Knowing commodity trading patterns allows traders to anticipate the markets in commodity futures. Successful commodities trading is based upon fundamental analysis of the commodity you wish to trade. It is also based upon astute technical analysis of technical analysis charts. Using technical analysis tools such as Candlestick pattern formations allows the trader to predict future market movement and market reversal based upon past and current market action. Commodity and futures training will help the new trader understand and use Candlestick charts and Candlestick charting techniques to make money in a commodity market.

Longer term commodity trading patterns will vary among commodities. For example, gold bullion prices and gold bullion futures will vary with the economy. Corn futures will vary with the weather and crop forecasts. They will also vary by season. The different fundamental analysis of these two different commodities is based upon their being totally different entities. Other precious metals will commonly trade like gold does. Industrial metals such as copper will trade with the rise and fall of the global economy. The commodities markets in wheat, rice, live cattle or other agricultural commodities will trade seasonally and will rise and fall with the ability of the agricultural industry to produce and ship food throughout the world.

Many commodity trading patterns, especially the seasonal agricultural ones, are unique to those commodities and are more closely tied to the fundamentals of the commodity than to the technical aspects of market reaction. However, the bulk of commodity trading patterns are really the same ones seen in trading stock and trading options. An example is the head and shoulders pattern or the reverse head and shoulders pattern. The head and shoulders pattern signals a market reverse of an equity on an upward trend towards a downward trend. The reverse head and shoulders pattern signals a reversal from a downward trend to an upward trend. Although a persistent drought in a major agricultural producing area may well drive up prices the various interpretations by many traders will cause market fluctuations superimposed upon an underlying trend. Understanding commodity trends, both large and small, will allow traders to profit both from long term market trends and the market inefficiency that result from important new news and market disruption.

One factor that affects commodity trading and commodity trading patterns as opposed to trading in another equity market is hedging. The biggest actors in the commodity markets are typically the producers and buyers of commodities. In fact, commodity markets had their beginning as a place for producers and buyers to come together and agree on future prices that protected each from catastrophic loss in case of a large change in market prices. Rice traders in ancient Japan used Candlestick basics to profit from market movements in rice. Learning through commodity and futures training how to do Candlestick chart analysis and use Candlestick trading tactics will profit the trader in both the short and long run. It is all about leaning the basics, applying them, and maintaining discipline in using commodity trading patterns.

Market Direction

What is the market telling us? The past five days of trading have shown severe whipsawing. As can be seen on the Dow chart, there have been huge down days followed by huge up days. This makes trading difficult. Obviously, it makes analyzing what is occurring in investor sentiment very difficult to interpret. This is usually an indication  there is going to be some dramatic change. In the case of the Dow, after a very steady uptrend, the severe oscillation in investor sentiment is probably an indication that something is going to move the markets in a more dramatic fashion than what has been experienced over the past two months.

Is this a top or is this a resting phase? By analyzing the charts, that cannot be answered. What should be the strategy when this market condition occurs? The point of investing is to analyze indicators that have shown a proven probability for the next move. The use of the tee line has been very effective until the past few days. The uptrend remained in progress as long as there was no close below the tee line. The Doji, followed by a large bearish candle that close below the tee line, indicated there was a change of investor sentiment. The past four trading days has revealed investor sentiment is wildly uncertain. For current trading, it is very difficult to make a profit. That is when an investor should observe the obvious. If market conditions cannot be analyzed to the degree where it gives you the edge, then you should not have your money exposed. Sit in cash or at least have the portfolio positions to where half is in long positions, the other half is in short positions.

DOW

No matter what market conditions are prevailing, the candlestick signals and patterns can produce a number of bullish or bearish potentials. A sideways, choppy market will allow both longs and shorts to be profitable at the same time. This requires one simple analysis. Which long positions continue to show strong charts? Which short positions continue to show week charts? There will be profits made on both sides when the market is predominantly moving sideways.

When the investor sentiment starts to become volatile, it reveals a potential change. This provides a self fulfilling discipline plan. The lack of identifiable direction creates the conditions to be sitting heavier in cash. Thus, when the market does reveal what it plans to do after an indecisive stage, the candlestick investor has heavy cash allotments available. A sideways moving market also allows price patterns to continue to formulate. Watching which trading patterns are setting up doses immediate profitable opportunities in the market does choose the next direction move.
CYTX was a recent recommendation. It had the evidence of a strong price move coming out of a frypan bottom. The resistance level, the 50 day moving average, was the first logical spot to take profits. As the markets in general have moved sideways over the past five trading days, CYTX has continued to set up a J-hook pattern. This becomes a very simple entry decision.

