The changes we’ve been planning at Trader’s Helping Traders seem to be coming together very quickly. In fact, we are planning to have the new goods to you by next weekend. I can hardly wait!

The focus is going to be totally on making you a better trader. Why? Because I remember all too well what it was like to be a struggling trader. When I began trading I had so many questions but no one to answer them. As a result I had to learn things hard way, which unfortunately cost me a lot of money in losses.

I remember what it is like stumbling through the markets with a small trading account. I remember not knowing which the best trades were, or even how to make them! I remember what it was like to loose $10K in the markets and have to start over from scratch.

But you know what? It doesn’t have to be that way!

We are making Trader’s Helping Traders into everything I wish I had when I began trading. We are going to cut into your learning curve to help you become a better trader faster.

In fact for the last few weeks, we’ve been working on ways to make your trading lives easier and more profitable than ever before. Not only will you get the usual great market analysis and educational pieces, but you’ll also get some new goodies that are really going to help in your quest to conquer the markets.

I can’t tell you about them just yet, you’re going to have to wait just a little bit longer, but I promise the wait will be worth it.

This is going to be almost as good as Christmas. ;-)

Enjoy this weeks issue!

After several weeks of tug-o-war between the bulls and the bears, it is beginning to look like corn has finally found its bottom. The market channelled for the latter part of the week between 233 ¼ and 230 ¼. While it was resisting going lower it did not commit to higher prices either. However given the seasonal tendencies and the oversold condition of the market I would expect to see higher prices very soon.

This Week:

If you followed the advice from last week you are probably already long corn from near the bottom of the channel with stops below the contract lows. This position will have about $175 risk to it. If you have not entered long yet, and would like to, a “safer” play is to wait for a breach of the top of the channel at 233 ¼ before committing to the trade. With stops below the bottom of the channel risk would be limited to $125.

The short term target is the heavy resistance at 238 ¾, from where I would not be too surprised to see a little bounce. I would not expect the market to pull back too far from here so you have the option of either exiting with profits or trailing stops in anticipation of a bounce.

Once corn has completed the pullback from 238 ¾ look for 249 to be the next upside target. Long term target would be the 50% retracement at 262.

I was a little annoyed at Cotton last week as the market failed to give the pullback we were looking for and rather made a bee-line to support at 5545, just a shade above the long term support we highlighted at 5516.

All is not lost however, as the market is showing strong support on this level; therefore I would look at initiating a long position to take advantage of a probable short term pullback.

This Week:

Those of you who saw my post at the Trader’s Helping Traders forum know that I entered a long position earlier last week when the market was showing support at 5545. For those of you looking to enter from where the market is now you could try to enter the market around 5580 with stops below support. If you are able to get an entry anywhere near here you would have about $225 at risk.

With the first upside target on the other side of the gap at 5735, profit potential for this short term trade is about $750, giving us a very acceptable 3:1 risk/reward ratio.

While there is some resistance around 5735 the hardest part about this resistance is the gap. Therefore if the market exceeds the 5735 target the next stop looks to be resistance around 5810, from where I might expect the market to resume the downtrend.

Long term the trend still seems to be bearish with a long term target of 5460.

Soybeans were another market that acted very predictably last week. The market broke above the resistance at 603 just as we hoped and posted a strong bullish rally through the previous high at 623 ½ before stalling on long term resistance at 637. From here the market is faltering slightly, so we might see a pullback in prices next week.

This Week:

While the overall trend for beans is still quite bullish we could see a pullback starting Monday. If the market breaches support at 625 ½, then there is not too much left to hold the market up. There is some mild support around 610; however the first real support is found at 606.

With stops above the high and an exit at 606, you could put on this trade for just over $400 risk and a profit potential of about $975, which is almost 2 ½:1 risk/reward.

As the market approaches 606 – 610, look for another opportunity to enter the market long. If entering near 606, stops for a long position should go at least below mild support at 602. Next upside target is resistance at 640.

Cattle gave us a bit of a surprise last week! While the market was setting up nicely for good shorting opportunity first off the resistance at 7175 and then again as the market tested the resistance at 7230, cattle prices exploded last Friday easily clearing the old contract highs.

This Week:

The bullish rally has a couple of things going against it. First off the market is just under substantial weekly support at 7355 followed by more long term support around 7415. This combined with the overbought nature of the market and the bearish seasonals are making look for shorting opportunities next week.

The strong close last Friday suggests that we could see the market push a little higher next week. This is a trade where the stop loss exit order is definitely more important than the entry order. Exit stops should be placed somewhere around 7420, just above the long term resistance. An entry short can be planned anywhere near Friday’s high.

If the market was cooperative you might be able to enter short near Friday’s close of 7335. With stops above the long term resistance you would have about $300 at risk. The first downside target is the support at 7150. Profit potential is just over $750, or about 2 ½:1 risk/reward.

Long term it looks as though the bears will keep the upper hand. Long term target is support at 6850.

Cocoa was pretty cooperative last week. If you are not currently short this market you need to ask yourself why not? Cocoa tipped its hand when, just as predicted, the market had problems overcoming the resistance at 2015. After four days of fighting to stay above this resistance level the market finally gave up and headed lower last Friday.

If you missed the boat going down don’t fret as we may see the market encounter support that could send prices higher once more.

