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How To Make A Full-Time Income Trading Less Than Part Time

Big Dogs Exposed

Sound familiar? You have spent years surfing the 'Net, and studying books and charts in search of commodity trading rules, a currency trading strategy, stock market successful trading strategies, or information on how to use commitments of traders data. All you really want is the 'Holy Grail' of entry techniques. You usually end up adding one indicator on top of another, switching from one guru to the next, until you are so confused and unsure of your entry system that you are unable to make entry decisions and stay organized. You get so distracted and frustrated that you quit watching the markets all together!

Shows you how FAST you can make money when the BIG DOGS make their move - by shamelessly copying this winning group . Even I am STILL surprised by how much power they have over ALL markets - not just commodities futures, currencies, and stocks.G

Newsletter - May 2003

This is an exact copy of the Newsletter e-mail-out.

Greetings! You are receiving this Newsletter because you either subscribed to it at my site or bought one of my 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 circumstances, I promise.

This Newsletter is issued on an if-as-and-when basis – at least once a quarter, but not more often than once a month.

This Newsletter is dedicated to traders around the world who are interested in trading commodities futures, currencies (FX and futures), markets and/or stocks. Obviously, I can’t cover all four bases in any one single edition of this Newsletter due to space limitations, and also out of respect for your time.

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

Other Editions

Commodity Trading Rules

Currency Trading Strategy

Stock Market Investing Basics

Stock Market Successful Trading Strategies

For those of you who missed other issues of this Newsletter, you can read them online by going to: Other Issues

Those issues deal primarily with commodity trading rules, a currency trading strategy, stock market investing basics, and stock market successful trading strategies.

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

Currency Trading Strategy

For those of you who missed the last issue of this Newsletter, you can read it online by going to currency trading strategy

That issue dealt primarily with the advantages of trading the Forex market, and provided a couple trading tips.

You will also find more at currency trading strategy

Please don’t miss my own personal Forex trading example for the month towards the end of this newsletter.

Commodity Trading Rules

This issue will deal primarily with commodities futures – more specifically commodity trading rules as they relate to silver – and the application of the MACD indicator. For a description of its use, please go to commodity trading rules

This issue will also cover the role COT and premium (backwardation in prices) play in determining the direction of the market. Also, I will give you an update on which commodity is shaping up as a good buy later on in the Newsletter.

One of the commodity trading rules traders employ to get a handle on activity levels in the commodities futures world is open interest, or the total number of outstanding contracts.

To dig even deeper, traders use another one of the commodity trading rules. This entails looking at the weekly Commitments of Traders report, which is published by the Commodity Futures Trading Commission. The report delineates the positions held by “non-commercials” (large speculators, like hedge funds), “commercials” (consumers of commodities, or those acting on their behalf, and producers), and the “non-reportable” category (small speculators). It enables you to see at a glance which way the speculative (“dumb”) money is being placed in relation to the smart money.

Of course, you don’t have to suffer through this report, as it is nicely charted and graphed at my favorite site. That is all explained in my book available at commodity trading rules

The three main entities needed to maintain a successful futures market are professional large traders, commercials and speculators.

According to my interpretation of the information at my favorite COT site mentioned above, the professional large traders were extremely short silver, and the commercials extremely long – as of April 23, 2003.

Of course, what I was looking for was an impending exodus of short money. Professional large traders had been holding large short positions, opposite a record-large net long position held by commercials.

The little guy (“dumb money”) buys the tops and sells the bottoms. Many of the commercials are producers that sell futures and deliver physical product against them; hence, they can afford to wait out their positions, as they will always be able to meet that obligation. On the other hand, small speculators can only sit on a position for so long, and are likely to exit quickly, if the market turns on them, and they start losing money.

Small speculators are a lot less consistent in their behavior than the large speculators. Large speculators (professional large traders) are the ones to watch. They react to particular price thresholds in a relatively predictable way. And, of course, the “big dogs” – the commercial traders – deserve your attention and respect, as they are the shakers and movers when it comes to setting commodity trading rules.