CYTX

If the markets/Dow break itself out of the consolidation stage, the anticipated bullish sentiment would continue confirming the J-hook pattern. Piecing simple common sense deductions together, based upon expected market movements, produces an analytical format that makes identifying high profit situations much easier to evaluate.

Chat session tonight at 8 PM ET.

Good Investing,

The Candlestick Forum Team

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What is a Stop Loss Order?

An order (instructions to your stock broker or pre-set in most trading platforms) to sell your security once it trades at a set price. If the price never falls to the stop loss, the order will not be executed. Stop loss orders don’t protect you before you make a trade; they protect you AFTER you enter a position.

Setting stop loss orders limit an investor’s loss on a security position, yet too many investors do not know how to determine the price on a stop loss order. Arbitrarily picking a set percentage, anywhere from 5% to 10%, might make sense for asset protection from a money management perspective. However, setting a 7% stop loss order on a stock that historically fluctuates 10% or more during a seven-day trading period is not a realistic strategy. Setting your stop loss orders based upon your risk tolerance is an emotion based decision – not a technical determination for setting stop loss orders.

The stock market becomes an easy medium for making money when using Candlestick signals properly. The stock market is the cumulative knowledge of all investors buying and selling during any particular time. Just like an individual stock, the stock market itself incorporates waves of human emotion. Whenever human emotion is involved with an investment entity, Candlestick pattern formations  visually clarify what those emotions are doing. The stock market can easily be analyzed when applying Candlestick technical  analysis.

Being able to analyze the direction of the stock market greatly enhances the ability to extract profits. The fact that the stock market moves up and down without major changes in fundamental economic conditions from week to week is a clear illustration that fundamentals do not move markets, the perception of fundamentals is what moves markets. Candlestick signals identify what is going on in investor sentiment and makes it possible for setting stop loss orders at logical points.

Candlestick analysis provides a very simple visual confirmation of whether the Bulls are in control or the Bears are in control. Over the past couple of weeks, the Dow and S&P 500 have been trading below the T line. The T line is a very high probability trend indicator. Historic results show that as long as a trend is closing above the T line, the up trend remains in progress. As long as a trend continues to trade below the T line the downtrend remains in progress. Over the past few weeks of trading, the Dow and S&P 500 have been trading below the T line while the NASDAQ has traded above the T line. For the candlestick investor, this makes the trend evaluation relatively simple. The overall market trend was not going to move in any powerful direction one way or the other. Today’s positive trading change that evaluation. Today the Dow closed above the T line as well as the S&P 500 gapping up above the T line and the NASDAQ continuing it’s uptrend above the T line. This provides much more evidence that bullish sentiment is now in control of the market. This allows the candlestick investor to be more aggressive when scanning and implementing bullish trades. It also provides accurate trend assessment that instigates closing any short positions that are starting to show too much bullish sentiment.

Candlestick patterns, in conjunction with the T line, provide an extremely highly accurate trend analysis. It is merely logic put into a graphic depiction. Bullish sentiment witnessed in the big trading stocks such as AMZN, TSLA, NVDA provide additional confirmation there is a lack of bearish pressure in the general markets. Knowing there is better probabilities the market uptrend should continue make scanning for the potential big price move pattern breakouts the better trading strategy for these market conditions.
 
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The Candlestick Forum Team

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In many cases, cash flow ratios signify a more accurate measurement of a stock’s value than the price to earnings ratio, P/E. A company’s ability to generate cash flow is one of the most important indicators of its health. Although much is said and written about P/E, it is not able to give you an accurate representation of a company and its efforts to generate cash flow. Because cash flow ratios examine the flow of money into a company, it can help to identify struggling companies and in turn, struggling stocks.

Price to earnings is perceived as being a very important ratio. When a company’s P/E is very high or low, it usually makes a splash on the financial pages. Understand one thing; the price to earnings ratio is a valuable metric and can help a successful investor with his or her stock technical analysis, but it is only one technical analysis tool and should be considered as such. While the same can be said for each of the cash flow ratios, these give insight into the money coming in and going out of a company. A company can demonstrate earnings, but if more money is pouring out of a company than pouring in, there will be fiscal problems in the future.

