Archives for September 2019

The best commodities to trade will depend upon a variety of circumstances, always including market timing. Commodity groups include energy, food and fiber, grains, interest rates, meats, metals, and stock indices. In all of these commodities markets there are factors that determine whether commodity prices will rise or fall when trading commodity futures. For traders with a great deal of expertise in a given commodity the best commodities to trade may be the most variable as these will be where the most profit potential lies. For the new comer to commodity trading the best commodities to trade may be those with less market volatility and, therefore, less risk of substantial loss. As with all trading it is wise to learn the basics first. Commodity and futures training is a good place to start. Learning the use of Candlestick charting techniques will help the beginning, and seasoned, trader to profit by anticipating price movement in commodities.

Often times commodity trading is trend trading. In the arena of traders there are followers of long term trends and short term trends. The longer the trend the more important it is to do fundamental analysis of the commodity involved. The shorter the trend the more important it is to do technical analysis. In all commodities trading fundamental and technical analysis have their places. For example, a trader who is expecting a long term rise in prices of corn futures will still want use tools such as Candlestick pattern formations to watch daily futures price movement in order to get the best purchase price even though he or she may be holding futures contracts for months or years. In trading commodities it is essential to know when large price movements usually occur. In trading agricultural commodities, such as live cattle commodity trading, a severe winter on the North American Great Plains may result in the deaths of many cattle. This will drive the price of beef up. An astute trader may see a weather map of a severe storm passing over Nebraska and Iowa and anticipate a drop in June live cattle futures.

Just as there is reason for diversifying a stock portfolio there can be reasons to diversify when trading futures on commodities. Although the possible return on investment in just trading interest rates or gold futures may be inviting, hedging in the form of trading a balanced portfolio of commodities may be safer and more profitable in the long run. Factors to consider when choosing the best commodities to trade are market liquidity as well as fundamental trends. For interest rates and currencies the trader will need insight into economics and politics as well as the banking systems of the countries involved. Trading oil futures, energy credits, natural gas futures and the like also require a sense of the economy as a recession can decrease demand substantially. Trading precious metals futures also has a lot to do with the economy and monetary policy. Many who trade in gold believe that the US and other nations will not be able to avoid inflation over time and, as such, habitually trade gold futures in the belief that the precious metal can only go up over time. A view of history will show that this is not the case as when gold prices plummeted in the 1980’s. In the end the best commodities to trade are the ones the trader knows the most about and is willing to follow closely enough to anticipate the market.

Market Direction

No Market Direction today due to traveling.

Chat session tonight 8 PM ET –  Tina Logan will be presenting this Thursday June 10th.

Good Investing,

The Candlestick Forum Team

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Candlestick Technical Analysis Webinar – July 10 & 11

 Options Training Webinar – July 31st & August 1st

Trend Analysis- 50% OFF

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Website special reflects current newsletter. If you are reading an archived newsletter you will be directed to Current Website Special.

Futures contracts are contracts on currencies, stock market indexes, or commodities. These contracts attempt to predict the value of these securities at some date in the future. When dealing with commodities, trading futures contracts is a commitment to deliver or to receive a specific amount of a commodity during a specified month at a price that is determined by the futures market. When you sell a futures contract, it means that you have an obligation to deliver the commodity by a certain date and conversely when buying a commodity you have agreed to buy the commodity at a specific price at a specified date. When trading futures contracts, most of the time, the trade never ends in an actual delivery of the asset, but instead these contracts are closed out before the delivery date. The purpose of futures markets in general is to provide a useful and competent means to manage price risks and the purchasing of futures is done through discount brokers and full-services brokers. Futures trading requires that the investors accept price risks from producers with the goal of making a profit.

There are advantages and disadvantages to trading futures contracts, both of which will be discussed in this article. The risks apply more to the speculators and this is due to the fact that futures orders are typically bought on margin. In fact, futures traders only have to deposit five to ten percent, and the rest of the contract can be bought on margin. Additionally, it is very easy to lose your original investment in a volatile market and is therefore suggested that only professionals trade in the future markets. Investors also must be aware of the tax consequences due to the high amount of leverage that can create huge capital gains and losses.

