"Saturday Seminars" -Pattern Probability Used in a Unified System

Posted on by lindsay

The new trader should have no difficulty following this presentation. Concepts progress logically from the basic to the more complex. There are no abstract theories that the trader must accept on faith or complex formulas to intimidate the new practitioner. Step by step, Curtis proves that any trader can duplicate his personal trading success by approaching trading as a business. A trader must have a consistent approach and a long-term perspective and must adhere to the four basic tenets of trading: trade with the trend, cut losses short, let profits run, and use good money management.

Curtis explains why most traders lose and why success depends upon long-term thinking. Curtis shows a simple way to define a trend and describes nine specific patterns that allow you to follow any trend with minimal risk. You will learn to recognize the most powerful pattern found on a chart and ways to avoid missing a major move.

Curtis teaches you how and when to move your stop to break-even and how to combine two powerful exit systems to ensure that you never again give back your open profits. Curtis also discusses some of the additional considerations that allow a trader to adopt a more aggressive stance when appropriate, including basis relationships, options expiration, and first notice days. Finally, Curtis teaches you a proven money management system using a fixed fractional approach to boost your performance and reduce your longest string of losses.

PDF Workbook

Curtis Arnold is a veteran of the stocks and commodities markets. His first book, Your Personal Computer Can Make You Rich in Stocks and Commodities, sold over 50,000 copies and contained the actual code for twenty-five programs that would create and plot technical indicators. His next book, Timing the Market (1984), sold nearly 70,000 copies worldwide. Changing Times magazine chose Timing the Market as the best investment book of the year in 1992. In 1994, the book made the best-seller list in India. Curtis developed the Commitment of Traders Index, a tool that allows traders to spot imbalances in futures open interest among small, large, and commercial speculators. In 1987, Curtis' research led him to quantify and classify classical chart patterns, then produce accurate statistics, rating each for its probabilities of success. This led Curtis to develop his PPS System (Pattern Probability Strategy), one of today's more successful and popular trading systems. After tripling his personal account in 1988, Curtis began training a limited number of students in his methodology. In 1992, one of his students became the number-one-ranked CTA in the country. That same year, a first-year PPS student won the United States Investing Championship with a return of 216.1 percent. Supertraders Almanac then chose PPS as "Trading Methodology of the Year."

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Saturday Seminars are just a taste of the power of INO TV. The web's only online video and audio library for trading education. So watch four videos in our free version of INO TV click here.

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Traders Toolbox: Support and resistance

Posted on by The INO.com Team

Although many of you will find this lesson in one of the most basic concepts of market behavior "old hat", it never hurts to review. One of the first things a new trader is told (I hesitate to say learns as many never do) is to buy a breakout above resistance and sell a fall through support.

Resistance is the level which holds a market down, while support is an area which props up a market much like a ceiling and a floor. The key is to identify the critical levels. There are a number of methods to determine support and resistance: trendlines, moving averages, retracements, Gann angles, etc. However, simple observation can be an effective means of locating the important areas. A quick glance at the October cotton chart reveals the most basic levels of support and resistance (broken lines).

A previous high often provides resistance, while an earlier low tends to offer support. Support or resistance levels are not necessarily flat. For example, trendlines reveal areas of rising support or falling resistance. Also, when broken, uptrend lines offer a new level of rising resistance, while the opposite is true for downtrend lines. In fact, virtually any broken area of support will become resistance and vice versa. After breaking a level of support (or resistance), the market commonly comes back to test that level before resuming the downmove (upmove). This may be the single most effective method of locating low-risk entry points for trading purposes. This lesson may seem like wasted space to the experienced. However, it is amazing how often traders simply forget (or ignore) the power of basic support and resistance levels. This concept can be very profitable, but it may be just too "easy".

Where we stand on crude oil

Posted on by The INO.com Team

What a great move in crude oil yesterday. It was enough for us to cover our short positions and bank almost $10,000 a contract in profits.

Watch this video and see how we did it.
Here's the full AP story from yesterday.

(AP:NEW YORK) Oil prices soared over $4 a barrel Wednesday, halting a dramatic two-week slide after a surprise drop in U.S. gasoline supplies fed speculation that record fuel prices aren't keeping Americans off the roads.

But energy market analysts offered mixed views on whether prices would swing back toward record levels above $147 a barrel hit earlier this month or if Wednesday's big rally was just a temporary bump.