Since we have identified the importance of cash flow ratios, how do we calculate them? The two cash flow ratios that we will examine are price to cash flow ratio and free cash flow ratio. Each of these technical analysis tools looks at the flow of money in a different perspective, but both are indicators of whether a companies stock is over or under-valued.

Price to Cash Flow Ratio

The price to cash flow ratio is determined by dividing the stock’s price by cash flow per share. The reason many prefer this measurement is because cash flow is used instead of net income (found when computing earnings per share). Cash flow is calculated by taking the company’s net income and adding back the depreciation and amortization charges. The cash flow is then divided by the number of shares and the result should be a positive number. A negative number indicates that the company is burning cash and buying shares of such companies could result in many investing mistakes.

Free Cash Flow Ratio

Free cash flow ratio is a refinement of cash flow that goes a step further and adds one-time expenses capital expenses, dividend payments, and other non-occurring charges back to cash flow. The result is how much cash the company generated in the trailing twelve months. It is possible to divide the free cash flow by the current price per share and the result describes the value the market places on the company’s ability to generate cash. Such analysis allows the wise investor to make a more accurate evaluation of a company and successfully accomplish value stock investing.

Conclusion

Like the P/E ratio, both of these Cash Flow ratios suggest where the market values a company. Lower numbers relative to its industry and sector, suggests the market has undervalued the stock. Higher numbers than its industry and sector may mean the market has overvalued the stock. Thankfully for the mathematically challenged, you don’t have to do all of these calculations. Many sites on the Web include these numbers for your review. Like all ratios, they don’t tell the whole story. Be sure you look at other metrics to verify relative value. However, these Cash Flow ratios can give you significant clues to how the market values a stock.

Bad commodity trading habits lead to bad commodity trading results. Beginning traders will often start with simulation trading and they will do great. When they switch to real time commodity trading the same folks who posted record profits in the simulation world will crash and burn. There are a number of reasons for on onset of bad commodity trading and these reasons are not just limited to beginners. Trading psychology has a lot to do with good habits turning into bad commodity trading habits. The old enemies of commodity trader, greed and fear, are not a problem when trading is not “for real” but raise their ugly heads at the thought of making or losing real money. To help avoid bad habits that lead to bad commodity trading it is useful to take Commodity and Futures Training. It is also very wise to learn, practice, and use the time honored technical analysis tools that made rice traders rich in ancient Japan. Candlestick basics originated over three hundred years ago and this very insightful, very visual system of following the commodity market can lead to very positive results. Using Candlestick charting techniques and Candlestick trading tactics can help the trader stay away from the bad habits that creep into the best commodity trading strategy.

Simulation or “paper” trading is basic to learning commodities trading, options trading, stock trading and the like. Trading software will have historical data that will allow the trader to work in “real life” trading situations. Using the time and psychological space afforded by these practice sessions the savvy trader will develop a sound trading strategy that can carry over to live commodity trading. Experienced traders will typically trade the same in simulated settings as they do in live trading. The trap that will lead inexperienced traders into bad commodity trading decisions is the impulse to “wing it” once in a live situation. Here is where the use of a tried and true set of technical indicators is necessary. Here is where learning the indicators and using them is critical. Use of Candlestick pattern formations to predict the commodities price movement has worked for over three centuries.

When the inexperienced trader enters into the real world of commodities trading is the time to apply what he or she has learned about the use of Candlestick analysis and not to forsake it. An excellent rule for a beginning trader to follow is that if you don’t understand the trade, don’t get into it. Commodity trading is not gambling. Because trading history repeats itself the use of Candlestick patterns gives the trader a very reasonable expectation of making a profit on a trade. What is required is the discipline to apply what is known at the right time. Using a well thought out trading strategy will lead to profits. Using the right tools to make a profit reinforces the use of the strategy. When the trader loses money on a trade when he or she did not expect to it is time to reevaluate trading strategies, not to wing in on the next trade. Practicing good trading habits leads to good commodity trading and letting fear and greed get in the way leads to bad commodity trading. Good trading goes with good management of investment risk. Setting limits and keeping track of both success and failure will lead to good long term results.