The advantages to trading futures contracts deals with the concept of hedging. The goal is to obtain a perfect hedge when you trade futures. Basically, you can opt to sell your commodity at the current market price or you can “lock in” a price for your commodity to be sold at a specific price at specific time in the future. This comes in handy for farmers who must speculate what their commodity will cost at a specific date in the future. (Many farmers must wait until harvest so they don’t know that the current market price will hold). If the farmer is content with the price of the commodity today, then they will sell the futures contract to guarantee that they will get today’s price at a future date. Additional advantages to online futures trading include the fact that futures markets are very active so you can liquidate contracts quite easily. Basically, trading futures is very useful to reducing any unwanted risk.

Trading futures contracts is a great way to invest money however it is not easy. Many people suggests that only professionals do it, but if you study, understand what you are doing and approach it as a professional would, then there is no reason that it can’t be a great way to invest for you.

Market Direction

Candlestick analysis creates a number of parameters that becomes a built in discipline. The reason most investors do not make money is because of their own emotions. When we make the decision to put our funds at risk, we have also inherently put a piece of our ego to the test. It is our mental capacities that will be judged based upon whether a trade makes money or loses money. When we make money with a trade, our self worth expands greatly. When we lose money on a trade, mentally we judge ourselves as losers, stupid, and many other derogatory feelings that we feel about ourselves. We hate to lose. That is what causes most people to let losses keep growing. Once we decide to close that trade as a loss, we have now solidified the fact that our mental processes were flawed. If we keep the position open, maybe it will come back to positive. Then we would be validated as a winner, not a loser.

Unfortunately, the markets did not care what you do or what you think. The markets are going to do what they are going to do. How you perceive what those movements may be has nothing to do with the market movements. Candlestick analysis provides a visual format that greatly reduces the emotions of investment decisions. The markets move in patterns. Candlestick signals help illustrate what is occurring and has occurred many times in the past. The caveat to that statement is adding “with a high degree of probability”. Candlestick analysis is merely the evaluation of investor sentiment. Investor sentiment works in a specific manner most of the time. Utilizing the information that is built into candlestick patterns and signals provides a visual format for recognizing the next reoccurring price movement.

This is powerful information. This makes evaluating what is occurring in market/price trends at critical levels. This is clearly evident in the Dow. The recent congestion of the past two weeks is providing analyzable forecasts for what the market might do from this area. The trend analysis becomes much easier knowing what occurs after the completion of specific patterns. As described in earlier newsletters, the dumpling top forecasts the potential of an extremely strong downtrend. Once that downtrend has completed, a new set of pattern potentials present themselves. The J-hook pattern, for example, is usually a result after an extremely strong price move. The recent strong downtrend could be the precursor to a bearish J-hook pattern. That possibility still exists if the Bears can push prices to new lows over the next few days. The failure of the Bulls to be able to close trading above the T-line provides more credence to the bearish J-hook set up.

DOW

Today’s bullish trading provided more evidence of a possible pennant formation. Positive trading from this level would make that prognosis more viable. In either case, an investor can make a reasonably intelligent assessment of what to do based upon what patterns may be setting up. Continued weakness from this level would warrant shorting positions or buying the short funds. Witnessing more bullish trading would make the pennant analysis more feasible. This would lead to looking for long positions. However, any long positions established would be done so with taking quick profits if the top of the pennant formation showed resistance.

Candlestick signals forming at support and resistance levels gain that much more credibility when analyzing what new price pattern could be developing. The T. line has become a very valuable technical level to watch. Buying a position after a candlestick buy signal can be maintained as long as it does not close back below the T. line. The research that has been performed involving the T. line produces a simple format for when to stay in and when to get out of a position. The Japanese rice traders did not have this technical indicator to help confirm candlestick signals. The benefit we have today is adding computer-aided technical indicators to help improve the probabilities of candlestick signals.

