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Historical Simulator Plug-in

Day Fifteen

Video Transcript

Okay, are we excited? Get excited, we're making money in the commodities market. We get to strut around the office, tell everybody how much money we're making. Yeah, I'm a commodities trader. You don't trade commodities? Why don't you trade commodities? Oh, you heard your grandma's, uncles, aunts, cousins, brothers niece lost money in commodities? Oh, commodities is dangerous. Yeah, I'm a dangerous kinda guy that's why I trade commodities.Yeah, yeah, yeah..Danger is my middle name.

Alright, you're only dangerous if you trade without stop losses. Okay, that little market just popped back up. Okay, we're just watching this thing for a new annual low- a little retracement here.

Well, look at what we're getting here. We're getting a little, we're getting what they call divergence, in the Stochastics. Now, I want to blow this up and show you what divergence is. Are we getting divergence? We are, this is divergence. Divergence is when the Stochastics says the trend is up. But yet the underlying commodity is still making lower lows. Yes, lower lows. So, the trend as far as what we're seeing up here in the top of the market, is that we are seeing lower lows. Downtrend. Stochastics uptrend, that is divergence.

When you see divergence between the underlying market and the underlying indicator, that is telling you that a trend reversal is imminent. Okay, that it is expecting a trend reversal, here relatively soon. I used a very hard word there- imminent. It expects a trend reversal. Imminent is too strong of a word, because it could still continue down. You know, even though the indicator says it goes up. But that's a very good indication that the market is ready to have a trend reversal. If we have divergence between the Stochastic or the underlying indicator and the underlying market.

Okay, so, let's anticipate a market reversal at this point, because we see some divergence.

Okay, let's go on to Feeder Cattle. Step forward. Oh, Feeder Cattle just went sideways a little. Nothing we have to do, we can look at our money again. Oh, open profit of $1,100.00 closed profit, $295.00. Yes, we're happy.

Okay, Gold- step.. nothing happens, just going sideways.

Lean Hogs- step.. nothing happens. Just going sideways. In fact, it came back and closed higher, we lost a little bit of money today.

Live Cattle- step.. oh, beautiful! Beautiful, that just snuck down there. Oh, look at that, that's the most beautiful thing I ever saw. That looks like that's right out of the manual. You'd think that I had this planned. Look at this, that came down and did exactly what I told you it was going to do.

The market comes down, it didn't want to push passed the area of resistance. It just wanted to come down close and test it. See that? Look at that, that is so picture perfect.

That is why I don't ever put my market on touched orders passed or below the areas of support and resistance. I always put them on the inside, so it's easy for the market to fill them. It wants to come down and get close to these areas of historical or past of support and resistance. They don't want to break through them again. I'll say it again, markets don't like to break through areas of support and resistance unless they plan on continuing down in that direction. That's what happened here, we set up our little area of support, see that line? The market did not want to push through it. 1, 2, 3, 4, 5, times, it comes up, it comes down and it hits it 6 times. Comes back down, and when it broke through it, it decided okay, I'm going to continue on down.

Okay, so you watch these lines like this. These areas of support and resistance. Even in Oats, you know, we sit here and laugh and joke about Oats, but that's what Oats did. Oats had this area of strong support, it did not want to break through. 1, 2, 3, 4, 5, 6 times, it came down to that area of support. Finally, when it decided to break through it, it broke hard. Look at that, look how hard it broke through there. It pushed through that area of support really hard. Okay, keep that in mind.

There's our order, filled, beautiful, wonderful, perfect, picturesque. It'll happen to you time and time and time and time again, as it has to me. Those markets will come close, and will test these areas of support and resistance and then turn around and go the other direction. Then you won't- if you're not there with your order on the inside, you'll get missed.

So, let's go on, let's go to Oats. Let's advance our Oats. Are we all together here? We're on the 20th. 20, 20, 19, okay, step. Now, it's coming back against us, though, it's coming back. See, I'm worried about this little gap here. Gaps are meant to be filled. That's coming back, it's filling that gap.

We had to think about whether we wanted to anticipate the retracement and lose the money between our buy stop. You know, I should've, maybe I could have just come down here and said, you know what, I know that market is going to come back and fill that gap. So, I'm going to bring this thing down, and I'm going to put it down, so I don't lose any money on that retracement. Then, if I want to get back in on another break, I get in on a break below that point right there, but I didn't. I'm anticipating a retracement like this. So, I'm going to have to have a draw-down. I have to have a draw down, back to at least $735.00 on this one before it stops me out. That's the nature of the game, you know?

Step.. see, it's not respecting this line. It's not respecting this line of support. I don't like this market, it has no respect.

Wheat- step.. oh, it's coming back towards me. It's coming towards me. Okay, it's okay. Alright, I guess we'll see you tomorrow.

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