Chat Archives
Commodity Chat With Trader Jim! (tm) with Jim Prince
from 05/13/2008
Hello and good evening! Trader Jim here. . . Thanks for joining me for tonight's chat! We have a lot to discuss this evening as several of markets are beginning to develop chart patterns. July Wheat, September Eurodollars, and July Coffee hvs developed channel formations. July Soybean Oil and July Lumber have formed pennants. And the June Euro FX has developed a 1-2-3 top formation. So there are several markets that have possible paper trading setups in the works. And to top it off, August Feeder Cattle continues to explode out of its Head and Shoulder bottom formation! By the way, all of these markets are currently 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), Feel free to share your trade details with 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 dedication. It provides others hope and optimism of what's to come. I'd like send a big "Thank You" to Ken Roberts. Ken started introducing folks to the Greatest Business on Earth™ 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. Please contact one of our Course Counselors if you need assistance with any of the introductory principles. 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 GBE 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, and contrac month etc. This really helps your fellow Course Members follow along and learn from your experience.
sprintcar asks (6:00:18 PM):
Hey trader Jim, any thoughts on J uly 08 corn today.I got stopped out on my first trade, but will stick to my trading plan. Thanks for all you do.
Hey sprintcar! Yep, July Corn gave us a head fake out of the channel. Don't get discouraged though, remember that losses are part of the business and are to be expected. The thing is you don't want to suffer large losses. So controlled losses are what it's all about. Continue sticking to your plan and congrats for having one!
Jim from Kalamazoo, asks (6:02:35 PM):
What do you think of spreads, I.E. Buying an option and selling an option ?
I think a spread is best left for a sandwich.  Don't get me wrong, there are some good strategies out there that use spreads but for most folks it tends to be too complicated. Simple buying puts and calls seems to work just fine.
Mike in NYC asks (6:04:33 PM):
Trader Jim: Thank you for recommending the two books by Mark Douglas. They were "The Disciplined Trader: Developing Winning Attitudes" (1990) and "Trading In The Zone" (2000). I read both over a span of two weeks. I felt he was writing about me - and every trading mistake I have made over the years.I understand the mental aspect of my trading much better now. I have much more confidence in my trades, and no longer trade on "what I think" the market will do. I put on a trade, with protective stops, and let the market price movement dictate if I will take a small loss, or make a profit.Thank you again for the clarity these two books provided.
Awesome, Mike in NY City! That's what it's all about. Glad you were able to clearly see the point behind the authors writing. He has a very powerful message and one that can help every trader.
Susan_in_CA asks (6:08:28 PM):
Hi Jim. In the GBE manual it's mentioned that the pit traders "haggle" over prices. For the electronically traded markets what would be the electronic equivalent of haggling over prices? BTW, as one of those "returning" students I just want to share that it really helps me as a beginner to focus on one strategy at a time. I've decided not to tackle the 1-2-3 strategies just yet and guess what, that' been a huge relief. Thanks, Susan.
Hi Susan_in_CA! Welcome back! There really is no difference in the "haggling" of prices. It's just that in this day and age much of it's done on the computer. If I want to buy at a certain price I put my order out there and wait to see if it'll be hit. That's no different than the pit traders. They do the same thing via the bid and offer as well. Good idea taking it slow. It's easy to get overwhelmed. So approach it like you'd eat an elephant -- one bite at a time! By the way, most good traders focus on just 2-3 strategies for the most part! Those that best fit their personalities.
J. Rubin asks (6:12:02 PM):
There are Electronic Markets and Pit Markets. Why would I choose to trade one market v. the other. Also, I've noticed when using Trade Tracker to track market positions it tracks pit markets and not electronic markets. If I'm interested in tracking a position in an electronic market can this be done using Trade Tracker?
Hey J. Rubin! Most all of the markets are moving to the electronic side of things. So that means more volume and quicker order fills on the "E" markets. Yes, trade tracker allows you to enter the "E" markets. Call a Course Counselor in the morning. They'll be happy to walk you through the process. Call them at 541-955-2885 8:30ma - 5:00pm PT.
tomkats1 asks (6:16:39 PM):
Hey trader Jim, First time chater here in Las Vegas and I have to say LOVE IT. The PAS is GREAT its the highlight of my day and I look forward to them. The last time I Traded Oil was at 40$ and with that do you think July Oil will keep this uptrend going???
