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Track 'n Trade Bulls 'n Bears Trading System
Trade Demonstration: Seasonal Nature of Markets
Video Transcript
In this Track 'n Trade Trading Training video, I want to talk about one of the biggest questions that I get. One of the biggest questions I get is people ask me, 'Lan, how do you know whether to enter the market with 1 contract, (as we've done in many of these examples) or to enter the market with 3 contracts? What makes you have the confidence to go in with multiple contracts, in an initial stage?' Well, the most powerful tool that we have in investing in the Futures market, is the ability to look at the Seasonal nature of a market.
Think about commodities, it's the one market that we have this luxury with. We don't have it in Stocks, or Forex. Only in Futures do we have this one capability, where we can go through and we can look at the nature of a market, or the Seasonal nature of a market.
Think about the different commodities. Think about the grains for example. Corn is planted at the same time every year, it's harvested at the same time every year. It's susceptible to damage at the same time every year. Or drought at the same time every year. It's susceptible to transportation problems at the same time every year. Also, storage fees at the same time every year. Because of that, commodities are very Seasonal in nature. One of those commodities that is very seasonal is gold. Surprisingly, enough, gold is what we call a perpetual commodity. It's created all year long, but it has a specific time of the year when it's at a higher demand. Where as corn, for example, is only, it is only created one time of the year, but then has high demand throughout the year.
What we're looking at here, this is a gold example. Gold is primarily used for jewelry. Right? Jewelry, when do we give jewelry...when do we buy jewelry the most? Birthdays, and of course, Christmas, right? Now, the commodities market, of course, this is the wholesale market. So, the wholesalers for gold are starting to buy their gold around the first of September into October. That's when the big gold rush in the commodities market comes along.
What we do is we take the Bulls 'n Bears, and the Bulls 'n Bears gives us the Buy and Sell Signals. It lets us know when the market is going to begin to rally. Also, the Seasonal Plug-In that we have in Track 'n Trade, the seasonal nature tells us when the big rally points are expected seasonally, on any given commodity.
This is wonderful tool, you can see how seasonal this market is being. I've got the Seasonal set to 10 years, which is the blue, and the 15 years, which is the red. The field one is just for looks, it doesn't really matter, as far as what's going on. All it does is gives us a different view. But I like to look at the 10 year and 15 year averages. We notice that right through here, that during the 10, 15 year average, we see a nice big increase in prices. Because of that, and we notice that the market has been being quite seasonal in nature, going kind of sideways, just like the seasonal nature of it is, here. I'm going to look for a big rally point, right here. What I do, is I like to come in with the Bulls 'n Bears, and I like to look at areas in which I think we're going to see big price increases.
I lay these lines in and I say these are my target zones. I'm looking for a Buy Signal, right in here, from the Bulls 'n Bears, for a nice rally point. As the market moves forward, we're in a yellow zone, yellow, yellow, yellow, I'm waiting for a Buy Signal....and there's a Buy Signal, right here. It's coming in... the timing is just right for it, with this nice big seasonal uptrend.
At this point, I might want to consider, uh..it's not a very good Buy Signal, is it? It's a...it's actually an inside day. It's a non-event day. It's a Buy Signal, nonetheless, and it is coming in at the right time. So, I'm going to come in here and if it continues higher, I'm going to get into 3 three contracts. If it doesn't, I'm not going to get in the market.
I step the market forward, of course, it goes higher, and we get filled. Since we're in a time machine it says you need to open your account. Let's come back to September 3rd, and let's get into this market. Let's put in $10,000, we're going to hit Okay. This market rallied, nicely, right here. We need to put in our Stop. Of course, this is where we can use our Bulls 'n Bears Blue Light System. I'm going to come in and turn on the Chart Properties on my, my Bulls 'n Bears Blue Light System. I can also come in here and turn on my Parabolic SAR, which I like to have in there, as well. Now, I'm going to come in and I'm going to place my Stop Order, back behind the previous...I can come in here and I can be a little bit more cautious, or I can be a little bit more aggressive. Since we're in a situation where we're in line nicely with the seasonals. I can probably be a little bit more aggressive, because I, yeah, I'm in line with the seasonals. It gives me a little bit more confidence.
I'm going to break my Stops apart, here. I'm going to put two up close, right behind the previous green. The market did rally quite nicely, and I'm going to put another one back behind the first yellow. Notice, how sometimes I break my Stops apart. It gives you a little more advantage in the market, in case I get stopped out, I'm not completely stopped out.
As the market rallies, if it continues higher, oh, nice move! I can come up here, I can actually move this one to break even. I can move this one up to where this one was, back behind the previous green. I can just let this market have a little bit of room to breathe and to grow. Now, look, the Blue Light is getting ready to catch up to my initial Stop, here, behind the first green. So, I'm going to come in here, and I'm going to say, I'm going to go to Settings, I'm going to say, Trailing Stop, based on the Blue Light. If that catches up, it's going to rally up there with me. It's going to take that Stop and at this point, I can break my other Stop apart. I can come in here, and go to Settings, I'm going to say okay, I want this set to 1. I'm going to leave that one at break even, and I'm going to place another one..maybe back in here right up against this area of resistance; right here, for support.
I'm going to Sell 1 on a Stop, there. So, now, I've got my 3 Stops broke apart, again, and as that market rallies, I'm going to continue to follow and Trail. At this point, I can move this one a little closer, if I want to, to try to take some profit. As that thing rallies, up some more...now look! The red light back here, or the Parabolic SAR is actually caught up to my Break even point. I'm going to come in here, and I'm going to go Settings, I'm going to put this a Trailing Stop at the Parabolic SAR. Hit Okay. Now, as those 3 Stops move independently up this trend, I can take advantage of the Seasonal nature of the market, multiple contracts, and multiple areas of Stop placement, to protect myself.
As that market, now it took us out at 2 positions, here. The next one, let's come over here and see how much money we're making. We're up $11,000. As it continues higher, now look! We have an opportunity, this is the blue Light coming down. Now, if we wanted to, we could put a re-entry point on here. But we're reaching a rally point, so maybe we don't want to do that, yet. It's coming in, see if we get stopped out....
and this market is continuing to rise, even though, we've reached our peak. We're still in the market, we're still trailing up with our Blue Light System. As this continues to rally, did we get stopped out? No, it's still holding us back, nicely, nice rally. We're still in the market. Notice how we held our 1 Stop, way back? That helped us stay in the market and have some staying power. Of course, this market just continues to rally, all the way up this trend. We're making all kinds of nice money.
We got stopped out once, here. We had an opportunity to get back in the market on the Blue Light, we didn't take it. We felt like we were at top of the Seasonals. But had we taken it, that would've been a nice position to get into. But you can see, using multiple contracts, kept us in the market, by holding our Stops back a little bit further.
This is how we take advantage of these types of markets.