TradingSmarts.com Newsletter

 

 

February 2004

 

 

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IN THIS ISSUE

 

 

Hi gang!  Thanks for coming back!  And, how was your month?  Lots of good reads this month.

 

Online version:

www.tradingsmarts.com/newsletter0204.htm

 

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www.tradingsmarts.com/newsletterwhitelisting.htm

 

One vital thing you can do that would greatly assist us in delivering this Newsletter to you, no matter what e-mail program you are using, is for you to add the following address to your address book: subscribe@tradingsmarts.com

 

Thank you in advance!

   

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3.

 

4.

 

5.

 

6.

 

7.

 

8.

 

9.

Past Editions

Managed Accounts

 

Going, Going, Gone

 

Mutual Fund in a Stock

 

Bonds with Pivots Program

 

The Forex: The Hottest Market

 

Hot Commodities, Currencies, Stocks

 

Watching the Grass Grow with Futures Options

 

Market Commentary: The Good, the Bad, and the Ugly

 

(Please click on any link above to go to the desired topic.)

 

(Please check out the trading tips at the end of Section 7.) 

 

If you have any questions regarding this Newsletter or its contents, please contact prbain@tradingsmarts.com  Please do not reply to the “From” address in this e-mail.  Thank you!

 

Please don't miss Section 3 of the last Newsletter for the announcement of a new service. You will find it by clicking here: stock market successful trading strategies new service

 

You will find a short-but-sweet trading strategy from W. D. Gann, and lots of new stuff, at the beginning of Section 6 in this Newsletter.  Just click on the Forex link above (No. 6).

 

And, for all you Forex traders out there, new and old, don't miss a trader's hot new addition to my trading strategy towards the end of Section 6 - in the yellow box - in last month's Newsletter: currency trading strategy

 

Greetings from Peter at www.TradingSmarts.com  You are receiving this Newsletter because you either subscribed to it at my site, or bought one of my many products.  It is e-mailed only to those participants who opted in voluntarily, and is not sent to unwilling partners.  Your e-mail address will never be given away to a third party under any circumstance.  We do not do any third-party advertising.  So, we will not flood you with one offer after another from outside sources.  Thank you for your business and readership!  We value you as a customer!

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The TradingSmarts Newsletter plumbs the profundities of the markets, and issues forth 'piranha' trading strategies.  

 

Please don’t click away or delete too soon, or you’ll miss my commodity trading rules, currency trading strategy, and stock market successful trading strategies coming up shortly.  Also, you will find commodity, currency, and stock picks of the month later on in this Newsletter.

 

You should view this Newsletter while you are connected to the Internet, so that you can see the imbedded charts (if any) and graphics.  It may take a while for the charts to load, if you have a slow connection, so don’t panic. 

     

Help! I need 1,401 new subscribers by 6:32 am February 17th.  Please feel free to forward this Newsletter to three (or more) of your business associates, colleagues, family members, friends, neighbors, and relatives, and urge them to subscribe by going to www.TradingSmarts.com and accepting the offer when they click away from that page.  Thank you!  You are encouraged to do so by sending this Newsletter along in its entirety, but portions may not be reproduced or disseminated separately, as it is copyright protected.  Thank you for acknowledging this!

 

If those that you send this Newsletter on to have pop-up blockers in place, that will prevent them from subscribing.  In such cases, please have them let me know, and I'll do the subscribing for them: prbain@tradingsmarts.com

 

Peter Sez - Peter’s Rants 'n Raves: Yeah, the U.S. dollar is down, but the U.S. is not out.  You're in for a shock when you find out how much money has been pouring into the U.S. lately.  Check it out at: stock market successful trading strategies US

 

And, while you're at it, check these links out too:

 

U.S. Dollar Collapse: www.tradingsmarts.com/newsletterusdollarcollapse.htm

U.S. Dollar Jitters: www.tradingsmarts.com/newslettergreenbackjitters.htm

U.S. Dollar Protection: www.tradingsmarts.com/newsletterusdollarindexput.htm

U.S Dollar - What Soros Thinks: www.tradingsmarts.com/newslettersorosonthedollar.htm

U.S. Dollar - The Straight Skinny: www.tradingsmarts.com/newsletterusdollarstraightskinny.htm

U.S. Dollar Woes - Its Future: www.tradingsmarts.com/newsletterdollartumble.htm

Other Useful Links:

www.tradingsmarts.com/newsletterbackissues.htm  


Quote of the Month: "Find the trend whose premise is false," says George Soros, "and bet against it."

 

Got Some Success Stories? If you have a story to tell, please let me know, and I’ll publish it right here – in the very next issue.  Don’t be bashful.  Share and share alike.  Share your secrets with my wide audience.  We won’t live long enough to make all the mistakes imaginable in this business.  So, let’s help each other.  I don’t know all the answers.  I am sure you know some real beauts.

 

1.