Thanks for joining us this evening. Been awhile since oil was at $40 LOL. I don't know if July Oil is going to move higher. I like to let the charts tell me what's happening and base decisions off of them. Recently though, we had a beautiful HI Lo setup in June Crude Oil. In fact, the market has rallied over $5 since the trigger on May 5. Anyway, we'll see what happens from this point. Remember, trade what you see, not what you think!
DAVE FROM OHIO asks (6:18:52 PM):
TRADER JIM: WHAT DO YOU THINK OF THE RECENT DISCOURAGING/ENCOURAGING PRICE ACTION IN THE MARKETS AT THIS TIME ??? DO YOU THINK ONE SHOULD WAIT FOR A TREND TO DEVELOP BEFORE ENTERING THE MARKETS AT THIS TIME??? THANKS DAVE
Market action cycles just like the seasons do. Our job as traders is to trade the formations presented and to keep our risk as low as we can. We never know when a market is going to take off and run, so we must trade the setups as they come. As far as waiting for a trend. . . that's what we do. Most all of our setups are trend based. So hang in there and wait for the setups that you enjoy trading.
T from Atlanta asks (6:20:45 PM):
I planned out a trading strategy (for a paper trade) as you emphasized that we all should do at the Training Camp with Feeder Cattle (E) August. I noticed a fish hook and went long on May 6th at 107.975 with trailing stops. Also, the pits on the same market I have one call option strike price at 120.000 at 0.650. Thanks for all the good advice.
Hey T! Congrats on the great trade and for keeping your stops! It was great having you at the Trading Camp too! By the way, I've listened to your CD and it's fantastic! Nice work!
auctioneer asks (6:23:39 PM):
Hi Jim, I'll be known as your slowest student.. Question. I tried to see a 124 August Feeder Cattle call option this morning.. The options were only listed up to 122. Why is that? Thanks for your time. Auctioneer.
Hey auctioneer! That's because the 122's are the highest strike price to trade. If a 124 actually trades then we'll have some data for it. Taking it slow in this business is a good thing. So many want to get rich overnight and that's just not realistic. Take it slow and easy. You'll be getting it all down pat in no time.
Oil Baron asks (6:26:59 PM):
Hi Trader Jim, using the wave projection method I would say oil's first point of resistants should be 130, does this seem correct?
Well Oil Baron, It depends on the contract you're looking at. But my projection for the June contract comes in right around 131.13. I got that by measuring from the early April low to the late April high. I then projected the difference from the early May low. Hope this helps.
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streetsamurai asks (6:32:11 PM):
Hi Jim, Since July corn gave us a head fake. Do we stop watching the channel it has re-entered, wondering if this is chasing the market or not?
Nope, we'll continue watching for another opportunity. This is actually a really good question. Folks often feel that just because they get stopped out of a trade they should give up on the market for several months. Not so my friends! If we can adjust our channel a bit to include all of the recent data we will. Then we can watch for another opportunity. Perhaps even a 1-2-3 top!
tone9 asks (6:35:15 PM):
Hi Jim,Haven't been watching the charts as of late due to a new job and house but now I'm back and focused. I was surprised to see all the electronic charts and my question is why they show trading (open, high, low
Hi tone9, Welcome back. The "E" markets have an opening and closing for the trading days. The sessions just run longer than the pit traded markets. But you can trade pit Corn or electronic corn. Both markets have an open, high, low and close. And all the data is charted for both markets. Hope this helps.
mojoman asks (6:38:49 PM):
Good Evening Jim: First off the Target, Stops and Money Management DVD is excellent...well done. I have a question regarding stops. If a natural level of support is too much to risk on one trade you have mentioned that a money stop may be used. If the money stop is some distance from the natural level of support would it be best to pass on that trade and look for a trade were the natural level of support would be within your risk tolerance?
