, develop a plan and stick to it! Stay in touch too!
RogerB asks:
Jim, I'm a beginner and went to the options table to look at the Euroyen and find no options available. What"s up with that? I'm doing something wrong but don't know what.
at 6:22:49 PM
Welcome RoberB! You're not doing any thing wrong. Just as with the Peso, EuroYen aren't currently listing options. But, if you want to trade them you might work with your broker to see if you can throw a bid out. See if you can make a market at you price. A good broker can assist you with the process. Keep in mind that it may take a while before your order gets filled. But it's all part of the biz and it's part of the fun!
Paul from Mokena asks:
Jim, good evening from Mokena, IL. How about them Bears? Just listening in to see what tips I can glean from the group.
at 6:23:43 PM
Hey Paul from Mokena! Was that a game last night or what? Glad you've joined us. Feel free to ask any questions you might have.
coyotee asks:
Thanks for the trading camp. I really enjoyed it and learned alot. The biggest lesson I learned was when I returned home a few days later, My two o.j. puts at the money lost most of there value on the USDA reports. I did not have a stop in place. If anybody gets anything from this chat tonight Trade With A Stop IN Place! Thank You for all you do.
at 6:33:25 PM
Howdy coyotee! I'm glad you enjoyed the camp and learned the value of using stops. To me they are "the" most important tool a trader has. Not using stops is much like being a store owner and leaving your cash register drawer wide open. Eventually someone is gonna steal from you and you ain't gonna like it. Trading is no different. You have to protect your trading capital. If you don't, you won't be in business for very long.
We're having some technical issues. We're back up now and will make sure the questions that have already been answered will be achieved.
If you've asked a question that hasn't been answered please resubmit it. We'll do our best to get to it.
cyntel asks:
Ah ha, thought I was late.
at 6:45:40 PM
You're not late, we are having some technical issues. But not to worry, our crack computer guru (Steve O) is hard at work trying to get things back in shape.
moffitt asks:
Is it Over?
Moffitt
at 6:48:19 PM
Nope, were still going. . .
pseudo asks:
ND I am slowly getting familiar with the ADX/DMI Indicator........Is this something you use??
at 6:49:58 PM
Howdy pseudo, No it's not anything I use. The one thing about indicators is that they lag price action. A lot of folks tend to think they predict price action but they do not. I'm a simple guy, I focus on the price bars, the formations they make, and support/resistance.
robert in Tempe asks:
I would like to say that your weekly videos are very helpful.
at 6:52:16 PM
Thanks, robert in Tempe! Glad you enjoy them. They are a lot of fun to produce and the best thing is they help a lot of folks. That's really what they're all about. Thanks for the kind words.
robert in Tempe asks:
What happen to the chat room? I lost the whole page?
at 6:54:07 PM
We'll repost the entire chat and the questions that have been answered first thing in the morning.
Jeff asks:
You asked if the $22,000 profit in Soy Bean Meal was real, yes I had 20 contracts at an average of 17.01, sold at the 50% retracement of 18.11
at 6:57:05 PM
Excellent! Folks, that's the power of this business. Have a plan and stick to it! Cut your losses by using a stop loss on trades that don't work out. Which provides you the opportunity to get on board a move similar to the one Jeff jumped on. Congrats!
robert in Tempe asks:
I am just starting out learning Paper trading. Which current market should I be looking at?
at 7:01:54 PM
Hey robert, The straight forward answer is that there is no best market. At any one time there are a half dozen or more opportunities available. Follow along with a few of the markets in the Chart Book at US Charts Online and also check the Friday emails. Last but not least, call a Course Counselor and ask them for a helping hand. They are happy to help. Call them at 541-955-2885 Monday -Friday 8:30am-5pm PT, they'll get you going!
blucius9 asks:
Jim, just wanted to say thanks to Ken and you for the perfect bus. i just got out of my first trade wit 3600$$ feel like a pro (even though i know i am far from it) thanks again. Plan your trade, trade your plan!!!
at 7:05:23 PM
Howdy blucius9! Ken is the one that got us all into this business so props go out to him. I'm the benefactor of Ken's knowledge based on the years as a student and then working for Ken. Anyway, congrats on the nice winner and for sticking with your plan!
REXBURG asks:
How do you figure your risk to rewards ratio
at 7:09:25 PM
Hi REXBURG! Here's the info. Based on the futures chart based on a long position. . . Risk = Your entry minus your stop loss. Reward = Your entry subtracted from your potential profit target. The Interactive charts at US Charts Online will do this for you. If you need assistance be sure to call a Course Counselor. They'll walk you through the simple process.