Past Editions

 

For those of you who missed previous issues of this Newsletter, you can read them online by going to: commodity trading rules, currency trading strategy, and stock market successful trading strategies  

 

If your trading is all foam and no beer, be sure to read my Newsletter on a regular basis.  And, please send me suggestions for things you want to hear about.

 

2.  

Managed Accounts

 

As a service to my valued readership, I am going to give you some pointers on where to park your money in Forex managed accounts, which seems to be a hot topic these days.  But, before I get into it, I should point out that I do not benefit by sharing this information with you in any way.  This is strictly for your information, and you should do your own due diligence.

The minimum for Dynex 10 to 1 is 20k, and the 5 to 1 is 40k.  The fees are based upon the leveraged trading size at .1% per month.  For example, if a client put in 20 k in the 10 to 1, his leverage would allow a trading size of 200,000 x .1%.  The trader also makes an incentive fee of 25% of profits above the high water mark.  The fees are detailed at dynexcorp.com.

According to one of my customers, an acquaintance of his, who has been trading FX since May, and doing VERY well off the daily chart, has researched recommendation services extensively.  He has it down to two:

Pronet Analytics in England (1,000 pounds a month to subscribe, but with a fantastic hit rate); and,

Global markets (USD$700 a month).  He's just trialing them now.

If you know of any other services that rate highly in your opinion, please let me know: prbain@tradingsmarts.com


If you want to hone your trading skills in commodities, currencies, stocks, or markets in general, get the scoop at: commodity trading rules, currency trading strategy, and stock market successful trading strategies         

3.  

Going, Going, Gone

 

Smith Barney's Alan Shaw is 65 years old, and is a 45-year veteran of Wall Street.  Probably the dean of technical analysis on Wall Street, he received the No. 1 ranking for technical analysis on Wall Street in a survey by Institutional Investor magazine last year along with colleague Louise Yamada.

 

Mr. Shaw is of the opinion that the latest market rally will be over some time in the second half of this year.  He cites as proof the lessons learned in the history books, wherein we're only supposed to experience one bull market run in our lifetime.

 

That rally for us would have been the one just ended the one that started in 1982 and ended in 1999.  Any gains now are taking place within the context of a longer-term bear market.  Watch out below.  Housing prices too.

 

I share his opinion, and have been calling for an 'up-market' until the April - November timeframe more like November now. 

 

Mr. Shaw is high on basic-materials stocks, such as Alcoa (the world's largest maker of aluminum), Inco (the world's second largest nickel producer), and Newmont Mining Corp. (the No. 1 producer of gold).  He also likes Xerox (the largest supplier of U.S. copiers), and sees its shares doubling.  Other companies he likes are Cooper Industries Limited, Ingersoll-Rand Co., and Waste Management Inc.

 

According to Mr. Shaw, commodities are in the early stages of a major bull market.  Please see the next section below for confirming evidence and another way to play basic materials without the risk.

 


 

Get the drill on trading at: commodity trading rules, currency trading strategy, and stock market successful trading strategies

 

4.  

Mutual Fund in a Stock

 

For you commodities sports fans out there, you're gonna love this one.  Anglo American (AAUK:NASDAQ) is a commodities conglomerate.  Anglo American has interests in base metals, coal, diamonds, ferrous metals, gold, industrial minerals, and platinum.  Think of it as a natural resources mutual fund with a precious metals component.  You get lots of diversification here, but without the egregious management expense ratio associated with a mutual fund.

 

If you take a look at its chart at BigCharts.com, you will notice that it is trading at a very reasonable price (US$22.13 as at January 19, 2004).  It also has a nice chart pattern consistently up for the last six months.  If you would like to know how to pick your entry point on this stock, drop me a line: prbain@tradingsmarts.com

 

Anglo American trades at just 20 times earnings, and has a 2.3% dividend yield.  Its astute management team have grown the earnings per share by almost 60% over the past five years.

 

This is a nice way to get in on rising commodity prices, without taking on the risk associated with any one sector.

 

It could very well be that the outlook for commodity prices is bullish.  Add to that the phenomenal growth rates of China and its environs, and you can easily see that the demand for raw materials and luxury goods out of these countries will only add fuel to the growth potential of companies such as this one.

 

Please see the section above this one for more on the future of commodity prices.

 

5.  

Bonds with Pivots Program

 

"Here is how to make your Pivots Program system work for Bonds:

1) Open your spreadsheet.
2) Click on the column that has your prices.
3) With the column highlighted, go to 'Format,' click on 'Cells,' then go to 'Number.'
4) At 'Number,' go to 'Custom.'
5) Where you see '# ??/16,' change to '# ??/32.'
6) And there you have it sports' fans!

Only problem is that we have to enter the price as 112. 17/32, rather than 11217, or 112 ^17; but it works never the less. There may be a better way to program it, but I don't know how at this time. I tried to make it work in FileMaker Pro, but the program did not have a function for 32s. I found your calculations from your book 'How To Trade Like a Pro in One Hour.'"

 

Thanks to Charles D. L. for this! If you would like to know which service he uses to trade bonds with, please let me know: prbain@tradingsmarts.com It has a pretty cool tool that automatically calculates and plots the support and resistance lines for you.

