Commodity trading online is a great way for investors to make money. There are four categories of commodities available for traders including energy, metals, agricultural and livestock and meat. Energy commodities include thing such as heating oil, natural gas and gasoline and crude oil. Metals can include gold, platinum, silver and copper and agricultural commodities can include things such as soybeans, cocoa, cotton, sugar, coffee, wheat, corn, and rice. Commodity trading can also include livestock and meat such as pork bellies, live cattle and feeder cattle and lean hogs.

When conducting commodity trading online there are certain characteristics to understand. Trading commodities can be very different from investing in stocks and bonds. This is because there are global and economic factors that come into play such as technology, disease, and natural disasters. Investors must use caution when buying commodities because trades can completed without visual inspection of the goods. Investment can quickly become risky because events take place that are impossible to predict. This can include things such as epidemics, man-made disasters, weather patterns and other factors. That is one reason why many investors make it a practice to only allocate about 10% of their portfolio to commodities.

When commodity trading online many investors practice hedging. Futures and forward contracts in addition to hedging are common practice and without them the volatility in the commodities market could potentially cause businesses to fail that would have otherwise managed to survive. There are businesses that need to be able to predict their expenses in order to budget. They do this through using the commodity exchanges in order to normalize their expenses. They use futures, forward contracts and hedging in order to do this.

In summary, there are numerous commodities available for investors to trade. These investors must ensure that they do their homework since there are so many factors that could derail their investments in the commodities markets. Investors must ensure that when commodity trading online they do not gamble, but instead speculate based on well informed decisions regarding market dynamics. They must learn to use investing strategies such as hedging and commodity futures and learn how to handle volatile or bearish markets.

Continue your education on the commodities market to see if the trading strategies and market are a good fit for you. There is a lot to learn however more and more investors are taking advantage of the benefits of trading commodities online.

Market Direction

The T-line is an extremely valuable tool. Candlestick signals illustrate when there has been a change of investor sentiment. However, as a trend continues in a specific direction, the sell signal requires more compelling confirmation. The longer a trend continues, the more established investor mindset becomes. A strong reversal signal is required to change investor sentiment.

Both the Dow and the NASDAQ closed below the T-line on Tuesday. This should have instigated some profit taking. What is required to indicate the bears were now in control? Confirmation that the bears were still the dominant force. This would have been evident had the selling continued on Wednesday. However, the markets opened relatively flat and then started to trade positive. If the bears were in complete control, the bullish trading should not be witnessed. This should have slowed down the selling process. As time went on during Wednesday’s trading, it became apparent the buying was not a quick rebound from the day before. The indexes moving well above the tee line provided more evidence the line may still be acting as support.

The trading below the T-line on Tuesday provided an opportunity to close out positions that may be exhibiting bearish signals. The bullish trading on Wednesday allowed for reestablishing bullish positions, not necessarily the same ones that were just liquidated. This process allows an investor to take profits at the appropriate time in some charts and reestablish long positions in new charts that have a higher degree of upside probability. This process is a simple cultivation to keep investment funds in better probability situations.

DOW

This process also helps investors overcome the fear/ego involved when taking profits. The fear of getting out of a position too early is greatly nullified when the funds are rotated into higher probability potential trades. As illustrated in our recommendation of FITB, this chart demonstrated a high probability trade as a Jay hook pattern was being established, bouncing up off the tee line. Our knowledge about a Jay hook pattern makes this a much higher probability situation versus a trade that has already moved up and now showing potential sell signals.

FITB
 
Good investing,

The Candlestick Forum Team

This Week’s Special

Major Moving Averages + Bonus Video Special

Click here for details.

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

Investment clubs exist as a group of people who share an interest in the stock market and who pool their resources into one large investment. Many investors are on there own and may not have enough money to invest individually into the stock market, so they opt to join or create a club based on the principle that there is strength in numbers.

Investment clubs are a wonderful way to get to know the stock market, make friends, and over time receive a return on investment.  Unfortunately, it is very difficult to join an established club since many of them have been operating for years with the same members. These investment clubs are not likely to grow in membership if they have been operating successfully over time.  This leaves many investors with the only option of creating their own stock market investing club. If you are interested in creating your own club keep in mind that it can take a significant amount of your time and a lot of work to get it up and running.  Below I discuss some factors to take into consideration if you are interested in the undertaking required to create investment clubs.