Light, sweet crude for September delivery jumped $4.58 cents to settle at $126.77 a barrel on the New York Mercantile Exchange, after earlier rising as high as $127.39. It was crude's biggest one-day rally since July 10, when prices ended $5.60 higher. Oil closed $2.54 lower on Tuesday at $122.19 a barrel.

The Energy Information Administration said in its weekly inventory report that U.S. gasoline supplies fell by 3.5 million barrels last week. Analysts surveyed by energy research firm Platts expected gas supplies to increase by 400,000 barrels. U.S. crude stockpiles also fell by 100,000 barrels last week, less than the 1.3 million barrels analysts had predicted.

The report gave some traders reasons to believe that crude's slide was overblown and that the drop in gas supplies mean prices have fallen enough to nudge Americans back onto the roads.

"It's stopping the bearish momentum that we've seen over the last few days," Phil Flynn, analyst at Alaron Trading Corp. in Chicago, said of the surprise decline in gas supplies.

But some analysts raised questions whether U.S. fuel demand was picking up. Tom Kloza, publisher and chief oil analyst of Oil Price Information Service in Wall, N.J., doubted that Americans are actually driving more, saying a seasonal bump in gas demand probably drew down supplies temporarily.

"It's nonsense to say that this proves that people are back to their old driving habits," Kloza said. "There just wasn't enough enthusiasm to push prices lower. "

Crude's jump was boosted by word that Israeli Prime Minister Ehud Olmert will quit his post in September, an announcement that raised doubts about the future of U.S.-backed Middle East peace efforts in the oil-producing region.

Also supporting prices was a report by Goldman Sachs, which affirmed its earlier forecast that crude will hit $149 a barrel by the end of the year.

The investment bank called weakness in U.S. energy demand "transient rather than permanent," saying the fundamentals of falling oil production and rising world energy consumption remain intact. Past forecasts for higher oil prices have caused jumps in prices as speculative buyers are drawn into the market.

Still, other analysts said oil's recovery doesn't mean prices are about to go higher again, but rather shows that traders saw a short-term buying opportunity after Tuesday's sell-off.

"I still expect to see further air being let out of this balloon," said Stephen Schork, an analyst and trader in Villanova, Pa.

He noted that U.S. demand for energy is falling across most sectors. Inventories of distillates, which include heating oil and diesel, rose by 2.4 million barrels, more than the 1.8 million barrels expected, according to the EIA report.

And Americans continue to cut back on their driving to cope with almost $4-a-gallon pump prices. The average price of a regular gas fell 1.5 cents on Wednesday to $3.926, according to auto club AAA, the Oil Prices Information Service and Wright Express.

"We clearly have demand destruction," Schork said.

Before Wednesday's rebound, crude prices had dropped in seven of the last 10 sessions, and are down about 14 percent from their peak above $147 a barrel earlier this month. Prices remain about 60 percent higher than at this time last year.

The dollar was stronger Wednesday against the euro, but the oil market seemed to be ignoring a trend that ordinarily would pressure prices. Investors buy commodities as a hedge against inflation and a weaker dollar but tend to sell when the American currency strengthens.

Oil also gained Tuesday's announcement from Royal Dutch Shell PLC that it may not be able to fulfill some oil export contracts after Nigerian militants sabotaged a pipeline in the Niger Delta.

Militant attacks on Nigerian oil facilities have trimmed nearly one quarter of the country's regular daily output. The strongest Nigerian militant group, the Movement for the Emancipation of the Niger Delta, said it sabotaged two pipelines early Monday in the southern oil-producing region.

In other Nymex trading, heating oil futures rose 5.08 cents to settle at $3.5203 a gallon while gasoline prices gained 12.74 cents to settle at $3.1351 a gallon. Natural gas futures rose 11.8 cents to settle at $9.248 per 1,000 cubic feet.

In London, September Brent crude rose $3.34 cents at $126.05 a barrel on the ICE Futures exchange.

Gold ends down but off 5-wk lows, eyes US data

Posted on by lindsay

By Frank Tang & Jon Harvey

NEW YORK/LONDON (Reuters) - Gold ended 1 percent lower on Wednesday as the dollar climbed, oil prices feel and U.S. stocks rose, denting the precious metal's appeal.

