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Trader Savvy Newsletter


June 20, 2006

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The Best of TraderSavvy

Click Here to read Phil Flynn's full article at InsideFutures.com.

Futures...An Economic Field of Dreams
by Phil Flynn

Since the Reagan years, economists have spoke of the beauty of supply-side economics. Cut taxes and they will build it. Maybe not a baseball field in a cornfield but they will build something, somewhere, a building or maybe a business or whatever. And along the way they will provide jobs and increased economic growth and increased tax revenue as a result. Now some economists may have issues with supply-side economics despite the fact that it has been proven to work time and time again yet no economist would have a problem with the old definition of supply side economics. Because in the beginning the real law and basic truth of supply side economics was whether you have enough supply to meet demand. And the search for that age old question is the stuff dreams are made out of. Or maybe fortunes.

Of course, for the futures markets, the new millennium has been an economic field of dreams. The US economic expansion continues to fly high. The Economy was spurred out of an inherited recession by the Bush tax cuts, spurring incredible growth and demand for goods and services. This growth has spurred economic expansion in many parts of the world, and in doing so, has caused a huge spike in demand for hard commodities all over the earth. China has been a major beneficiary of the US economic expansion. China, of course, has been undergoing its own industrial revolution. By supplying the United States goods to meet its demand, China has experienced incredible growth. This growth has also expanded to India, which has fed China with goods. And underneath it all it has spurred incredible demand for commodities across the board. Not only to make goods for others, but for their own comfort and appreciation. Read More...

Click Here to read Kevin J. Davey's full article at InsideFutures.com.

How I made 148% in the 2005 World Cup Championship of Futures Trading®
by Kevin J. Davey

“Overnight success.” I’ve heard that term quite a few times in the last few months, as people learn that I achieved a 148% net return and a second-place finish in World Cup Championship of Futures Trading in 2005. Since you’ve probably never heard my name mentioned before, you might be inclined to think the same thing. But the fact is the futures markets are littered with overnight failures and overnight successes are few and far between.

I’ve been speculating in futures for 15 years, and it took me most of that time to become an “overnight success.” Even though turning $15,000 into over $37,000 in one year entailed some luck, I know I could not have gotten there without following certain steps. In this article, I’ll detail these steps, steps that worked so well for me. My guess is that they’ll work for you, too. Read more...

Click Here to read Valdi Thorkelsson & Ron Schoemmell's full article at InsideFutures.com.

The Power of Price Patterns – for Reliability and Structured trading
by Valdi Thorkelsson & Ron Schoemmell

The focus of today’s article is on price patterns. We will explain the benefits we perceive of relying on chart patterns over other forms of analysis and why we prefer them to the myriad of indicators and oscillators available. We certainly hope you find the following discussion beneficial and will consider adding structured chart patterns to your trading arsenal as they have the potential to dramatically improve your trading results .

PRICE PATTERNS PROVIDE RELIABILITY AND LEND STRUCTURE TO TRADING

In our view chart patterns are the purest form of Technical Analysis as they are created through the process of price discovery itself. They are the “footprints” left on the chart by commercials and large institutional players that control the markets and tell you the direction they are headed. You simply can’t get any more current or closer to the market than the latest tick and the bar that just formed. That last tick is formed by the “auction” process and reflects ALL the latest information and news (both public and private) available to market participants at that point in time, eliminating the need to follow news and pore over the annual reports of companies. Read more...

Click Here to read Jovanka Vukosavljevic's full article at InsideFutures.com.

Common Trading Mistakes
by Jovanka Vukosavljevic

I'd like to discuss some of the common mistakes of the commodity futures trader. The first and foremost is not having a clear cut plan in their heads of what they want to achieve. Of course, everyone wants to make money, that's a given, but the way most conduct themselves trading, would leave the seasoned trader to think otherwise. The first thing a trader should do once in the market is place a stop. Know how much you would be willing to lose in a specific trade and if it is not going your way then place a stop to protect your position. If you're long a March Corn from 2.08 even a bushel, each time the market moves a penny its worth $50.00, so to protect yourself 10 cents on the downside, your stop is at 1.98 and you are risking $500.00 in this market.

The second mistake traders make is often not taking profits when presented with them. In other words, if the corn markets moves up to $2.14 that's a 6 cent profit of $300.00. The trader could get out of the corn market take his profit off the table and always get back in when presented another opportunity. So if the trader is holding onto to five contracts or positions in the March Corn for example, that could translate into $1,500.00. The third mistake is not moving the stop up however much the market moves in his or her favor. In this instance if the March Corn settles at $2.14 a bushel it has moved up 6 cents higher from the entry point of $2.08 a bushel the trader should move his or her stop at least 6 cents higher that price would then be $2.04 to protect his position. They are still 10 cents away from the market price and they are risking the same amount of money $500.00 but they are tightening their stop in accordance with the market's fluctuations of the March Corn market. Again, I want to reiterate if they get nervous they can always close out their position and pay themselves what they made. Read More...