 


 

You will find the whole shebang on trading in my book by clicking here: stock market successful trading strategies

 

6.  

The Forex: The Hottest Market

Okay, I'll bite ... why the Forex?

Forex trading has been catching the eye of day and swing traders lately because of the contraction of price movement in stocks and indexes over the past few years. 

To illustrate, Amazon's 20-day average true range (ATR) was $10.30 January 29, 1999. The ATR was a meager $1.93 October 31, 2003. What this means, of course, is that it now takes more than a week for Amazon to cover the same amount of territory that it did in a single day during the heady days before the STOCKWRECK, rendering intraday trading much less attractive to scalpers.

Consider that the euro's ATR is 76 pips on any given day, and you'll soon realize why traders are flocking to the Forex.  It is 30 times the size of all U.S. equity markets put together, it never closes, and it has tons of liquidity.  And, you pay no commissions.  And, and, and ... I could go on forever.

One simple implementation of a swing trading idea came from W. D. Gann. He posited that, if two consecutive bars made lower lows, a downswing would ensue, while an upswing would occur if two consecutive bars made higher highs. Don’t you just love simple things?

If you would like to know how to learn how to trade the Forex in six weeks or less, please send me a blank e-mail with 'Six Weeks' in the subject line.

Or, if you would like a free report on making easy money with the Canadian dollar, Swiss franc, and the U.S. dollar, please send me a blank e-mail with 'Easy Money' in the subject line.

Currency Update:

The U.S. Dollar is a deadly falling knife.

Down, down, down she goes … The U.S. dollar could drop 6% from its current level to US$1.35 per euro. Why? The government’s budget deficit is big; the trade deficit is at a record level; foreign investors are losing interest in the dollar. The dollar weakens without foreign money funding the twin deficits.

The good news is U.S. businesses reap the benefits of translating their earnings from a strong euro into a weak dollar. The United States is in the sweet spot in the current currency conflict. A weaker dollar is slowing the trade deficit by making their exports cheaper.

And ... the current account is leveling off by US$100-billion.

However ... Bush surely will not want to head into the final months of his campaign with a wilting dollar ... because the dollar in part reflects on the  strength of the economy.  He will want to do something about the optics is my guess.

Please read why you shouldn't kiss the U.S. off just yet at: currency trading strategy US

Other interesting reading on the U.S. dollar situation:

U.S. Dollar Collapse: www.tradingsmarts.com/newsletterusdollarcollapse.htm

U.S. Dollar Jitters: www.tradingsmarts.com/newslettergreenbackjitters.htm

U.S. Dollar Protection: www.tradingsmarts.com/newsletterusdollarindexput.htm

U.S Dollar - What Soros Thinks: www.tradingsmarts.com/newslettersorosonthedollar.htm

U.S. Dollar - The Straight Skinny: www.tradingsmarts.com/newsletterusdollarstraightskinny.htm

U.S. Dollar Woes - Its Future: www.tradingsmarts.com/newsletterdollartumble.htm

Other Useful Links:

www.tradingsmarts.com/newsletterbackissues.htm

Swiss Franc Play: www.tradingsmarts.com/newsletterswissfrancplay.htm

The Swiss franc ain't too shabby either these days.

Switzerland is also in an enviable position with its currency. It did not participate in the single European currency pact. The Swiss franc stood at 1.7 per dollar (US$0.59) in 2002. Today, it has risen 35% – far less than the 50% gain for the euro.

 

Learn how you can play the Swiss franc through one single stock purchase by clicking here: currency trading strategy Swiss franc

The Real Value of the Euro:

The average price of a Starbucks tall latte in America is the same as the average price of a Big Mac – US$2.80. The average price of a Starbucks tall latte in euro-area countries is 2.93 euros (US$3.70). This would suggest that the euro is about 30 per cent overvalued against the dollar, but the Canadian dollar is still undervalued against the U.S. buck.

European officials don't appear to be too choked up about their heady euro, indicating, "Let it rise." This while the BoC cut its target rate to 2.5%.

The fire was lit under the euro the week of January 12 after a euro group meeting of euro zone finance ministers and the ECB signaled a green light to buy back the euro after a  US5-cent decline that week.

The BoJ surprised us all ... by deciding to raise its target range for excess liquidity in the banking system a sign of their concern about the damage being inflicted on their exports by the strong yen.  

Thanks also to Victoria Keeling for this:

 

"I like your pivot points! I've been doing some "simple" trades off the hourly charts because you don't have to deal with the running of stops the way you do on a 15 min time frame. I use fibs but don't generally find them necessary. 230 pips in just two days. Add another 95 to that by buying one more contract at the second breakout!! With a decent account, one could add a contract at every trendline resistance break during this beautiful uptrend, and...WOW!!!


The Forex is so far superior to the stock market...sometimes, I feel like I'm dreaming!!!"