CNB

Because we are constantly trying to find trading techniques that dramatically improve our probabilities of making money, to disregard what has already been proven now becomes a detriment to your account balance as well as your mental perspectives. As often stated, this is not rocket science. This is merely combining information continually improves your trading abilities. Learn how to use candlestick signals correctly. Once you do, you’ll have a completely different perspective on how to invest successfully. Your emotions would not continue to be a flaw.
Chat session tonight at 8 PM ET – open to everybody, bring the kids, teach them how to invest correctly at an early age. You do not want them to go through investment hard knocks like most of us had to do most of our lives. Click here for instructions.

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Good investing,

The Candlestick Forum Team

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In trading commodities traders follow trends, anticipate market reversal, and use technical analysis tools such as Candlestick chart patterns to trade successfully when a commodity establishes itself in trend or a trading range. Commodity trends vary with the type of commodity. Trends differ over short or long term. However, technical analysis with Candlestick charting will predict future market moves as successfully with corn futures or gold futures as it did in the rice market in Japan during the reign of the Samurai. Trading of commodity trends can be very successful so long as the trader uses both fundamental commodity analysis and technical analysis indicators to verify the probability of the trend lasting or reversing. Learning how to trade commodity trends and market reversal is part of commodity and futures training.

Commodity prices and commodity trends are based on the laws of supply and demand. However, when the exact supply and the exact demand are unknown the market will speculate. Knowing the fundamentals of how a commodity is produced and the depth and breadth of its market is essential to successful commodity trading. Knowing the fundamentals always helps the trader reduce and manage investment risk. However, to profit from trading futures in commodities the trader will need to be able to read the market. Trends tend to establish themselves when the market is in consensus about the prospects of a commodity price. When a recession hits traders in oil futures will want to sell short on the way down and will continue to do so as long as they believe that the price has not reached a fundamental support level. Understanding support and resistance zones is essential in successful trading of commodity trends. With knowledgeable use of Candlestick trading tactics a trader can do well trading commodity trends or predicting and profiting from breakouts.

Long term trends are essentially an organic part of a market. For example, the development of a new seed variety may substantially increase corn production and cause a long term decrease in the price of corn futures. On the other hand a drought in a major crop growing area will probably only raise prices for a year or until the next rains. Knowing and understanding the nature of trends will help the trader profit by them. The longer term trends are typically due to fundamentals. Short term trends in commodities or other trading are typically due to market sentiment. In reading market sentiment the trader will rely on Candlestick analysis to let the market tell him when the market will do. Everyone has the same fundamental information but everyone buys or sells a little differently. The psychology of the market is such that commodity trends feed upon themselves, almost to excess. Knowing when to stay with the trend when to go against it comes with experience and the use of tried and true trading tools such as Candlestick basics. What worked for Japanese rice traders centuries ago can work for traders today.

Market Direction

The major benefit of candlestick analysis is that it can accurately evaluate all markets and all time frames . For the active trader, this is very important information. If you love trading stocks, you have a relatively large market to deal with. However, most of the active trading occurs in the first hour and a half in the final hour. The market trades relatively blasé during the middle part of the day. For an active trader, this can be a problem. Wanting to trade actively during the middle part of the day may lead to pushing trades that should not be executed just for the sake of staying active. There are better solutions.

Commodity markets usually open up 30 minutes to an hour after the stock market opens. They usually close prior to the close of the stock market. This allows a trader to trade actively during the first and last hours of the stock market trading, then participate in some commodity trading during the middle part of the day. This allows the active trading to be spread over the full length of the day. Fortunately, successful commodity trading utilizes the same confirming indicators as stock trading. The charts work equally well on bond charts, currency charts, or any other trading entity that involves human participation.

Investing successfully in commodity charts is very simple. It takes the same logic and visual analysis found in stock charts. For example, July Wheat was shorted today based upon a few simple chart analysis techniques. A failure of the 50 day moving average yesterday was an indication to watch for further weakness today. If that happened, the trend channel would be breached. This would set up the possibility of a strong leg to the downside.

Wheat

Having the ability to recognize when a high probability trade is going to occur creates the opportunity to make much bigger profits trading commodities than trading stocks. The leverage in commodities make say price move extremely worthwhile.