Thanks for the nice words about the DVD, mojoman! If you can't make the trade parameters work for your account balance and risk tolerance, then walk away from the setup and look for something better. Good job, your thought process shows maturity as a trader. There's an old market saying that can help in times of indecision. . . when in doubt, stay out! Nice recognition and keep up the good work.
rickh asks (6:42:01 PM):
In your blog you wrote about the june dow mini breaking out, but you also mentioned the volume being low and that may be a sign of a short lived ralley. Is this something you find to be a reliable indicator when deciding wheather to trade a breakout?
Good question, rickh! Reading volume like you mention can help with more uncertain chart patterns or market action. I usually don't put a lot of weight into the use of volume though. Most all of my decisions are made based on the prices action by itself. (Of course price forms patterns and I also filter the patterns with Trend Seeker.)
Sniper asks (6:47:10 PM):
Jim, Why is it that the weekly/monthly prices and the daily don't quite line up? For example, looking at the feeder cattle prices daily Aug chart, we see we are currently around 112.650, while the weekly says 108.7. Is it an average for the week or month that we see on the weekly and monthly?
Well, Sniper the data that builds the Weekly and Monthly charts comes from the front month Daily chart. In this case, the May contract is still the front month. Thus the difference. Hope this helps.
ran56 asks (6:54:09 PM):
Hi Treader Jim, why does it seem like all the premium alerts are on futures and not options, its not good to buy an options inside 30 days. Right or wrong? Thanks
Hey ran56, Actually I don't necessarily suggest either futures or options. The Premium Alerts mainly point out potential setups. In fact, the last few PAS videos have covered about a dozen markets in the 12-15 minutes or so that I have to do the videos. If I spent each night doing option searches I wouldn't be able to cover anywhere close to the number of possible setups that I do. Remember, you need the chart formation to have a possible trade. It doesn't matter whether you're trading those chart patterns with futures or options. Again, the main focus of the PAS videos is to point out chart formations, possible entry levels and possible stops loss levels (which can and should be used with either futures or options). The currencies, financials, and indices often provide some very nice opportunities with options that have 30 days or less remaining before expiration. It all comes down to buying the right options. Good questions.
Susan_in_CA asks (6:57:37 PM):
Hi again.June '08 US Dollar Index --have you abandoned the 1-2-3 bottom formation? Looks like prices didn't continue pat the #2 point. I see a channel from 4/24 to present or perhaps a flat-top triangle. What do you think?
Hi Susan_in_CA! Nope, the 1-2-3 is still intact. Prices have kind of stalled out near the #2 point like you mention. I don't really see a channel during that time frame. Instead, perhaps a small one is forming based on the last couple of weeks of data.
Plow Boy asks (7:01:52 PM):
Trader Jim. I was in Rough Rice back at the dawn of 2008 around launch pad 14.50 range and got out at 15.10 thinking there was no way it would go to the moon. I got fixated on Soybean Meal because I listen to my broker's advice and traded a seasonal recommendation. Question: Do you trade seasonals at all - ever..ever in combination with technicals, or are you truly "only" a technical trader samurai with your charts in one hand and your pen in the other?
Hi Plow Bo, I have traded some seasonals before but haven't for years. I prefer to make my decisions off of what's going on today with the price action, chart patterns and Trend Seeker. I got my chart on the screen and my mouse in hand. Drawing trendlines and as Larry the Cable Guy would say. . . gettin' 'er done!
bradlee asks (7:04:17 PM):
Hi Jim, would like to know what data is used to develope a trend in trend seeker.
Hey bradlee, Trend Seeker (TS) uses regular price data. To determine the trend on the daily chart TS analyzes the last 6 months of data. For the weekly chart it analyzes the prior 2 years of data. For the monthly chart it analyzes tha previous 6 years of data. Hope this helps.
billy t asks (7:07:20 PM):
Hello Jim, I realize we should be strictly technical and stick to the charts, but with the price of crude and talk of it trading at levels that don't make fundamental sense, would it be responsible to be pricing puts on this theory? BT
You could, billy t but keep in mind folks were thinking the same thing $10, $20, $30, even $40 a barrel ago! Personally I prefer to use the tools that I talk about all the time. That means watching for a chart pattern and getting trend confirmation via Trend Seeker. That said, you can always paper trade your theory. In fact, I encourage you to do so!
trader cujo asks (7:11:06 PM):
Hi Jim! Tradercujo again. Can you describe how you set your stop orders with your broker? Do you do itsimultaneously when you place your order or after your original fill, or does it depend on other factors?