 

Thanks to George C. Smith for this:

 

"When getting the OHLC numbers from the hourly chart to calculate the pivot point numbers at FX Solutions, it is necessary to subtract three pips from the high bar number. For some reason, their charts tag on the bid price with a three-pip shadow.

Of course, this also makes it harder to see hammers and spinning tops, as well as double and triple tops in the making. I have been fooled more than once in 'seeing' a double top forming, only to realize when the new bar comes up, and the three-pip shadow is popped on top of the last bar, that I forgot once again about this three-pip ask price being added on. I do wish they would offer an option on their otherwise excellent platform software to remove these distorting upper shadows.

Anyway, those silly three extra pips on the EUR/USD pair, when clipped off, make the pivot point numbers far more accurate compared to yours from what I've seen."

 

Thanks to Vincent Chamberlain for this:

 

"I noticed that macd divergences on the 4 hour chart offers some powerful moves and signals besides the 1 hour chart. I have gotten to the point where I do not even look at the lower charts. I only pay attention the weekly, daily, 4 hour, and 1 hour charts. I only use the 15 minute or 5 minute charts to enter and exit my trades. I look for my signals on the higher charts, and the primary signal I look for is a DIVERGENCE! The lower charts always listen to the higher charts. Knowing this, along with pivot points and drawing the proper trendlines, has given me a tremendous edge."

 

FX Solutions' $100 Referral Program:


FX Solutions offers existing customers $100 in additional equity for referring a new customer to them when the new customer opens an account of $1,000 or more. This is just one of our ways of saying thank you for being an FX Solutions customer, and introducing other Forex traders to FX Solutions' advantages. It's simple for new customers to help you earn your additional equity. Simply have them put "Referred by Your Name, FX Solutions Account ID#______" in the Comments or Questions section of the Account Application. Following the opening of that account, they will add $100 to the balance in your account.

 

Please let thomas@fxsol.com know when you do this, and please mention my name (Peter R. Bain) as the referring agent. Thanks you in advance!

FX Solutions' Innovative FLEXI Contracts:

FX Solutions provides the foreign exchange trader with the best trading package, including rapid trade execution, the narrowest price spreads, superior trading tools, customer support and live access to vital market information. The package includes the FLEXI contract, offered exclusively by FX Solutions, which allows you to choose a contract size which best suits your trading style.

FLEXI Contract:

Contract Size Currency Units
 1K       1,000
 5K       5,000
 10K ("Mini" Contract)       10,000
 50K       50,000
 100K ("Standard" Contract)       100,000

 

Margin Advantage at FX Solutions:

FX Solutions also offers a significant margin advantage to foreign exchange traders. Margin at FX Solutions is calculated on a real-time basis in full compliance with NFA regulations. Many other brokers instead use arbitrary margin requirements, which overcharge traders, therefore reducing the number of trades that can be executed.

Equity Bonus at FX Solutions:

In addition to all of these advantages, open an account of US$3,000 or more by March 1, 2004 and FX Solutions will add US$250 in equity to your account. Existing FX Solutions' clients that deposit US$3,000 or more into their account by March 1, 2004 are also eligible to receive a $250 equity bonus.

Dang!  EgadGeez!  Are you sick ’n tired of being sick ’n tired of feeling like a klutz because you're only eking out anemic returns caused by #@&*! snafus in the other markets?  Feel like you’re always on tenterhooks?  Feel like you’re dogged by bad habits, hither and thither with your trading, and at the end of your tether?  Is your trading vexing you, and got you in a funk?

Thinking of switching to another market?  Have you mulled the possibility of the Forex yet?  What about a currency trading strategy to go with it?  Well then, stanch your losses and head on over to the Forex.  Brook nothing less than the best.  Get over that feeling that the ground is rushing up to meet you.

If you were awash in cash, I’m sure you wouldn’t be reading this.  Thin people don’t usually go to Weight Watchers.

The trading world is abuzz with talk about the Forex, and my currency trading strategy is garnering a lota hoopla.  Action-phobic traders are agog over my program.  It will quickly rid you of your feeling like you’re a beginner pointing your skis down a double-diamond run, and keep you from swimming against the tide.  No rarefied expertise required.

Day trading (as well as position trading) is alive and well in the Forex, which harkens back to the heady days of the 90s.  To paraphrase Mark Twain, “Reports of day trading’s death are greatly exaggerated.”  The jig is not up at the Forex.  Ardent day traders are rah-rah again, and the Forex is leaving the other markets choking in its dust.

Stop being hobbled by bad habits, reminiscing about the frothy 90s, and lamenting the past.  If you are at all wistful about the heady days of the stock market, then the Forex is where you belong.  Never any set-backs there.  Time to get giddy again.  Say bye-bye to the other markets for good.  The Forex is not some quiet backwater of the trading world.  There’s a whiff of the bubbly go-go days of 1999 in the air again, and it’s all happening at the Forex.  I call it “nosebleed trading on steroids.”   