Fix and Fly Paul asks:
Jim: Would you allow an in-the-money option to be exercised if you thought the trading pattern was very, very good, or would you liquidate the option and then buy a futures contract?
at 7:13:33 PM
Fix and Fly Paul it depends on what my plan was going into the trade. I don't mean to dodge the question but only you can answer it. I only trade according to the plan I makde prior to entering the trade. I don't change anything during the trade. So if you had a plan in place, you should seriously consider sticking to it. Remember, if you exercise the option you'll be charged additional commissions plus you must have the margin money available. This is because you will now be the proud holder of a futures contract.
Jeff asks:
I would like to say a HUGE Thank you to Jim for the One-on-One I had late in September. It has made a giant difference in my trading. The most important thing I learned was to HAVE A PLAN and more importantly STICK TO THAT PLAN. Thank you again!
at 7:16:12 PM
Hi Jeff! Great to hear from you. Thanks for the kind words. I'm so glad I was able to help enforce the "plan" aspect into your trading. Isn't it amazing the difference it can make? Thanks again and stay in touch!
cyntel asks:
I'm about to go from successful paper trading to real money with an online acct. I've traded stock options before & I'd like to know if there are any tricks or pitfalls in executing trades at bid or ask.
at 7:20:15 PM
Hi cyntel, Here's a little insight that I usually only mention at the Trading Camps. I typically will offer a little more on the buy side and I'm willing to take a little less when liquidating. It really depends on how bad you want to get in or out of the market. You can work this with your broker. Other wise you can trade commodity options just like equity options. There's more to it, but I save that for the Trading Camps.
Land Man asks:
Hey Jim, I've been paper trading with huge amounts of success and have made the decision to move into the real deal. Any tips or advice you may have in making the transition would be greatly appreciated. Thanks, Jim Coffey
at 7:24:37 PM
Hi Land Man, Yep, have a complete plan and absolutely stick to it. Always trade with a stop loss and don't get greedy. Greed, hope and fear will ruin a trader. Don't let any of these emotions take you over while trading!
doc asks:
do you think williams'% R is a good indicator?
at 7:25:54 PM
Hi doc, I don't use indicators. I use chart patterns and support and resistance.
pseudo asks:
pseudo I appreciate your opinion on indicators.....I always liked Ken's simple ways and these were grayng my hair....I will move on w/o them ;-)
at 7:27:50 PM
Congrats! Otherwise you'll always be hunting for that magical indicator. I'll let you in on a little secret. . . there is not a single magical indicator on the planet! Your best bet is to study price action. You'll go a lot further in this business because of it.
chris from barrie asks:
tell us about your first trades? how much did u start with? did u make or lose money?
at 7:32:08 PM
Hey chris from barrie, I don't remember any particular details about my first trade other than I lost like $200 or so. My first big successful trade happened in July 1988 Corn. Turned out I was in the market during a drought. I put up about $500 or so of initial margin money and was in the trade about 30 days or so. At exit the trade made $6,500. I still remember the excitement at the time as it was probably my third or fourth trade. That was a long time ago. . .
Mike in Houston, Texans asks:
hi jim, licking my wounds from the oj move, any advice.......
at 7:34:13 PM
Yep, suck it up and move on. If you made mistakes don't make them again. Don't dwell on the loss either. If you do, it will bring you down for a very long time. Remember, there is always opportunity for good things. They'll come if you let them.
REXBURG asks:
You should make a video every day of the week.
at 7:36:45 PM
Hey REXBURG, Actually that's what we'll be doing with the Premium Alert Service. It will be launched in the next month or so. Stay tuned!
doc asks:
pls advise the strongest? which has the most weight in decision making? a price that hits and bounces off support or one that hits, resists and bounces back?
at 7:39:21 PM
What's up, doc? To me they both have equal weight. It doesn't matter if the market is moving up or down. Support is support and resistance is resistance. They both do the same thing if they hold -- reject price movement!
Tex asks:
Hi Jim and thank you for you weekly video training lessons and special thanks for archieving them. Oh, and thanks for the weeekly email alerts and "It Just Happened" alerts and ... just everything ya'll do for us!
at 7:44:36 PM
You are so very welcome. I'm happy that you enjoy the tools that we provide for you. We're working hard and actually have additional things in the works. I'll just tease you by saying you're gonna love the changes to the new US Charts site. . . they're AWESOME!