First of all, you should be sure that participating in investment clubs is right for you personally. If you have never been a member of a club, you may not know the answer to this. Some things to take into consideration may include the fact that you may not always get your way.  Can you handle a democratic forum? Also, are you willing to be an amateur?  Just because you start a club doesn’t mean you will become an expert in playing the stock Market overnight. The purpose of investment clubs are to provide a safe learning environment and one that is an ideal atmosphere for beginner investing.  Lastly, are you being realistic?  If you think the only purpose for starting investment clubs is to make a large profit quickly, then you are sadly mistaken.  Not saying that overtime you won’t make a large profit, but there are no guarantees and the level of success depends on many factors.

Still interested in starting one of your own investment clubs? Great!  Below are a few tips to assist in the successful launch of your club.

• Before investment clubs are formed you must be sure that you have investigated the status under federal, state, and local laws.  It will vary from state to state so you want to be sure that you are compliant.
• Find compatible members to form your club. You want to have few enough that you don’t have too many schedules to balance and big enough that you allow enough capital to invest so that you actually make money investing in stock. You also want to be sure that your fellow investors share a similar investment philosophy.
• When creating investment clubs, you also want to be sure that the position of replacements for members who have dropped out, or for newcomers to the club are clearly defined. For example, should the new member be expected to match the total investment of the member he or she is replacing?
• Determine common goals for the group and decide how much money the club will invest on a monthly basis. This will be a part of determining your clubs investing strategy.
• Open a bank or brokerage account after you have filled out a Limited Partnership form. (If that is what you choose). Many investors see this as the easiest way to start a business and create investment clubs.

Investment clubs work out great for investors for many reasons. They are a great place to learn how to invest and to learn how to avoid making investing mistakes. You can learn the investment basics and work with members of your group in determining and learning new investment strategies. 

Candlestick signals make analyzing stock market trading patterns relatively easy. Trading patterns become recognized because of the reoccurring mental processes of investor sentiment. Normal investor decision making is flawed with the input of emotion. The majority of investors are usually wrong. Human emotions are contrary to rational investment decision making. Being able to graphically analyze what investors normally do provides a huge advantage. Candlestick analysis is capturing and analyzing investor sentiment on a chart.

Western analysis has identified many reoccurring stock market trading patterns. Adding Candlestick signals to the analysis creates a huge advantage. Once recognizing that a trading pattern is developing, it can be better analyzed and more accurately timed when applying Candlestick signals. One of the most highly profitable stock market trading patterns is called a “Fry Pan Bottom”.

The Fry Pan Bottom pattern, once analyzed, is very easy to recognize and it is very easy to understand how it forms. This week’s online Candlestick training session on the site delved into the Fry Pan Bottom pattern. Understanding the ramifications of the psychology that forms the Fry Pan Bottom allows an investor to prepare for the potential of a high profit trade.

One of the recommendations this past week was Phazar Corp. (ANTP). The recommendation was based on recognizing the set-up for a Fry Pan Bottom. As illustrated in the ANTP chart, a Fry Pan Bottom was forming over the past three weeks. Being able to analyze the formation creates a fairly low risk trade and can be used in an aggressive trader’s strategy as well. Note how the downward trajectory was very slow, followed by a few days of indecisive trading, small Spinning Top signals, then a small Bullish Engulfing signal formed and was followed by a slow uptrend. This stock market trading pattern was occurring during a time when the indexes were in a steady downtrend.

ANTP

That slow bottoming action is the Fry Pan Bottom. It looks like the bottom of a frying pan. The psychology is simple to analyze. First, investors had a negative bias. That bias became neutral, then started slowly moving back to the upside, revealing the rebuilding of investor confidence. A conservative investor could have bought the stock after the first little Bullish Engulfing signal, knowing that the stop loss would have been any trading below the bottom of that bullish candle. A more aggressive trader would start buying as the candle formations started to enlarge, revealing that investor sentiment was dramatically building up confidence.

The result of a Fry Pan Bottom is that when it breaks out through the peak that started the downward trend, the force of the new confidence will move it to much higher levels. Does this work every time? Not every time, but the probabilities are extremely high. This is the type of knowledge that is easily obtained through Candlestick analysis. Once you understand the common sense logic of how the formation is created, the eye will become easily trained to identify this type of stock market trading pattern.

Boom

That is why we have been so successful in trading the BOOM stock this past month. The analysis becomes much easier once the pattern of its recent past trading is identified. Being able to identify the potential chart pattern that could develop, and using other technical indicators such as the moving averages, allows the refinement of the entry and exit strategies. In this case, BOOM was first bought back in mid-January on seeing the Morning Star signal. Its lackluster movement after that signal could be credited to the 50-day moving average. Once it broke through at the end of January, the 50-day moving average acted as support. But more importantly, the slow uptrend after the slow downtrend was now giving the implications that a Fry Pan Bottom was forming.