The quintessence of TA trading … The ubiquitous Forex does $1.5 trillion per day, which is 30 times the size of all U.S. equity markets – 50 times larger than the NYSE alone!  The $30 billion-per-day futures market pales by comparison.  Ninety-five per cent of all currency trading is conducted over the Forex.  By comparison, the currency futures market is shrinking, and represents only one percent of the size of the cash market.

The largesse of the Forex … It is the largest financial market, and is always liquid 24X7.  It is not subject to engineering by any one entity.  And, the average daily range for the four major pairs is US$1,040 per lot.  Compare that to the other markets, and you’ll soon discover why the Forex is attracting so much attention these days.

Most professional traders catch only three-to-four really great trades a week, if that!  Not so with the Forex – especially with my currency trading strategy.  Here, the timeframe is more like a day.  And, a professional doesn’t have to worry about 7,800 stocks, or 72 commodities, and all the underlying Byzantine rules that are larded on those tradables.  With the Forex, a trader only has to think about the four major currency pairs – and pure technical analysis.  The average daily range of 104 pips (read, US$1,040 per lot) for all four pairs handed us far surpasses that of any other market.  It also has a much longer “length of line” (intraday swings), which offers more “swing-trading” opportunities.  Lots of action for both novice and professional alike.  Salad days are here at the Forex, where money doesn't get short shrift!

The two venerable Forex market maker brokers I personally endorse, after a lot of input from other traders, research, and soul searching, offer superior dealing software, fast and efficient execution, instant online trading, and charts – all for F*R*E*E.  The efficiency of trading with either of these two market makers means that you no longer have to pay commissions on your futures or stock trades – and Forex trading is commission-F*R*E*E as always.  Their F*R*E*E online software improves your trading performance by giving you the edge in execution, market information, and account management.  Combine either robust platform with my currency trading strategy, and you’ve got a winner.

To preview the trading software and register for a free demo account, click here: currency trading strategy cbfx for offering number one, and click here: currency trading strategy fxsol for offering number two.  They’re both equally as good, but I’ll let you be the judge as to which one you like the best.  When you open a funded account at either of these two locations, please mention my name (Peter R. Bain) in the application, and I’ll support you all the way to the bank.  Ka-Ching!

When you let me know that you have opened your funded account, you will immediately get access to my own personal Forex trading examples on a daily basis, and receive a “f*r*e*e” copy of my e-book on my own personal currency trading strategy for the Forex called “Before You Press Enter” – a treasure trove of unvarnished truth about trading the Forex, that even spells out the idiom of that market – just for the asking.  Let me know when your account is open, and they’re both yours for F*R*E*E.  One heckuva deal.  You will be over the top.  See you there.

With a demo account at either location, you can trade “virtual” money, until you feel comfortable with the process.

Don’t get me wrong.  I still like the other markets too.  But, the nascent Forex is the new high viz biz, and it’s the hot “flavor de jour.”  If you like futures, you’ll LOVE the Forex!  It will really get your trading mojo going.  What’s not to love?  “EVERYBODY’S TRADING IT” is reason enough for you to trade it too.

Too much of a good thing isn’t too much of a good thing when you’re trading the Forex.  No ephemeral success stories or namby-pamby trading here.  Bling, bling!  Enjoy!  Get ready to shoot the lights out.

I recently spoke with a long-time stock broker who confided in me that he wished he had discovered the Forex a lot sooner.  He just recently saw the light, and made the switch.  It’s never too late.

Come on.  Admit it.  I’ve whetted your curiosity just a tad, haven’t I?  Right?  Thirty days from now you’ll either be a Forex trader, or just 30 days older.  Don’t be a dilly-dallier.  Quit dawdling, get over your reticence, and do it now.  “The secret of getting ahead is getting started.”  (Mark Twain)

And so, kerchief to cheek, kiss your old trading habits au revoir, and get gung ho again.  This could just be the underpinning to your future success.  No more quashed hopes.  Hurrah for the Forex.  It is becoming a “de rigueur” fact of life.

I get tons of kudos about my commodity trading rules, currency trading strategy, and stock market successful trading strategies on a regular basis, but here is just one of the more recent ones, courtesy Manny Sousa, who has been a customer of mine for a couple years:  

"Your material is great. I have already gone over it twice since receiving it on Friday evening, and plan to review it many more times till I get everything down pat. I am not a complete novice at this, but my previous try at the Forex got off to a good start. I had opened a Forex account with five grand, and within two months I had gotten it to 15. I thought I was doing ok till I joined this service that emailed me buy points and sell points. That totally blew away my account. At that point, I left the Forex for a few months till now, until I discovered your course and pivot system. I believe I have your pivot system figured out pretty well, and I am extremely ecstatic about putting it too use."

"Just to let you know that last night your pivots where right on the money. This is really exciting. I got the pivot points down pat and wow, Peter, you're right on the money."

And, these just in:

"Hi Peter

Long time no hear. How are you?

A friend of mine by the name of Dr. David Paul subscribed to your trading system. He is a very astute trader, and is arguably the most knowledgeable trader I have ever met. He trades almost any market (mostly Forex), with outstanding results. He phoned me to enquire about your system, as he saw my testimonial on your website. I only gave the best, as I truly believe your system is fantastic.