ColombianCofee asks:
Hi Jim. I'm Alejo Jaimes from Colombia. I had paper-traded for four months and I made money with calls more than puts. Is this a coincidence or a pattern?
at 7:46:21 PM
Welcome Alejo Jaimes! It's probably just a coinincidence. Remember, the markets flucuate on a daily basis. At anyone time prices are advancing or declining, so what matters is that you're on the right side of the trend. Your winners say that you were. Thanks for joining us and come back next month!
baileyalaska asks:
Hi Trader Jim.
It's been since 9/11 that I have traded(having about 6yrs experience up till then) and now feel completely lost like I'm as new as can be. I check in from time to time to see the weekly updates, etc but, yeh, I'm out of it. Please suggest how you think I might go about gettin back into it. Thanks.
at 7:47:58 PM
Call a Course Counselor at 541-955-2885. They'll be happy to help. They'll point you in the right direction and get you back on track. Don't be shy, pick up the phone and give them a ring. Tell 'em I sent ya!
Because of demand, we've just announced a brand new Trading Camp. Click the link below to find out more!
Monstercash asks:
Hi Jim,
I have a couple of may sugar put options that I was making some nice profits on. TS is saying that the market is in a down trend with a "weakest" rating. The market has hit it's yrly low forming a sideways channel or a 123 bottom. Over the last couple of days the market has been making some big moves up and some of my profits with it. Since TS still says the market is in a down trend, I am hanging on to the options in hope that the market will turn around and I regain my profits. I'm just not sure if I should bail out or stick & stay. My broker thinks the market is going to go down some. But I have learned to do the opposite. Just looking for your opinion.
at 7:55:29 PM
Never trust a broker with a crystal ball unless you see it at work yourself! Nobody knows what Sugar or any other market is going to do. That's why it's so important to have a plan. If you had a complete plan in place prior to trade entry you wouldn't be wondering what to do. This may sound a bit harsh but consider where you're at. . . you're stuck between a rock and a hard place. I can't tell you what to do, but I can tell you that more profits are given back by traders "hoping" the market will continue to move in their favor. Remember I said earlier that greed, hope and fear are the ruin of most all unsuccessful traders. Analyze where you're trade is at, don't be greedy, and make a wise unemotional decision. I wish you the best.
Eric in Fort Worth, TX asks:
Good evening, Jim. Heating Oil looks to be forming a base with a breakage of the #2 pt. today, followed by a retracement back below it. What's your take on this market?
at 7:58:09 PM
Looking at the December contract I see that prices did poke above the #2 point. However, Trend Seeker says this market is still in a down trend. Therefore, a paper trading entry signal with call options has not yet been triggered. We like to see Trend Seeker's trend pointing in the same direction as the break of the #2 point. Once all the criteria are met, we'll take the trade on. Until then, we'll keep watching.
gonzalo asks:
how long should i do paper trading?..
at 7:59:01 PM
Until you feel comfortable with the strategies and other aspects of the business. For some that's three months. For others it's as much as a year or so. You'll know when you'r ready.
metisman asks:
Jim, thanks for your help for us rookies. If given a choice (which I am facing) would you subscribe to TOVI or US CHARTS?
thanks
Metisman
at 8:06:04 PM
Hi metisman, I think there is some confusion. TOVI and US Charts are completley different animals. While at one time I did use TOVI I don't any longer. Everything I need is right at US Charts Online (USC). It provides Daily, Weekly, and Monthly price charts that are interactive by choice. It also provides futures and option quotes and a Trade Tracker. In addition, US Charts provides Option History and a Chart Book that contains notes of markets I'm watching. The notes are right on the charts pointing out potential paper trading opportunities. USC also has Trend Seeker. This tool analyzes the trend and the strength of the trend. Plus USC provides a weekly 5-10 minute video trading lesson -- and you have access to all archived videos too (going on three hours of video now). I hope this helps.
junie asks:
Hi Jim and crew, Congratulations to Jeff on his soybean meal trade. Today I liqidated 7 of my 8 corn call options for a net profit of over $9,000. Thanks so much for Ken's getting me started in this business and to you guys for the great trading camp I attended last January. It really helped to get me focused.
at 8:10:30 PM
Awesome junie! Nice job. Isn't it fun? I remember you and I'm truly glad you're still at it. (Thanks to Ken we're all plugging away at this biz.) Stay in touch and congrats once again!