This Week:

Now that cocoa is on the way down you could look for the market to find support at either 1905 or 1880. Ideally I’d like to see the market stall at the 1880 level for a couple of days to allow some confidence in taking a long position from here.

Entering long near 1880 with stops below the nearby support at 1850 would have approximately $300 at risk. The next upside target would be resistance just shy of the 50% retracement level at 2050, for a potential profit of just over $1700 per contract.

We could see another bounce at this level, but cocoa seems to have adopted a much more bullish feel the last few weeks. If the bull trend continues for the longer term look to 2130 as the next target.

Sugar was the “fly in the ointment” last week as the market ignored our support lines at 725, choosing instead to find support at 695. From here the market made a hesitant reversal and resumed the long term bull trend.

This Week:

The market is still thrashing about a bit as it struggles to find support. Ideally I would like to see the market hold where it is right now on the support at 713 - 716. There is a fair amount of support here and I think we will see it hold the market up. If we did see the market break 713 I doubt it would have the strength to get below 702; therefore I think this would be good place to place initial stops.

Entering above the 716 resistance with stops below 702 would have about $180 at risk.

From here look for the market to continue higher to the next significant resistance level at 762. Given the choppiness of last week’s trading I would not be surprised to see the market bounce here so it might be wise to use this as an exit target. Profit potential for the trade is approximately $500 or about 3:1 risk/reward.

Once the market is above 762, the next upside target is resistance at 790.

The Franc rounded out a very good week for us buy giving the pullback in prices we were looking for. Entering near the support at 7275 we were able to keep the risk fairly low ($625) while still having a good probability of success. While the market exceeded our expectations a little, exiting at the original target still yielded profits of over $1600 per contract.

This Week:

The Franc seems to be giving us another good opportunity this week, but in the opposite direction. The last couple of sessions have seen the market flinching as it gets closer to resistance at 7500. In anticipation of the resistance holding we can place an entry order near the 7476 resistance with stops above the 7500 resistance. Risk would be about $450 per contract, which is extremely low for a market like the Franc.

Downside target would be support at 7345. This would give us just over $1500 profit per contract.

From here I would expect the market to find support again and resume the bull trend. Next target to the upside would be the resistance just short of the contract highs at 7573.

Silver was another market that was very kind to us last week. In fact it was almost as though the market knew what was written about it and followed the directions to a tee. If you caught the market moving both ways, first short and then long, you could have picked up about $1200 per contract in about three days. Not too bad.

This Week:

The market moved a little further than expected and now finds itself against short and long term resistance. It looks as though the best plays for next week will be to the short side.

If we see the market give us another bounce off resistance at 483 that would give us a great opportunity to enter short from here. Stops should go above the strong resistance at 486 which would have about $250 at risk.

From here look for the market to test support at 465, which if used as a profit target would yield around $800 per contract, or a little better than 3:1 risk/reward. While a resumption of the bull trend from this level is possible, we may see the market attempt a 50% retracement of the last trend. In this case look for prices to settle at 460.

Long term the trend still looks bullish so look for a signal that the pullback is complete. Long term upside target is still resistance at 500.

While we are not stopped out yet, I suspect that we will be early next week as it looks as though the market could be pulling back; therefore we need to find another opportunity to trade this week.

The problem this week is that there are so many good opportunities that it is hard to choose just one; however our account size is still such that we can’t get into too many markets at once. So after reviewing the different options I think our best bet will be to give cotton another try this week.

In cotton we are trying to take advantage of a short term pullback. I am pretty confident that the market will hold support at 5545 while trying to fill the gap at 5735.

Getting a good entry is key to the success of this trade. If we can manage an entry around 5580 then we can keep the risk to a respectable $225 with a possible reward of about $750.

• Entry: 5579
• Stop Loss: 5534
• Dollar Risk: $225
• Profit Target: 5729
• Potential Profit: $750
• Risk/Reward Ratio: 3 1/3:1
• Degree of Risk: Moderate

This post is neither a solicitation to trade nor a recommendation of any strategy. Always consult your broker or advisor before attempting any trade. Commodity trading involves substantial risk of loss.

Answer:
Taking profits vs. letting the market run...probably the biggest problem facing a new trader.

My rule of thumb has been to let your account size determine your strategy. If you're trading a small account (ie. anything less than $10K) forget about the home run trades, you can't afford to wait for them.

Consistently banking $500 - $1000 per contract per trade will do wonders for your confidence and your account. Sure you *might* miss the really big trade but by exiting at a target, but most times by exiting at a target price you will be maximizing your profits vs. letting the market retreat to stop you out. Besides, you always have the option of re-entering the market if you feel you have exited too early.

Exiting on a target will also improve your risk/reward potential per trade, which in turn will give you more opportunities to take advantage of what the market is giving.

Most new traders lack the experience (and the nerve) to trail stops correctly anyway; therefore using a profit target will usually work better for them.

If you have a larger account ($20K+), and you have gained some experience, then you can consider trailing your stops. At this point in your trading career you can afford to give a little something back if the market retreats and takes you out, as you look for the home run trades.

The safest place to trail a stop is behind proven support and resistance levels. If the market violates these there is a good chance you'll be looking at a change in trend so that’s a good reason to get out.

-Erich