I have used your system to trade just about any market from DAX, FTSE 100, DOW, S&P500 futures, stocks, and the Forex Market. Your system worked on all the markets. In fact, I showed a friend of mine not so long ago (I was trading GBP/USD on the Forex) and, up to today, he still thinks I performed some magical trick on him. I never used any indicators. All I did was plot the lines, and the reversals took place exactly on the numbers. The uncanny thing is that the numbers were obscure, such as 1.7686 and 1.6988, and not round numbers. We even tried using it on very short time frames, such as 1 min data, which then blew him totally away, as the candles closed exactly on the numbers. If you have any skeptics out there, please refer them to me.

My email to you is simply to say hello and all is well on my side.

Fondest regards."

Mark van Greunen, South Africa, January 28/04

"The performance to date in using your system is outstanding."

Bruce Weir, Australia

 
"I have been studying your Forex material for the last couple of months, and cannot describe how impressed I am with your system."

Mick Smith

"First of all, I don’t have to buy your info. to know that you are the real deal!!!!! YOU ARE! I’m so used to information research that I can weed out the 'play' from the 'value.' I can say this even though I have not received your book yet."

Guido Gazzo

  

7.

Big Kahunas: Hot Commodities, Currencies, Stocks

 

Hot Commodities

Time to toot my own horn again.  Last month, I called for orange juice to tumble, and tumble it did big time.  January 21, orange juice futures in New York had their biggest drop in almost five years over concern that a record crop in Florida, the largest U.S. grower of the fruit, would overwhelm slumping demand.  The futures have plunged 34% in the past year, largely because of the Florida crop and declining U.S. juice consumption.  Many people have quit drinking orange juice thanks to the low-carbohydrate diet craze that spurns fruit.   

Feeling lucky?  Huge returns only come from brave actions.

According to my interpretation of the latest commitments of traders data, the following commodities futures represent good trading opportunities to the short side: coffee, corn, orange juice

I did see only one suitable long candidates: sugar.

Traders, trading these commodities at absurd prices, are practically giving their money away. Why not take it? You will be doing God's own work ... helping to teach valuable moral lessons to those who need them.  You might also be paid well in the process.

Please adhere to the 11 commodity trading rules outlined in the May/03 edition of this Newsletter.  You can read it by going to: commodity trading rules

Caution

Be sure to observe the rules around trading active contract months – i.e., open interest and volume.  FutureSource.com is a good “source” of such information.  That was all explained in my May issue of this Newsletter.  You can go there by clicking here: commodity trading rules 0503   

MACD is a good indicator to help you trade commodities.  You can read all about it at: commodity trading rules

My book was originally inspired by commodities futures, and the profit potential they stood for.  You too can get your very own copy at: commodity trading rules

Hot Currencies

The four major pairs (EUR/USD, USD/JPY, GBP/USD, USD/CHF) are always hot – each and every day of the week.  That never changes from session to session.  That’s the nice thing about trading currencies on the Forex.  You only have to worry about four entities, rather than 7,800 stocks, or 72 commodities.  Of course, you can get the latest at: currency trading strategy

Hot Stocks and Real Gems

 

With the market doing quite nicely, traders are piling in.  But, not SO fast.

 

In their rush to "do something," many of them are simply trading the WRONG stocks.

 

SO, trade only the very best marquee stocks, and play it safe … with the pared-down list of cult hotties ferreted out for you by the service I mentioned in Section 3 in my last Newsletter (stock market successful trading strategies new service), which wades through all the gobbledygook for you.  This is not just some ragtag collection.  No “dead man walking” stocks there.

 

Also, Broadcom (BRCM) beat estimates by three cents a share on a sharp jump in revenues. Another tech stock seeing higher prices is Flextronics (FLEX), up nearly ten percent. Flextronics also bested earnings estimates on a strong improvement in revenues the past year.
 

Trading Techniques

 

No Hail Mary passes or fancy knee-jerk gizmos here … just stuff that rocks – but, even Muhammad Ali lost a few fights.  However, it was he who said, "It ain't braggin' if you can do it." 

 

Say “Hasta La Vista” to bad trades.  Hit the “sweet spot” of trading successes with these trading tips, and don’t forget that almighty tight …

 

 

Don’t be condemned to repeat past mistakes.  Everyone knows how to buy, but few people know how to sell.  When you are trading momentum stocks, where you are dealing with hairy-fairy fundamentals, that’s perfectly okay, so long as you have an exit strategy in mind – worked out on paper before you press enter.  Don’t just gloss over the following information.  Please study it in detail.