Hi trader cujo, the easiest method is to simply place your stop and target orders with your broker at the time you place your entry order. They only become active contingent on your entry into the market. If the firm you're with doesn't allow this then simply place your stop and target orders once you get confirmation of your initial fill. Be sure to chat with your broker about this to make sure you're both on the same page.
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Oil Baron asks (7:14:12 PM):
Hi Jim, I spent the last 2 weeks going over the "Master the chart series" targets stops and money management. What an excellent series,,, it gave me the confidence to enter my first real trade in years.. Crude oil calls on a hi lo breakout above 120
Thanks for the nice words, Oil Baron. I appreciate it. Congrats on the trade too. If you're still holding you're doing very well! Nice job!
Tre-Tre from Toronto asks (7:17:16 PM):
Jim hust a quick note on my US dollar index trade my stop got hit on that overnight session with the big price spike. I followed my plan and exited because my stop was hit.
Thanks for the follow-up, Tre-Tre from Toronto! I remember that you mentioned that trade in our last chat. That was sure a bizarre spike in that market. Not sure I've seen that type of price action in that market in a long, long time.
Mike in NYC asks (7:20:11 PM):
If I instruct my Broker to trade the Electronic markets, like July 2008 Corn (e), can my Stop Loss order, or a Limit Profit order, be filled overnight, as I am sleeping? The overnight Grain markets trade from 7pm to 7am Eastern. My Broker goes home at 8pm Eastern, and isn't in the office unitl 5am Eastern. Does the computer automatically execute the order when he's not there? Thanks.
Mike in NYC, if your broker places the order in the "E" sessions then they will work overnight. Be sure you chat with your broker about this. You'll definitely want clarification.
JaysFan in Windsor, asks (7:25:37 PM):
Thanks for another chat night. With your vast experience, you've probably heard about this "rule of thumb". A successful lady trader calls it her 10-20-50 rule for 1-2-3 tops or bottoms. A reliable 1-2-3 should have at least 10 days and not more than 20 days between the
Hi JaysFan in Windsor, I can say that I have never heard of that "rule." Unfortunately the res of your post didn't come in. Even so, I'll add this. I prefer to see at least a few days between each point. The more the better because it tends to mean the formation is more mature and has a better chance of working. Of course there are no guarantees. This is just my "rule of thumb." By the way, your Jays and my Mariners came into the league at the same time. Unfortunately my M's have never been to the World Series........ now I'm getting depressed thinking about it. 
Cliff in Utah asks (7:31:20 PM):
Hello Jim, First time on your chat and I am amazed at your following, I am an old school Ken student and my question after all of these years is that viewing and reading the GBE manual have you pulled away from long term options plan for extreme markets based on weekly and monthly 50% retracements and if so is there a "newer" plan or other types of plans to follow? Keep up the excellent work and say Hi to Bob for me..
Hey Cliff in Utah! The strategies we use today are all trend follow strategies based around various chart patterns. You'll find them outlined in the manual and on the GBE web site under the strategy section. Right now I don't have a longer-term approach involved in the trading methodology. I suppose that's because it's not my forte'. That said, I do have something on the back burner that I'm working on. But I don't think it will be ready before the first of the year. Anyway, if you're interested you might ask me about it again in 8 or 9 months and I'll let you know how the videos are coming along. Thanks for visiting us tonight and I'll be sure to pass on your hello to Bob.
eastcoast asks (7:38:17 PM):
Hi Jim... before I sign up for a PAS membership, I was curious to know... how do you all measure the success rate of students who use the trading methods that US Charts is teaching? Meaning, I know you may be a successful trader using these methods yourself, but how do I get an inkling of the degree to which others you all have taught are also having success?