Technical analysis training is greatly simplified when incorporating the 12 major Candlestick signals. Many technical analysis training programs concentrate on specific criteria. The major benefit of Candlestick analysis is that it can be applied to any technical analysis method. Understanding the investment psychology that forms Candlestick signals dramatically improves an investors understanding of what is occurring in a trend. Being able to analyze what is happening at important support and resistance levels allows the Candlestick investor to establish positions at optimal levels.

Whether an experienced investor or just learning, applying Candlestick signals into technical analysis training takes the guesswork out of investment decisions. The information provided by the signals can create consistent profits in any trading entity. The commodity trader, Forex trader, and option trader can incorporate the Candlestick signals into their technical analysis training as easily as any stock trading program. The candlestick charts make the visualization of trend reversals very easy to see.

The Candlestick Forum will be producing an extensive technical analysis training program for the options trader. The signals provide an excellent format for evaluating direction and magnitude of price movement. These two factors, when correctly analyzed, provide the opportunity to make extensive profits in the options market.

The Candlestick Forum option technical analysis training will involve analyzing the correct option strategy based on the potential magnitude of a move during particular time constraints, expiration dates. Having the ability to project direction is a major stumbling block in most investment programs. The Candlestick signals greatly alleviate that problem.

Being able to use the Candlestick signals to analyze the WYNN chart at the beginning of July made for a very compelling option trade. The Bullish Harami on the first day of July demonstrated that the selling had stopped. The following day showed confirmation buying. The 50 day moving average came into play. Additionally, the potential for a Scoop pattern to develop could be observed.

Wynn

Putting these factors into our technical analysis training provided an optimal option trading strategy. One strategy involved buying the July and August 50 calls. The premiums were relatively low due to a lack of great amounts of positive investor sentiment. The stop loss target was simple, the low of the last day of June’s trading.

The combination of buying calls and selling puts provided a highly profitable trade scenario. Put premiums were still relatively high because investor sentiment had not turned positive for most investors. The Candlestick signals revealed that potential. Opportunities to double, triple, quadruple profit returns become reasonably obtainable when incorporating simple Candlestick analysis techniques. Watch for additional option trading strategy information being put forth in the members stock pick commentary.

Market Direction – The markets had an opportunity to sell off early in the week. The Dow formed an Evening Star signal which was negated the next day, no selling confirmation. The past two days have shown closes above the recent peak of mid-June. Stochastics still maintain an upward direction indicating that the uptrend may persist.

DOW

The NASDAQ also had the opportunity to create some “sell” signals but negated the selling with a Kicker signal to the upside on Tuesday. Although the stochastics are in an overbought area, the buying has shown good strength.

NASDAQ

Crude Oil prices appear to be weakening, the Bearish Engulfing signal of two weeks ago is still in effect. The 50 day moving average could be a support level but that implies at least a few more days of weaker Crude Oil prices. This, occurring at the same time that interest rates appear to be remaining relatively stable, produces a positive scenario for the economy. Interest rates remaining low and oil prices appearing to be backing off could lead to more confidence in the equity markets.
 

The most successful stock traders keep a trading journal, they have a stock trading plan, and they constantly document their trades in their journal. Not only do they keep this journal, but they know what information they must document in the journal and they do it every time they trade. They keep a thorough and detailed record of every trade and the information below in order to grow as a trader and to prevent themselves from making recurring mistakes when trading stock.

1. Numbers – Keep a trading journal that contains information on your key markets. Donft just read stock charts but write down the highs, lows, close, and volume of those markets that you follow as well as your most important technical indicators. This will keep you in tune with the markets.
2. Record Every Trade – As stated above you must record every trade you make, not just when you feel like it!
3. Record your Feelings and your Thoughts – In order to fully comprehend why you performed a specific action when you place a trade, you must document how you felt when you placed the trade as well as your though process that occurred. The psychology of investing tells us that you must not only understand the technical aspects of stock trading, but you must also understand the emotional aspects as well. Thoughts and feelings shape your behavior so it makes sense that you would want to document these things as you place a trade.
4. Document your Strengths and Weaknesses – You must document in your trading journal, your strengths and your weaknesses so that you know what you are good at what you need to work on. You will always have things that you need to improve upon when you trade stock, and the hard work is never over.
5. Develop a Trading Plan – You must have a trading plan before you even begin trading in the stock market, and you must also document as part of your trading plan, how you will work to overcome your weaknesses. Just identifying your weaknesses is not enough; you need to implement an action plan as to how specifically you will overcome your limitations. Focus on your strengths to help you do this.
6. Track Performance – You must track your performance in your trading journal. Your personal data will show you not only your progress but again, where you have the need to improve. Track your wins vs. your losses and ensure that you are winning overall. If you are losing overall, then you will need to take a step back and reevaluate your trading plan and trading strategies.
7. Journal Everyday – You must document in your journal every single day you trade. Go back and review and analyze what you have written. It does not do you any good to write it all down if you never revisit it. Use your journal in part as a workbook to improve your trading. You will be amazed at how much you learn from yourself!