Bonita Joe asks:
Jim, Bonita Joe again.......I bought several CALLS in Beans (at the #2 point of the 1-2-3) and decided before the fills that I would liquidate at the daily 50% which is just above a gap and below a lot of trading "choppiness"....it worked very well with 147% return after the price of the CALLS. Funny thing tho......I never seem to have put enuf in the trade....HA!!! Greed is a bad habit! Thanks Jim!!
at 8:12:01 PM
Ahhhhh, you had a plan and stuck to it! Nice job and congrats! Umm, where else can you get that type of return on your investment?
rabiancone asks:
a lot if the markets seem very volatile right now (wheat, soybeans, oats, OJ). Would you attribute that to any current events?
at 8:14:02 PM
The markets move in cycles. Volatility is good for traders -- especially if you're on the right side of the trade ;) There may be events that have happened, but frankly I don't watch the news or read the reports. The charts tell me all I need to know.
DAVE FROM OHIO asks:
DAVE FROM OHIO===JUST WANTED TO SAY THANK YOU FOR ALL YOUR HARD WORK IN THIS NEW ERA OF TRADING.............DAVE PS CAN NOT WAIT FOR THE FRIDAY NIGHT AT THE VIDEOS
at 8:15:18 PM
Thanks, Dave! Glad to help and glad to do the videos too!
Sybil asks:
Hi Jim, would you please explain the TS,TSR,and the related TS's?Thank you.Sybil
at 8:17:52 PM
Hi Sybil, They are part are what makes up Trend Seeker at US Charts Online. For instance, TS = Trend Seeker. TSR = Trend Signal Ranking (a column of Trend Seeker). Hope this helps.
leather guy asks:
Jim, wanted to know if you ever hedge yourself on any trades that there is a USDA report in the near future. ie. orange juice. Thank-you.
at 8:21:53 PM
Nope, I've never done it.
DAVE FROM OHIO asks:
DAVE FROM OHIO----TRADER JIM COULD YOU GIVE US SOME INSIGHT ON HOW YOU USE STOP LOSS PROTECTION eg WEEKLY SUPPORT/RESISTANCE POINTS OR USE THE DAILY SUPPORT/RESISTANCE POINTS IN THE RECENT MAJOR MOVE IN CORN. THANKS DAVE FORM OHIO.......
at 8:24:27 PM
Dave, I will usually use points of support/resistance on the Daily charts for stop loss placement. I'm conservative and therefore don't like to sit through large drawdowns. So I keep relatively tight stops to protect my trades. I give the trade a chance to work and if it doesn't I don't want any part of it. I exit and move on.
Check out what Ken's up to these days. . .
Eric In Japan asks:
Hi Jim! I like your input to Cyntel about offering a little more and taking a little less... that is something I have been using for a little while, and it works pretty well for me.
at 8:29:41 PM
Hey Eric! Wow, we have Course Members from all over the World. Eric from Japan and Alejo Jaimes from Colombia. Good for you, Eric! I love it when Course Member's think outside the box. Great job!
WayneinLA asks:
Are trades executed just as well, and quickly, online as the regular way?
at 8:31:45 PM
Sure, buy the key is to really know and understand the right type of orders to use. If you don't use the correct order you could be on the wrong side of the market. And let me tell you, you don't want to be long when you thought you were short. Or you don't want to be the writer of an option when you thought you were the buyer. Anyway, I encourage you to use a good full service broker until you've been at this for awhile. It will save you a ton of headaches in the long run.
rob coomber asks:
Hi Jim
I was wondering if you sometimes go with the obvious moves that happen in the commodities, and forgo a lot of the technical stuff and just go with your gut and commons sense.
at 8:33:24 PM
Howdy rob, I always try to have a reason for a trade. My reasons are always a technical chart setup. If I don't get it I don't make a trade. My gut may be wrong and the only help for that is a pack of rolaids. ;)
Tre-Tre from Toronto, Ontario Canada asks:
Just I quick point Jim I agree with you on indicators almost all big moves in commodities are started by formations/price patterns chasing indicators only serve as distractions.
at 8:34:41 PM
Hey Tre-Tre! Nice to see you this evening. And I agree with you agreeing with me. Have a great evening.
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 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, November 14, 2006. God Bless and I look forward to seeing you then!
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