The Dow held up  well today after a few days of strong buying for the most part of the day. The immediate consolidation took the Dow back down to the tee line first thing in the morning. It acted as support. The rest of the day traded relatively strong, considering there was a good amount of profit taking occurring today. The selling strength returned going into the close. This makes the prospects of a strong recovery in the markets more dismal. However, the strong charts still revealed continued strength. Because of the severity of the last downtrend, when buyers came back into the markets, they did so with an extensive amount of enthusiasm. This can be seen in the number of candlestick reversal signals and gap ups in price.

DOW

RHT

Utilizing these simple rules helps an investor trade much more calmly. Many investors get scared out of a trade that is not producing a true reversal signal. They will not attempt to get back in because it would make them look foolish to sell out and then buy it right back. Using the simple rules applied to candlestick signals in the confirming indicators keeps an investor from entering a trade they should not get in and keeping them in trades they should not get out. This benefit allows an investor to concentrate their efforts on analyzing for new trades. Mental time and effort will not be wasted on price trends that are just zigging when the uptrend is still in progress. The benefits of these techniques are more apparent when trading commodities. Small price moves in a commodity trade equats to great differences in profits or losses. Learn how to apply simple trading rules to your investing and you will gain a much better comprehension for when trending prices are merely having small pullbacks.

Commodity traders — Do you know how to evaluate which trade or trades have the highest probabilities of producing profits? Have you ever analyzed two trades that look good. You decide upon placing a trade in one. It doesn’t move, but the other one takes off like a rocket. What could you have done to decipher which one was going to have the greater probability of moving. Not only moving, but moving with a much greater strength. The Candlestick Forum will be providing a two-day commodity trading training session. Candlestick signals makes the opportunity for improving your returns for stock trading dramatically better. Using candlestick signals in commodity trading greatly improves the potential of making huge profits. Join us on May 22 and 23rd for a concentrated two day training session for successfully trading commodities. The analytical techniques found in his training will improve all aspects of your candlestick investing. 

Chat session tonight at 8 PM ET

The Candlestick Forum Team

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Projecting Price Targets – Quickly learn to spot the most profitable price targets! – BONUS EBOOK with purchase!!!

2-Day-Commodity Training Webinar

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Website special reflects current newsletter. If you are reading an archived newsletter you will be directed to Current Website Special.

The concept of children and the stock market seems as logical as mixing nitrogen and glycerin in a blender in your kitchen. Children joining the stock market community? Shouldn’t they be playing PlayStation 2 or 3 now? In reality, the combination of children and the stock market and the world’s future is a natural fit. Remember, most of today’s baby boomer investors didn’t have a home computer or video game when they were kids; this generation can save the universe courtesy of Sony and other program creators. There are some keys to introducing your children to the stock market, so let’s get started.

First, it is imperative to start this adventure with a good understanding of stock market basics. You can start by teaching those youngsters that investing is totally different from saving. You might “save” to buy a new bike, but “invest” to have the money for college. Next in the process of combining your children and the stock market would be to cover topics such as portfolio diversification, liquidity, and risk reward ratios.

Ready to give your kids the family fortune yet? Let’s hope not! Before the kids actually start picking stocks and investing with real money, it’s best to start with a mock portfolio. There are a variety of ways for kids or anyone else to practice online stock market trading. There are a number of online games for stock and option investing simulation games. Prefer FOREX currency trading for beginners?  It’s there too. Or if you enjoy the more traditional method, you can do this all on your own by helping your child construct and track his/her own portfolio of stocks. It’s also wise to encourage your children to “invest” in companies that they know, such as Disney, Coca Cola, Nike, or Microsoft.

While in the stock market, you can teach your children to track their investments, practice money management techniques, monitor company performance, research each investment, and track trends in the market. Junior probably has a good idea if Sony will impact Microsoft’s profit when the PlayStation 3 is launched. This is also a great opportunity to begin teaching the concepts of Japanese Candlesticks stock trading to your children in the stock market. Chances are, they will pick up the principles much quicker than poor old dad!

Once you, and your kids, are ready for the stock market, there are a several investment options you can choose from. The safest course is probably finding a mutual fund. Although this is not the most exciting option, there are “kid friendly” mutual funds available, and actually some that provide stock market investing education materials as well. All of the principles your kids have learned apply and the bottom line results are real.