 

For stocks: Please refer to section 7 of the July/03 newsletter: stock market successful trading strategies 0703

 

If you would like a “free” copy of my special report on trading stocks the way the Big Dogs do, just drop me a line: prbain@tradingsmarts.com

 

For information on shorting stocks, please follow this link: stock market successful trading strategies shorting

 

New: Moving Averages www.tradingsmarts.com/newslettermovingaverages.htm

 

New: The S&P 500 Game www.tradingsmarts.com/newslettersp500game.htm

 

New: Swing Trading - To swing or not to swing, that is the question.

www.tradingsmarts.com/newsletterswingorno.htm  

 

When is volume really volume? stock market successful trading strategies volume 

 

For currencies: Please see the Forex Section in the August/03 Newsletter: currency trading strategy 0803 and please be sure to read the entire newsletter for April/03: currency trading strategy 0403

 

For information on FX Solutions’ hedging, momentum, and statistical charting, as reported in the last Newsletter – for October – please go to that Newsletter by clicking here:  currency trading strategy 1003

 

New:

 

Combining Chart Patterns with Pivot Point Analysis: www.tradingsmarts.com/newsletterchartpatterns.htm

 

Currency Trading Strategy: www.tradingsmarts.com/newslettercurrencytradingstrategy.htm  

 

Currency Trading Strategy - Icing on the Cake www.tradingsmarts.com/newslettericingonthecake.htm

 

Forex Hedging (Currencies - Hedging Exchange Rates):

www.tradingsmarts.com/newsletterforexhedging.htm

 

Forex Interbank: www.tradingsmarts.com/newsletterforexinterbank.htm

 

Forex Trading Strategy: www.tradingsmarts.com/newsletterforextradingstrategy.htm

 

For commodities: Please go to the May/03 Newsletter: commodity trading rules 0503  Also, please visit the June/03 edition: commodity trading rules 0603  And, the September/03 issue: commodity trading rules 0903

 

For information on when to cut and run in a commodities trade, the meaning and use of the 200-day moving average, the purpose of trendlines, the Relative Strength Index indicator, and the “4-9-18 Formula,” please refer to the last edition of this Newsletter by going to: commodity trading rules, currency trading strategy, and stock market successful trading strategies 1003

 

For more information on the role commitments of traders data plays in trading commodities, please follow this link: commodity trading rules 

 

New:

 

Commitments of Traders - Funds: www.tradingsmarts.com/newslettercotfunds.htm

 

Futures: A real mish-mash of stuff – Backwardation, Bonds, Commercial Traders, Commodities, Contango, Federal Reserve, Futures Pricing, Government Deficits, Interest Rate Futures, Investment Funds, Supply and Demand, World Economy, Yield Curve

 

www.tradingsmarts.com/newsletterfuturesstuff.htm

 


 

Just some of the many trading gems you will find at: commodity trading rules, currency trading strategy, and stock market successful trading strategies

 

8.  

Watching the Grass Grow with Futures Options

 

Selling futures options is like watching an Iowa farmer's cornfield grow – no need to worry about the intricacies day traders face.  Here, you can sit back and be more objective about the market as a whole.

 
Option writing is not for the faint of heart, and should only be handled with an experienced professional, or after you have acquired sufficient knowledge to take the leap on your own.


The strategy is to sell far out-of-the-money options in futures markets where there are clear long term fundamentals – be they bullish or bearish – in the opposite direction to the market.  And, to also be aware of seasonal tendencies. Unless the market is moving sharply against your position, time value will eventually make you a winner.

When selling an option, an investor statistically has an approximate 80% chance of the option expiring worthless. Thus, if bearish a market, you would sell calls. If bullish, you would sell puts. The idea is to sell strike prices either far above or far below the current price of the futures market. Then, place a stop (perhaps 200% of the current value of the option), sit back and observe.

The benefit of always having time value working in your favor (eroding the option on a daily basis) can be a tremendous advantage with this strategy.


 

Options - To Cover or Go Naked: www.tradingsmarts.com/newslettercoveredornakedcall.htm

 

Are options dead? www.tradingsmarts.com/newsletterdeadoptions.htm

 

The Magic of QQQ Options: www.tradingsmarts.com/newsletterqqqoptionmagic.htm

 

Options Reading: www.tradingsmarts.com/newsletteroptionsreading.htm

 

Options - Synthetic Calls: www.tradingsmarts.com/newslettersyntheticcall.htm

 

Options Terminology: www.tradingsmarts.com/newsletteroptionsterminology.htm

 



My book addresses commodities, currencies, market indexes, stocks – and, of course, options too.  It’s all waiting for you with just one mouse click at:
commodity trading rules, currency trading strategy, and stock market successful trading strategies  

 

9.

Market Commentary: The Good, the Bad, and the Ugly

 

From 30,000 feet – A presidential election year, especially one in which the incumbent is running, is usually considered to be market-positive.  Even though historically the market fares better under Democrat reign, it would appear that sentiment is running in favor of a Bush reelection. Stay the course, and stay invested at least until the election.

 

Tech stocks don't usually fare all that well in the run-up to the election in that year.

 

Get this ... American consumer spending accounts for 14% of the entire world economy. Compare that to Washington's US$3-trillion debt, one-third of which is owed to China and Japan. Will they bolt? Not. Because, holding American debt is a form of export subsidies program to them.  They NEED the ever-spending American consumer. Keep that plastic going folks.