Remember, you are only as good as you make yourself. Have a trading plan, document your trades, and trade with discipline and you should reach your true trading potential.

Market Direction

Both the Dow and the NASDAQ formed a Doji in today’s trading. This does not necessarily mean the uptrend has come to an end. However, the advantages a candlestick investor derives from knowing what a Doji represents allows for the preparation of the next days trading strategy. The uptrend is still in progress. However, a Doji has formed in the overbought conditions. Positive trading on the open tomorrow would indicate the uptrend remains in progress. Weakness on tomorrow’s open would demonstrate today’s indecision has now produced a high probability scenario for a profit-taking pullback.

DOW

As we have seen in this recent uptrend, the pullbacks have been very short-lived. Either a two or three day pullback was followed by the next bullish uptrend. In most cases, the profit-taking ended very quickly. This created a decision making process. Was this the time to take profits or was this just a pullback during an uptrend? If the uptrend continues to look as if it is the predominant analytical factor but there appears to be a reversal, maybe profit taking, should I sell a profitable position and be prepared to buy it back if the uptrend continues? This is a question most investors have to face. But there is another solution.

Option trading is usually considered for  trying to make large, leveraged profits from a price move. They can also be used effectively for protecting profits. The use of candlestick signals allows an investor to analyze when a price reversal should be occurring. The price reversal could be merely profit taking or it “could” be the beginning of a major reversal. Not knowing which it could be, there are some very simple options strategies that can be put into place.

Option strategies are merely a tool that exploits the information found in candlestick signals and patterns. As illustrated in our recent recommendations of Chesapeake Energy Corp., The Hanging Man signal, followed by selling, produces an extremely high probability situation that a pullback in price is about to occur. Strong price move has ramifications. It could be the pre-requisite for a Jay hook pattern. The price could come down and test the T-line. A bounce up from the tee line would indicate the Jay hook pattern was in progress. Or this could be the top of an uptrend and a major reversal has occurred. What options strategies would be beneficial under these circumstances?

CHK

If the market opens weaker tomorrow, and it is easily visualized that a Hanging Man signal was confirmed in today’s trading, what would be the logical conclusion? Probably CHK would selloff. Would it support on the tee line? That we do not know. A strategy for a one-day option trade could be to buy a September 28 put for $.40. If the market sold off hard tomorrow, testing the tee line at approximately the $26.85 level, holding the stock would have lost approximately $1.15. Buying the September 28 put for $.40 in the morning may now have moved to $1.15 when the price did test the tee line. At that time, what is the important factor we are looking for at that level? Whether the price held the tee line or not.

If the price moves down to the T-line, the put trade is closed. A 70 cent gain in the option offsets the $1.15 loss of the stock. At this point, a better decision making process can be made. If the price closes near the tee line, what should be watched for the next day? Whether the price holds the tee line or not. That decision can be made without a major move to get to that level. The $.40 was insurance to offset a price move. That has occurred on the previous trading day utilizing a put to help offset the loss required to get to the tee line.

Candlestick analysis utilizes options strategies to exploit large profits out of the market or protect existing profits. The Candlestick Forum will be presenting a Two day option trading program on September 26 and 27th. Click here for details. Option trading strategies are very simple. It is knowing how to apply those simple strategies with the correct candlestick analysis that will greatly improve option trading returns. Have you ever wondered why some people have had to spend thousands upon thousands of dollars to learn sophisticated option strategies that don’t seem to work? Then they have to go back and spend more money to learn why they are not making money with option strategies? That does not need to be done! Candlestick analysis is merely the graphic analysis of what investor sentiment is doing. That is the most important aspect of a successful trade. Once you have learned that, utilizing simple option trading strategies will produce very large profits without spending mega-thousands to learn how to do it.

Chat session tonight at 8 p.m. ET – we will be looking at a few very simple but effective options strategies in conjunction with candlestick analysis.

Good investing,

The Candlestick Trading Team

This Week’s Special

Last week to Save 50% OFF Options Trading Course

Click here for details

Annual Membership Special – Receive an Extra Month + Bonus

Click here for details

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