Good question eastcoast. But rather than me try to answer that I suggest you scour the chat archives. There are plenty of testimonials from Course Members contained within the chats. In fact, I've been doing the PAS since Jan. 2007. So you can probably go back to the Feb. 2007 chats and start there. I'd never suggest that you simply take my word for anything. Watch and learn and see if PAS and trading methodologies in action. That way you can make your own decisions. In addition, with the PAS you can take a free trial. Be sure to scroll through the chat and locate the PAS graphic. It has all the details. Thanks for your interest.
Bill in NC asks (7:42:57 PM):
Hello Jim...I've been waiting 10 years for Targets, Stops,etc. It is VERY clear and understandable. Your team did a great job and your explanations are clear. Many, many thanks. I feel confident!!!!!! The broker you steered me to and knows your strategy is VERY helpful because.
Glad you like the DVD, Bill in NC. That's something I've wanted to produce for years. I think that once folks watch it they'll be amazed to learn the real power of trading. Just something as simple as knowing you don't have to choose 50% winners in your trading to make money and be profitable. This is very powerful, a big stress reducer, and by following the simple steps to implement it into your trading it's something anybody can do! Glad you like the broker too.
Bonita Joe asks (7:47:03 PM):
Mr. Jim Prince!! Big HELLO!!! It sure was nice when commodities would go from bottom to top every six months and then turn around again! Now, it sure gets kinds wild at the top..........blood pressure goes up (I need to short that one), but corn today went all over the map to take me out of the trade and then settle .25 of a point ABOVE my old STOP. Sorta makes a good Christian angry......Any suggestions "Karnak?"........Thanks, Bonita Joe
Karnak? You're dating yourself Bonita Joe! LOL Not much different to say. We still gotta stick to our plans. Eventually things will smooth out, but the recent volatility is why it's so important to keep your risk under control and have a complete plan of action in place prior to entering a trade. Then. . . it's chips fall where they may. Don't get mad, get glad! Keep on truckin'!
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havenfun asks (7:53:14 PM):
Jim, The other day you talked about a outside bar day in the alert. You have said that a inside bar is a day of indecesion, What is a outside bar telling us? Thanks for all the excellent tips.
It may tell us that either bearish or bullish price movements are ahead. Here's what I mean, if the outside day occurs near resistance and price action reverses, it might be viewed as bearish. On the other hand, if it occurs near support, it is viewed as bullish price action. Truthfully, in the big scheme of things I wouldn't worry too much about it. Focus on the chart patterns. In the long run they'll help you a lot more.
Sunny Caymans asks (7:59:01 PM):
I was surprised to learn on last Thursday's PAS alert that a break and not a close beyond the #2 point in 123 formations (along with TS confirming the trend) is all that is needed to trigger a trade entry. The two markets with these formations were the June '08 Euro FX (123 top) and the June '08 US Dollar Index (123 bottom). I had trained myself to only consider closes as this is how we trade pennants/channels. Is this to enter a position before it becomes more expensive in the next day or two? Why is a break rather than a close sufficient in this particular formation?Last Thursday's PAS alert was another example to me of the value in this service as it constantly works out "kinks" in trading habits that I'm forming. Thank you for providing this terrific service as well as the chats to ask questions and learn from fellow course members!
Hi Sunny Caymans, typically I don't wait to see a close above a #2 top or below a #2 bottom. For the 1-2-3 patterns all I want to see is price break the #2 point. It's how I cut my teeth trading the pattern. Typically, for the other formations I chat about, I want to see the market close outside the formations. That said, I just finished recording the newest addition to the Master the Chart series. I call it How to Trade Chart Patterns with Early Entry Techniques™. This DVD will really open your eyes to the tremendous number of opportunities available. I think you'll all be amazed at what can be done with the techniques in this package. Anyway, it's probably 60 days or so before production and duplication is completed.
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 training lessons at: US Charts Online. This is a fantastic teaching tool and free to all GBE Members and US Chart Online 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, June 10, 2008. God Bless and I look forward to seeing you then!
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