Large speculators buy or sell at specific price targets based on a trading model, and are less constrained by a lack of funds for running positions. Small traders don’t have deep enough pockets to ride out a position, or they can be chopped out of holding a position.

As of April 23, 2003, the large speculators were actually looking more exposed to a price advance in silver than the small speculators, who had already started to cut their short positions. Tidy profits were made buying silver in advance of this change in buying sentiment.

A whole new generation of investors and traders, who are fleeing the stock markets after the NASWRECK, are discovering commodities futures. But, the commodities futures market is no where near as big, or as popular, as the Forex. The commodities futures market does US$30 billion per day in trading volume, whereas the Forex that comes in at US$1.5 trillion. A few more zeros I would say.

As you will soon see as you read on, all you need are the right commodity trading rules to prosper in the commodities futures arena.

Okay, let’s take a look at the price chart for silver below to see what commodity trading rules led me to believe silver was a good buy.

Already knowing that the commitments of traders report for silver was indicating a price advance, I then focused my attention on looking for clues coming from price action. You will notice in the above chart the formation of a “1-2-3” or “W” bottom March 21, March 31, and April 2 respectively (the 1, 2 and 3 points). You will also notice the breakout point at the number 2 spot April 4. This, of course, was the time to go long, putting a stop underneath the number 1 location. As you can see, price then headed north. Pretty simple stuff once you get the hang of it.

You can see that MACD flagged a buy signal, and volume advanced as price moved up. For a description of how to use MACD, head on over to commodity trading rules

One further consideration is trendline analysis. I adhere to Tom DeMark’s definition and usage here, and basically rely on his interpretation as to when to exit such a trade. This is all covered in my book, available at commodity trading rules

Here are the major commodity trading rules to take into consideration before placing a trade:

11 Commodity Trading Rules for Picking

Major Turning Points-Bottoms/Tops

Volume must be at least 1,000

Use a two percent stop and trail it.

Open interest must be at least 10,000

Buy weakness (uptrend); sell strength (downtrend).

There must be at least 30 days left to contract expiry.

Look for divergence momentum to price, using MACD.

MACD, or your own favorite indicator, should signal a trade.

Where there is premium (backwardation), buy; don’t go short.

Weekly close should be four percent above/below previous week.

Look for extreme divergence between commercials/specs. in COT.

Check for seasonal tendency in relation to the commodity you picked.

For more on commodity trading rules and lessons not found in the curricula of Ivy League universities, please visit commodity trading rules

Hear what people are saying about my book ...

Jonathan Ong, Singapore: "I will never trade again without first looking at COT and your other advice ... made me want to buy your book again!!!"

Paul, U.K.: "I have been studying the accuracy of your (COT) indicator. It is excellent. Very powerful stuff. Thanks for the tip!"

Orlando Bustos, California: "I fully agree with you when you say if you want to be winner in this business you have to follow what the big dogs are doing."

John Kuzma, Alaska: "Got your book last night ... spent some time 'thumbing' and the rest looking at where I might have gone wrong on my trades last year vs. the COT data. All I can say is WOW! ... wish I knew that before."

For more kudos, please go to commodity trading rules

Of course, my book also covers currencies (Forex and futures), markets and stocks. There’s something in there for every market, every trader – new and old.

Thinking about the Forex? The trading world is abuzz with talk about the Forex. It 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 doesn’t even come close. 95% 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 Forex 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 drawing so much attention these days.

The two Forex market makers I personally recommend offer superior Internet dealing software, fast and efficient execution, instant online trading, charts – all for free. 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-free as always. Their free online software improves your trading performance by giving you the edge in execution, market information, and account management.

Most professional traders catch only three to four really great trades a week, if that! Not so with the Forex. 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 rules that accompany 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) 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!

