image

"Free Chart Lessons for Growing Your Futures & Option Trading Business?"


Chart Lesson for 02/18/10

Hi, I'm Archie and I've been producing commodity trading chart lessons online now for ten years. We've covered a lot of different methods of trading and shown many 'before the fact' trade examples showing you how it's done.

I've shown countless examples of trading chart patterns with both futures and options and many other examples for limiting losses and protecting profits.

2008 went down in history as one of the best years ever for trading chart patterns. We were fortunate enough to participate in extreme price moves in both directions.

While the second half of 2008 was devastating for 401k plans and the 'buy and hold' mentality in the stock market where portfolio losses were about 70 to 80%, chart patterns traders not only saw it coming in advance, they made a fortune by following the charts.

CLICK HERE FOR CHART LESSON SECRETS
Ten-years of Chart Lessons Totaling 315 pages, 149 Charts, and 18 Videos!

 

 

Today's Special

VTU Trade Alerts

Get TWO FREE E-Manuals with a minimum one-month trial subscription. A $127.97 Value for $39.97. You can keep the two manuals even if you cancel as our gift for checking out the Trade Alerts!

CLICK HERE to see all that's included >>>>>


Greetings Traders,

In today's lesson we're going to take a closer look at one of the thirty-two chart patterns I teach in my course. It's the "Head & Shoulders Top (H&ST)" and it's known for being 80% reliable in calling market tops! Simply put, when you find this chart pattern at market highs, you have an 80% chance that prices will fall below the neckline support producing your entry point to sell the market.

Just what is a H&ST and why does it form? In the most basic explanation, it's simply a painful rollover between traders who are bullish and those who are bearish. The left shoulder on the diagram below was a market top, then prices retreated due to increased selling pressure from bearish traders. The bullish traders who were already in the market, and those waiting to get in, saw the price decline as a buying opportunity. So now the bullish traders enter the market shooting prices to new contract highs forming the Head of the formation. Selling reentered the market again driving prices lower to form a neckline support area. By this time many of the bullish traders have jumped ship or switched their views, however, there is enough buying pressure left to make one more push higher to form the Right shoulder. Unfortunately for the bulls, there are not enough of them left to make another push higher so the sellers gain full control and prices trade below the neckline.

To trade this formation we simply sit on the sidelines and wait for prices to trade below the neckline, then sell a futures contract and/or purchase options. As a general rule, measuring the distance from the top of the head to the neckline and projecting that amount from the neckline lower gives you your first profit objective. 

Before we look at real chart examples of this formation, it's important for you to note that  they come in all sizes and shapes so they don't always look like text book examples. That's why I include many real market chart examples here and in my course in order to help you find these patterns in the real world.

The Live Cattle market is one of the easiest markets to trade. Influenced by producers, feedlots, slaughter houses, and short-term supply and demand from consumers. This combination presents a pretty reliable 90 - 120 day cycle or seasonal pattern. Generally, you'll see a Double Top, a Head & Shoulders Top, or a 1-2-3 Top formation every 90 - 120 days. 

This particular chart had two H&ST on it within two 90 - 120 day cycles. Notice, however, they certainly look a little out of shape compared to the text book example. You just have to remember to connect all your points (LS - H - RS and neckline support).

Next:

Here's another Live Cattle Chart. There's that 90 - to -120 day cycle again! The H&ST could not have been traded with futures contracts because of the locked limit market conditions. In a locked limit market no trading takes place in the futures but the option trading pits are open and taking orders as they are not effected by limit moves.

Just another reason for you to consider trading options. On that first limit down day you could have purchased a put option for $300 or $400 bucks and cashed it in Six days later for near $6,000.00. That's about 600% return on investment while futures contract traders were still sitting on the sidelines scratching their heads! However, I sure those bullish traders that made that last push higher to form the Right shoulder have my course to show them how to offset a losing futures position that's locked limit against them with options!

Today's chart master lesson not only shows you how to trade the H&ST, you've also learned about the 90 - 120 day market cycle in cattle. Now, this cycle is no secret among traders, but very few retail traders (you and I) use this information in their analysis. 

The very best way to become a chart master is to practice and try not to complicate matters. In short, if it looks like a H&ST then it likely is. The most useful lesson I've learned in all my years of doing this is the fact that trading can be as difficult or as simple as you make it.

Don't forget, when you're following the 90 - 120 day cycle in cattle your chart patterns to look for are the Double Top, a Head & Shoulders Top, or a 1-2-3 Top formation.

If you found this lesson beneficial, consider getting my full course and trade alerts. You'll find many more option and futures trading strategies. And, I'll guide you every step of the way to insure your success!

Trade Well,

Archie Johnson

PS. In my new course I will show you how to trade chart patterns with options and futures contracts with as little as $2000 and only the knowledge I supply you with. This two volume course with video presentations will be available later this year for $397.00. However, you can get it for zero cost by joining the VTU lifetime membership today. But you don't have to wait on the new course to get started because I'll show you how to trade the same strategies right now in my VTU chart pattern secrets trade alerts.

PSS. - The VTU LIFETIME MEMBERSHIP is back! If you want a course membership that doesn't expire and includes everything plus future courses and alert services for one low cost today and never be charged for future courses and subscription services, click the link below then the order button at the bottom of that page for a one-time special discount for this fabulous course. But do it today because this offer will expire soon!

Click here to read more about the course, then click the order button at the bottom of the course description page to read more about the LIFETIME MEMBERSHIP UPGRADE!----->

 

   


Disclaimer and Disclosure of Risk Statement

 All traders should understand that trading in the futures and or options markets is not for everyone. All traders should understand that there is substantial risk of loss when trading futures and or options. All traders should carefully evaluate whether trading in the futures and or options markets is appropriate for them, as such trading is speculative in nature. When trading futures, traders may sustain losses which may exceed their margin deposits. Option purchases may result in the entire loss of premiums paid for such options. Past performance is no guarantee of future success.

CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVER COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.

Top of Page