 

Read the China connection at: stock market successful trading strategies US

Other interesting reading on the U.S. dollar situation:

U.S. Dollar Collapse: www.tradingsmarts.com/newsletterusdollarcollapse.htm

U.S. Dollar Jitters: www.tradingsmarts.com/newslettergreenbackjitters.htm

U.S. Dollar Protection: www.tradingsmarts.com/newsletterusdollarindexput.htm

U.S Dollar - What Soros Thinks: www.tradingsmarts.com/newslettersorosonthedollar.htm

U.S. Dollar - The Straight Skinny: www.tradingsmarts.com/newsletterusdollarstraightskinny.htm

U.S. Dollar Woes - Its Future: www.tradingsmarts.com/newsletterdollartumble.htm

Other Useful Links:

www.tradingsmarts.com/newsletterbackissues.htm       

 

The latest market stats. – as at February 2/04:
 

Put/Call Ratio: .61 (For an explanation of the Put/Call Ratio, please click here: stock market successful trading strategies put/call)

 

$VIX Volatility Index (a.k.a. the Wall Street's market fear gauge): 17.11 (For an explanation of the VIX Indicator, please click here: stock market successful trading strategies vix)

 

For an update on the VIX, please click here: stock market successful trading strategies vix update

 

$TICK: 660.00 - The New York Stock Exchange (NYSE) this indicator, which measures up-ticks verses down-ticks on the NYSE.  This statistic summarizes the number of stocks that are increasing in price, versus those that are decreasing in price.  Readings above 1,400 are rare.  A spike in TICK to that level and beyond is a sign of aggressive buying, and helps to explain a rally that helps push stocks from negative to positive territory. 

 

NYSE/DOW Crash Index:  2 (invested)

 

NASDAQ 100/S&P 500 Crash Index:  -6/0 respectively (cash/invested)

 

A buy occurs when an index goes to a +6 from a sell, or a crash alert status.  A sell occurs when an index goes to a -6, and a crash alert occurs when an index hits -10.

 

NYSE Advancing/Declining Issues:  30636.00

 

COT (Commitments of Traders) – Commercial traders net positions

DJIA – Funds neutral; commercials neutral

NASDAQ 100 Stock Index – No clear direction

S&P 500 Stock Index –  Funds very short; commercials long   

 

 

If there is any part of this Newsletter than you cannot see because of the e-mail program you are using, please view it online at: commodity trading rules, currency trading strategy, and stock market successful trading strategies

Or, please send me an e-mail, and I’ll send you a PDF version of the Newsletter: prbain@tradingsmarts.com  It could be that you are not online while viewing the Newsletter, as we pull the charts and graphics down from our site – to save having to send them out with each e-mail copy of the Newsletter.  

If you don’t already have a copy of my internationally-acclaimed bookHow to Trade Like a Pro in One Hour” and associated software, you can get your very own copies for the price of dinner and a bad movie!  Get the whole enchilada at: commodity trading rules, currency trading strategy, and stock market successful trading strategies

The book and program are for traders who trade any market, not just the Forex.

Please feel free to send your inquiries, be they comments, feedback, questions or suggestions, to me at: prbain@tradingsmarts.com

If you have any ideas or suggestions for future articles, they would be most welcome.  I especially invite any trading tips, strategies or techniques you may have that you wish to bring forward, and share with others.  If I include them in future editions of this Newsletter, you will most certainly get proper credit and recognition.  You will also receive a free bonus from me for your time and trouble.    

Happy trades to you, and here’s to your health, happiness and good relationships!

Thank you for reading this Newsletter!  Go forth and multiply your income!

God bless!

Peter R. Bain
www.TradingSmarts.com

PS: I would be more than glad to put on a seminar in your area, if you could pull together a large enough audience to make it worth my while.

PPS: If you wish to unsubscribe from this newsletter, please send an e-mail to webmaster@tradingsmarts.com (Brad Du Preez, MCSE) 

Disclaimer:  I do not promote or make any promises about short-term predictions or daring speculations.

 

There is a risk to investing and trading, so please use money you have set aside for that purpose, and guard it with your life by using good money management practices and principles, and good trading technique.  Please don’t invest or trade money you can ill afford to lose. 

 

I am not responsible for your decisions, and subsequent actions, based on the information contained in this Newsletter. 

 

Please note: The Securities Commission in the jurisdiction where I live and work precludes me from giving you trading advice or recommendations when it comes to any form of security.  So, I present my picks for educational and informational purposes only, and do not personally benefit from their inclusion in this Newsletter, or for any other reason.  Nor am I imputing my views to you.  Please proceed at your own risk, should you decide to act upon any of the tradables mentioned in this Newsletter.

 

 

E-mail: prbain@tradingsmarts.com
Web site address: www.TradingSmarts.com

Copyright© 2003 by Peter R. Bain/All Rights Reserved

 

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