Follow up Questions and Answers from 11/14/06 with Jim Prince
from December 5, 2006
US Charts Online Chat November 14, 2006 Q&A Follow-up
Hi everyone, Trader Jim here. . .
Below are answers to questions I wasn't able to get to during our November 14 live chatroom discussion. Enjoy and if you ever have a question that needs 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 really like the idea of a video of the training camps. It opens up a lot of knowlege to the folks that can't get away. You all know what they say about knowledge.
I appreciate your comments. We are considering taping a seminar early next year. In the meantime, be sure to check out the free weekly video training lessons on the US Charts web site. The complete series currently features over three hours of instruction!
What is Gasoline RBOB on Trend Seeker?
The current Unleaded Gas contract (HU) is being replaced with the "RBOB" contract next year. The technical mumbo jumbo on why the contract is changing is due to "the contract is changing due to the "fade out of an oxygen additive (MTBE)"." The RBOB will consist of a different blend stock. Whew! What a mouth full. Anyway, the bottom line is we'll display the contract and contract specifications that are available from the exchange.
I did really well paper trading pork bellies, but it seems to be thinly
traded and I am reluctant to get in with real money. Any thoughts?
You are correct. Because of the low volume this market can be quite crazy at times. If you do trade it be aware that you can see prices "whipsaw" from one extreme to another almost on a daily basis. If you're just getting started in the biz I'd suggest you follow other markets that are more heavily traded. Ultimately it's up to you to decide on your approach, just be aware of the market volatility.
If a 123 top or bottom formation (or other various formations)takes place on the applicable "front" month, it's taught to go out 90 days or so-usually not the front month--to look for options. However, many times the chart out 90 days has yet to make such a formation. Should that 90-day-out chart be traded regardless, going off what the "front" month indicates? Additionally, should the "front" month always be the month where one looks for formations, or should formations be looked for 90 days out?
I recently produced a training video on this exact subject. It's nearly nine minutes long and does a much better job of explaining my thoughts than I can do here in a few sentences. Look for the November 22 video in the US Charts web site video library archive.
Hey Yo! on Cape Cod asks: Good evening Jim, Does your "It just happened
message." Suggest a time to enter the market for that commodity?
Yes, I always point out if the strategy was triggered or is about to be triggered. If you're not receiving the It Just Happened messages, be sure to call a Course Counselor and give them your email address to get on the list. They can be reached Monday through Friday from 8:30am to 5:00pm PT at 541-955-2885.
Jim, do you find that it's easier to buy than to sell commodities, or have you had roughly equal success both ways?
Good question, but I don't have a preference. The beauty of trading commodities is we are provided an equal opportunity to make money regardless of market direction.
Hi Trader Jim, just want to share a few experiences and lessons learned. I took the course in '98-'99, traded real money on and off since 2000 till present. Lost around $8k and stopped real money trading. I went over all of my trades to look for insight into why I kept on failing. Jim, can you quess? Yep! I NEVER paper traded, I thought, this is so simply that I can just jump in. What a hard and expensive lesson I learned! I started paper trading in SEPT 06 and did some things you teach ie; preserve capital, the trailing of stop losses with futures and options, having a plan before you get in and all that the Ken Roberts Co. teaches. I was the only one standing in the way of amazing success. Best paper trade so far-LONG 2DEC beanmeal @ 169.5, liq. 1 @ 1st target 191.6 ($2110 ), and 2nd @ 197.15 ($2765). I trailed the stop-loss @ support and resistance levels. I will paper trade till I reach my set goal and am comfortable with the strategies I use. Your videos are great learning tools. Thanks.
Glad to see you're still at it. Isn't it amazing what having a plan and using stops can do for your psychology and trading? Keep plugging away and stay in touch! I wish you the best!
Jim, Ken used to teach a trading strategy of buying low markets without
stops, which was apparently successful. Now, however, it sounds as though that strategy is in disfavor. Could you elaborate? Thanks.
The strategy you mention is still a valid for those with staying power. In other words, you really need to have large sums of trading capital available to withstand large draw downs when the market moves against you. You can trade that way or use the trend following strategies we use today. Either way is okay, it's just up to you to find what works best for your personality and financial status.
The E-mail sent out about the US dollar index had a risk/reward ratio of 1 to 1 I believe. Did you trade or are you trading this market? Are the points of support to close for comfort or are they tradable in your opinion. thanks
I'm not sure about your risk/reward ratio. In the It Just Happened emails I never talk about stop placement. I feel that is something each individual needs to determine because only you know how much money you're comfortable risking on a trade. That said, I do point out possible profit targets. But to calculate a risk/reward ratio you need both stop loss and entry figures. Personally I prefer to trade chart patterns that offer a risk/reward ratio of a minimum of 2:1. Thanks.
Hi My name is Earle and this is my first chat so if I ask ? that may be
viewed as a rookie ? ....please givmea break
Hey Earle, these chats are for everybody, so please don't hesitate to ask a question. All questions and comments are welcome. Thanks for joining us.
Jim, Another question from Florida, is Canola a product you guys watch, I never see it on stratagies and newsletters, am I the only one who cares? thanks.
While we do provide charts for Canola it's a market that I personally don't trade. It has very low volume and I prefer to concentrate on markets that have more volume and open interest. Those are probably the main reasons I don't feature Canola in any of our alerts. If it interests you though, I encourage you to keep watching it -- even though it's not one of my favorite markets.
I just got an alert for a cotton #2 brake to the bottom of a pennent and a brake below the previous low according to the Dec 2006 contract. However the front month has changed to Mar 2007 and these conditions have not been made on this chart. Could a trade still be intiated or should we wait until contitions are met with the new front month?
I prefer to wait for the setup to happen on the March chart since it is now the front month contract and the December market is not.
Do all the chart formations have the same liklihood of a successful trade or, do some have a better hit ratio than others?
That's a real good question but virtually impossible to provide the answer I think you're looking for. Markets cycle and thus, so does the success (or failure) of the various chart patterns. I suggest you paper trade the various patterns/formations to see what type of results you get. Then I think you'll have a better understanding of what I'm saying.
Hi,TJ what is your outlook on coffee?
I like it in the morning but I have been known to drink a cup in the
afternoon. Seriously though. . . prices have advanced nicely out of the pennant formation and seems to be headed higher, but of course there are no guarantees. Be sure to keep an eye on Ken's Chart Book at US Charts Online for my latest up-to-date comments.
Jim, Thanks, how would you trade the large triangle in Coffee!
Just as I mentioned in Ken's Chart book at US Charts Online. Wait for a close above the upper down trend line of the pennant. If you miss the initial breakout you can wait to see if prices pull back to the upper trend line and enter at that point. All that said, December Coffee has already broken out of its pennant to the upside and triggered a paper trade with call options. Prices have advanced nicely, so that setup has come and gone. It's now time to watch for another chart pattern to take shape.
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 Wednesday, December 6, 2006. God Bless and I look forward to seeing you then!