Gold was at 918.80/920.30 by New York's last quote at 2:15 p.m. EDT, down from $928.45/929.65 late in New York on Monday.

Gold's decline was "pretty much forex related, and oil is coming down," said senior Commerzbank trader Michael Kempinski. "We need to see come stronger commodities in general, and a stronger euro, to push gold higher again."

The dollar rose to its highest level in a month against major currencies, pressuring bullion prices. Gold tends to move in the opposite direction of the U.S. currency, as it is often bought as an alternative investment.

Declining oil prices also dragged gold, as signs of weakening demand for crude and a rising dollar outweighed the supply threat linked to tensions in Iran and Nigeria. U.S. crude futures ended $2.54 lower at $122.19 a barrel.

Gold also dipped as U.S. stocks ticked up, dampening interest in the precious metal as an alternative investment.

"When crude oil goes down, gold also goes down with the stock market going up. Everyone is watching that correlation," said Adam Hewison, president of MarketClub.com in Annapolis, Maryland.

Hewison said gold should find support at current levels, but the $905 to $912 an ounce area represented a key support area. Should bullion fail to hold there, prices could test the lows set in June below $860 an ounce, he said.

Absent significant moves in oil and the dollar, gold prices should remain rangebound, analysts said, with physical buying muted during the low-demand summer season and exchange-traded funds' holdings steadying after recent gains.

U.S. gold futures for August delivery settled down $11.20, or 1.2 percent, at $916.50 an once on the COMEX division of New York Mercantile Exchange.

Gold traders awaited release of U.S. economic data this week, including GDP numbers on Thursday and nonfarm payross, construction spending and auto sales data on Friday. These reports could have a significant impact on the dollar.

Traders also looked ahead to Wednesday's oil inventory data from the U.S. Department of Energy.

"The consensus is looking for another drop of crude oil inventories, which might provide some support for crude oil and thus also for gold," said Dresdner Kleinwort analyst Peter Fertig.

Among other precious metals, spot platinum hit its highest level in almost a week at $1,775 an ounce, then retreated to end at $1739.00, down from $1,739.00/1,759.00, down from $1,763.00/1,783.00 late in New York on Monday.

Spot palladium was at $380.50/388.50, unchanged from late in New York on Monday. Silver fell to $17.35/17.41 an ounce from $17.46/17.52 late in New York on Monday.

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See original Reuter's article here: http://www.guardian.co.uk/business/feedarticle/7690017

Straddling Options

Posted on by lindsay

The post below is from Eric at The Stock Market Prognosticator. Free free to leave a comment or let him know if you have any other option tips you would like him to write about.

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It is important for investors not panic during the current market volatility. Money can be made on both the upside and downside. One of the strategies I employed recently involves using options to take advantage of this volatility. During the month of July, I opened "straddle" positions on six different stocks and ETF's. I closed all of them out at a profit within two weeks.

So here is how it works, a straddle is the simultaneous purchase of an equal number of both calls and puts on the same underling stock, ETF, or index. Both the calls and the puts should have the same strike price and same expiration.

What I am looking for is a large move by the stock before the options expires. I am indifferent as to which way the market moves, as long as the combined premium when I close it out is more than the combined premium that I paid.

Here are some other things to know:

1) Make sure that the options have several weeks to expiration so there is time for the underlying instrument to move.

2) Pick only options with large volume and narrow spreads, a few pennies per contract is best.

3) Be careful about using this strategy when the underlying instrument has very high-implied volatility, as all other things being equal, a high implied volatility leads to a higher option premium. If this implied volatility suddenly dissipates then one side of your position may drop sharply in price.

4) I usually wait until the underlying instrument is trading right at the strike price, so the options cast per contract is roughly the same.

Here is an example of one of my trades:

I purchased the Financial Select Sector SPDR (XLF) July 21 Calls and July 21 Puts at a price per contract of $1.14 and $1.13 respectively. This position was opened prior to the huge rally in financials last week. Four days later I closed the position out, selling the calls at $2.28 and the puts at $0.51 per contract. The profit before commissions per contract was $0.53, or $53.00. So a round lot of 100 contracts would have yielded a profit of $5,273 in less than a week.

Investing in options carries a lot of risk, so please decide yourself whether a strategy like this is correct for you as an investor.

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If you would like to learn more about my investment philosophy, then please visit The Stock Market Prognosticator.