Market Direction

“Watch what it does when it gets to the next moving average!” This is the statement most often expressed when analyzing the charts on Monday and Thursday night training sessions. What is the significance of this statement? Prior to you learning candlestick signals, you might have had to wait a few days to see whether a resistance level was going to act as a resistance level or not. Most investors that do not have candlestick signal knowledge. That means they have to wait two or three days to see what is happening at a support or resistance level. Candlestick signals provide that same information instantly. As witnessed in todays trading, the Dow went up and touched the 200 day moving average, the suspected target, and then started fading back. This becomes a good of where and when to take profits.

DOW

If a price move hits a potential target and does not seem to show enthusiasm about pushing through, take some profits, especially on charts that appear to be also showing a lack of enthusiasm. If the smart traders can see profit-taking going on at a resistance level, they will be taking some profits also. The worst-case scenario would be to buy back into positions where their charts showed strength and the indexes revealed they were coming back up through the resistance level. Once again, the advantage is still in the hands of the candlestick investor because they can identify what prices were actually doing at the resistance levels. This would both be applicable on the daily chart as well as seeing what was going on on the five minute chart or the 10 minute chart.

Dow 10  min chart

Candlestick formations reveal whether prices will resist or breakthrough a resistance level. If prices break through, there is a much different anticipation. As illustrated in our recommendation to buy July sugar today, the fact that the rounding bottom patterns broke out through the beginning of the pattern as well as the 50 day moving average at powerful implications. There was going to be more upside. What becomes the next potential target? The 200 day moving average! Will it get there in one move? Probably not, however knowing the price is probably in an uptrend, it now becomes much easier to anticipate what type of pattern setups might occur. There may be a J. hook pattern forming some time before the price gets to the 200 day moving average.

July Sugar

Candlestick signals provide an immense amount of common sense information. If you want to gain an advantage when you are investing, to trade without the knowledge of what the candlestick signals reveal is putting somebody else ahead of you. The candlestick investor is provided with a much easier trend analysis process when they understand what each signal represents and how to use them successfully with confirming indicators. The more information you can put into your analysis, the higher the probability you’ll be in a successful trade.

Chat session tonight 8 PM ET

Good Investing,
The Candlestick Forum Team

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Utilizing technical analysis is an important component of wise investing in various securities and can be done to any kind of security, including mutual funds, stocks, bonds, etc. When using technical analysis tools on a specific security, you are looking for price patterns, price fluctuations, and trends. Your ultimate objective is to figure out how you stand as an investor. In other words, should you sell or buy?

So, how is stock market technical analysis accomplished? There are several different methods. Some investors use technical indicators as part of their technical analysis process and others do their technical analysis by studying charts of a security’s past activity. The best investment advice regarding technical analysis is to use several different methods – comparing one against the other in a system of checks and balances.

There are several assumptions made when using the best technical analysis tools. A first assumption is that the past is a good indicator of the present. However, when dealing with the stock market, coming to this conclusion during technical analysis does not always lead you to profitable results. The other assumption is that all securities have a tendency to form stock chart patterns in their fluctuations. This is fine, and is often the case, but the market is often unstable because of stock volatility.

How then do you make use of the most important technical analysis tools? Why try it if they are not completely accurate? Well, even though they are not 100% accurate, you still stand a reasonable chance of analyzing correctly, depending on how thoroughly you were in your analysis using the methods you have chosen.

Therefore, fundamental and technical analysis methods offer a way to make educated choices when making new investments in securities and determining how to handle your current investments. So you can at least have confidence in knowing you did your absolute best, even though it isn’t a sure thing.

So who will do the technical analysis? Well, you can either hire people to perform the technical analysis or you can do it yourself. If you work with a company that helps manage your long term investing accounts, it’s a safe bet that they employ human resources to help analyze the market and gather data. Then they pass this information to their clients in an attempt to guide them in their investment options.

If you choose to do it yourself, using technical analysis with candlesticks, it could take a while to get the hang of it. Science and math are used to do the analysis, but many consider it an art. Although you can use formulas to give you a set of numbers, it is an “art” for that person to determine what the numbers actually mean.

Free stock picks every day with candlestick signals.

Many investors search the Internet every day for free stock picks. This is a very unproductive practice. Finding free stock picks is like kissing your sister. It helps the situation right now but it is not going to get you anywhere in the long run. The best source of free stock picks  is being able to do your own candlestick signals scans. Once an investor learns and understands the  ramifications of the 12 major candlestick signals, they will have more free stock picks then can be utilized by most investors.