To preview the trading software and register for a free demo account, click here (online option) for offering number one, and here for offering number two. They’re both equally as good, but 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. You’ll get access to my own personal Forex trading examples on a regular basis and a “free” copy of my brand new e-book on my own personal trading style for the Forex called “Before You Press Enter” – just for the asking. Let me know when your account is open, and they’re yours. See you at the top.

Don’t get me wrong. I like the other markets too. But, this is the new kid on the block, and it’s hot. If you like futures, you’ll LOVE the Forex! It will really get your trading mojo going. What’s not to like?

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.

Weekend Effect

A “weekend” effect exists in currency prices. “Good” news is released during the week when it can be acted on, and “bad” news is released on weekends when it is more difficult to respond to. Also, less information per day arrives on weekends; therefore, the overall effect on Forex rates is greater than during the week.

Turnaround Tuesday

Turnaround Tuesday is an age-old part of trading lore. The basic logic behind this phenomenon is that markets often over-react to news over the weekend, or on Monday morning, and thus Tuesday often goes in the opposite direction of Monday.

All-New Pivots Program

My Pivots Program was already popular before it was re-written by P. De Jager, which I thank him for. It is a little more user-friendly than the original version, as there is no manual updating of any values other than the open, high, low and close figures for the previous session. All other information is updated automatically; even the actual values for the last session are added when the next session’s values are entered. You can get your very own copy at commodity trading rules or currency trading strategy It comes automatically with my book.

Forex Chart of the Month

Price chart courtesy www.cbfx.com

It is typical to achieve good returns per lot on the Forex, similar to those indicated in the above chart, during any given 24-hour session. I would say the range is ~US$200 to >US$1,000 per lot. Hard to beat that in any other market! I know of one trader in South Africa who trades 55 lots at a time, and pulls in, on average, US$25,000 per day. Not too shabby to say the least!

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 Or, please send me an e-mail, and I’ll send you a Word doc. version of the Newsletter: prbain@tradingsmarts.com

If you don’t already have a copy of my now-famous book “How to Trade Like a Pro in One Hour” and associated “Pivots Program,” you can get your very own copies for the price of a dinner and a bad movie! All you have to do is click here: 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

Hot Stock

Cash America International (PWN/NYSE) has risen 11% this year, and hit a 52-week high Friday, April 11, 2003, after announcing that profit will exceed analyst expectations.

This U.S. company does brisk business in the pawn shop business – not exactly good news for the economy. Higher unemployment has forced many to cash in their jewelry, or living-room stereo, to make ends meet.

For you stock enthusiasts out there, don’t despair. I will be running an edition of this Newsletter on that topic in the not-too-distant future.

Hot Currencies

The four major pairs (EUR/USD, USD/JPY, GBP/USD, USD/CHF) are always hot – 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.

Hot Commodity

According to my interpretation of recent COT data and research as of April 26, 2003, Kansas (KCBT) Wheat is shaping up as a good buy. The commercial traders are extremely long with their positions, whereas the big and small specs. are equally short. This type of extreme divergence in sentiment is usually a classic set-up for an upward move.

MACD is a good indicator to help take you into this trade. If you don’t know how to use it, please go to commodity trading rules

Also, please adhere to the 11 commodity trading rules for picking bottoms posted earlier in this Newsletter.

Please feel free to pass this Newsletter on to your business associates, colleagues, family members, friends, relatives or neighbors. You are encouraged to do so by sending it along in its entirety, but portions may not be reproduced or disseminated separately as it is copyright protected. Thank you for acknowledging this!

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 for your time and trouble.

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

Thank you for reading this Newsletter! Have a great day!

Sincerely,

Peter R. Bain
www.TradingSmarts.com

PS: Help! I need 236,142 new subscribers by 6:32 am May 23rd. Please forward this Newsletter to three of your business associates, colleagues, family members, friends, relatives or neighbors, and urge them to subscribe here Thank you!

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

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

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How To Make A Full-Time Income Trading Less Than Part Time

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