Searching for free stock picks does not provide a viable trading program. One source of free stock picks may have a completely different reason for entering positions than another source for free stock picks. If these positions do not perform as expected, there will be no game plan for when to enter the trades or  when to exit the trades. The candlestick signals have a well-defined set of parameters for when to get into a trade and to exit a trade. It is not only important to identify stock positions that have a probability of producing profits, but there needs to be an analysis for when to get out of a trade. Candlestick signals can be used as the building block for any investment program. If using free stock picks as a source for a viable trade, then applying candlestick signals to those price charts provides a huge advantage. The signals can illustrate the times to be entering and exiting those stock positions.

More importantly, an investor’s trading program should have a set of parameters that can be utilized continuously. The candlestick signals have provided very strong evidence through the centuries that they indicate where investor sentiment is reversing the trend. The 12 major signals will occur frequently enough to make them worthwhile indicators that can be utilized during any time frame. Whether intraday trading, using the one-minute, five-minute, and fifteen-minute chart combination, or investing longer-term using the daily/weekly/monthly chart combinations, the major signals will occur consistently at the trend reversals. Once signal scans are programmed into your charting software, viable reversal signals can be found every single day. The process for scanning 9900 trading entities each afternoon and finding the best trade potentials for the next day will take less than 15 minutes. On good days, 20, 30, or possibly 40 trade excellent possibilities will appear. On bad days, at least two or three excellent trade possibilities will occur. This now becomes your best source of free stock picks for finding the best stock picks. Your own source of picks  provides the format for analyzing why they should work and what would dictate coming back out of those trades.

Act now – The Candlestick Forum 12 major signals price special will be ending in the next few days. The 12 major signals are the core for understanding candlestick analysis. Learn these 12 major signals and you will have control of your own investment future for the rest of your life. Click here for details on the 12 major signals special Once you understand how to use the 12 major signals correctly, producing large profits in your account becomes a much easier process.

Investment portfolio management is the process in which an investment portfolio is acquired and maintained. Items for a portfolio manager and client to consider when investing include the term of the investment, stock market trends, and underlying forces within market trends. There are three types of terms of investment including short-term, medium term, and long term goals. Short term investing will provide quick returns, with medium term investing providing steady returns, and of course long term investing which aims to provide long range returns. The portfolio manager must ensure that their client receives a good return on investment which is achieved through the building of a strong portfolio.

What exactly does a Portfolio Manager do?

One of the main tasks they complete regularly is to meet with their analysts to discuss market developments and the trends pertaining to current events. They constantly check the status of the financial markets and again must stay on stop of current events. They also make the ultimate decision on what securities to buy or sell and some of them even conduct interviews with the financial media.  It is also their responsibility to ensure their clients build and maintain portfolio diversification, to keep them from “keeping all of their eggs in one basket.”

What is the typical background for a Portfolio Manager?

Some backgrounds may include engineering, computer science, physics, or biology, and many also possess an MBA degree.  They must be strong in accounting, finance, and economics and many are previously research analysts beforehand. One thing is for sure, and that is that they must be very strong in money management and they must be very hard-working analytical individuals.

What are the different types of Portfolio Manager Positions?

There are three things that determine this. They include the investing style, the size of the fund, and the type of investment vehicle.  The investing style could include small or large cap specialties (i.e. small cap stocks), domestic or international fund investing, hedge fund techniques, or growth or value style of management.  The size of the fund also determines the type of portfolio manager because he or she could determine the asset allocation for a small independent fund or a large asset management institution. The type of investment vehicle can vary greatly from mutual fund investing, hedge fund investing, commodity investing, trust and pension funds, and high net-worth investment pools.

In addition to or instead of a live portfolio manager, an investor may also decide to manage his or her portfolio using portfolio management software. Some of the features offered by a tool of this fashion include real time prices, accounting methods, management of investment records, and the ability to track multiple portfolios. This type of software has many additional features and may be an investing strategy that works for you. Its purpose is to simplify the life of the successful trader and investor. The point in the end is for the investor to be able to see the records of what he has invested and how much money he made.

The job of a portfolio manager is not one that is easy, but is one that is very rewarding for those individuals who like a challenge in their every day job.  It also pays off very nice financially.