welcome everyone this is John Sheely as director of research and development for
imadaytrader.com today we're going to talk about trading stocks versus
financial commodities but as you know we must review our risk disclaimers trading
carries a high degree of risk and trading may not be suitable for all
persons past returns are not indicative of future results please review our risk
disclaimer very carefully additionally I place our hypothetical disclaimer as
well in I am a day trader.com we create a great amount of research in the
creation of indicators and strategies like other research firms we use
hypothetical data to create our discoveries please review our
hypothetical disclaimer very carefully let's take a look at a very popular
stock of course and that's Apple I'm showing you a one-minute chart of the
stock of Apple and we've recently had a nice little bull market here but let's
talk about what's required to take this trade in regards to Apple let's say you
had a 10-cent objective of course if I had a thousand shares do not have this
objective for a hundred dollars if I had a 20-cent objective basically the entire
run here then you'd look at two hundred dollars or for the same thousand shares
say we put a stop loss of ten cents on this particular trade so we'd have a
risk of about a hundred dollars what is the capital that is required to put this
position on for a thousand shares well let's take a look for this thousand
share position the capital would be required if you had just one to one with
no margin it's a hundred and eighteen thousand dollars let's say you had a
margin account margin is two to one so you'd have about 59,000 that would be
required now how out if someone is a pattern day trader
and of course if you have that ability in regards to your stock account then
you'd have a 4 to 1 margin during the day now in regards to therefore you'd
have a twenty-nine thousand five hundred available for this particular position
of a thousand shares let's talk about the expense of putting on this thousands
of shares well actually as you can tell Commission varies tremendously it can be
as low as five dollars and maybe even slightly less but we know different
brokers you could have a stock cost of fifteen dollars that's one side just the
buy side well let's say I want to go ahead and take profits and I sell so i
buy and a sell okay the total cost of this particular position is at least ten
to thirty dollars for each trade since I've talked about a pattern day trader
the requirements to be a pattern day trader means that you must have at a
minimum of twenty-five thousand dollars in your account let's say you want to
cut a pump it up just a little bit so it's not exactly at 25,000 let's say we
had a 30,000 account and you're going to be a pattern day trader that's going to
allow you to have the 4 to 1 margin that is required so in other words to make
that 100 the two hundred dollars in this trade you would need at least a 30
thousand dollar account now let's take a look at a commodities now I'm looking at
the same movement in regards to crude futures in this one-minute chart just
like we saw in the stock of Apple and so we had a big price decline here let's
say we had a 10-cent objective entering this trade in here if you had a 10-cent
objective that is a hundred dollars for one contract if you had a 20 cent
objective during this little bit irish trend here you would then be able
to make two hundred dollars for one contract if you put a stop loss of ten
cents you would have a loss of about a hundred dollars what is the capital that
is required to make this trade well the current margin is 3,200 dollars but
remember that if the market is more volatile then you're going to see a
larger requirement in regards to margin now what is the beauty of this
particular trade commission's the Commission cost or this same trade is
five dollars are less total now we do have a contract such as the e-mini crude
oil the symbol is qm and actually the margin can be even less it's 1600 but
remember contract is not as active as the normal crude contract but let's talk
about the capital that would be required to enter this trade I show an example of
gonna commodity count of ten thousand dollars now the reason I say that is
that if you are going to risk a hundred dollars as a stop loss then a
one-percent risk would be one hundred dollars so if you had a one-to-one ratio
of which a stop loss of a hundred dollars and a profit objective of ten
cents you're looking at a hundred dollars so that is why a
ten-thousand-dollar account may be suitable to place this trade now granted
the margin is less than that that's only thirty two hundred but if you're going
to risk one percent of your capital in placing this one contract a
ten-thousand-dollar commodity count would be appropriate now here I've
showed you the price action in a time-based chart in a one-minute chart
let's take a look at a different kind of chart here we're taking a look at the
233 tick chart and crude oil just remember that every bar that you see is
created by every time there's 233 separate ticks when that 233 tick occur
then a new bar is created now let's take a look at the same price action that we
saw by using the tick chart here you have that 20 cent move and you could
have made anywhere a 10-cent objective so you'd be able to make a hundred
dollars here's the two hundred dollars now I show a couple of potential trades
that we're going to teach our members in our training room here we have actually
two possible trades using a strategy and so we're looking at a very a fast
scalping trade of a hundred one hundred and fifty dollars per trade that is just
for one contract of the major crude oil now remember we're talking about tick
charts these are charts that are not based upon time but price activity you
may wonder why am I really looking at the tick bar or volume bars or rain
charts why am I not using a normal time based chart well let's take a look here
we're taking a look at the crude oil again at a 15 minute chart now what you
see is that we had suddenly out of nowhere had a big vertical run now what
happens is that if you use indicators to indicate a bullish trend well as you can
tell it was too fast I even show the 5-minute chart during the same time of
which them price moves up so fast even the 50 period simple moving average was
too slow and indicating of a bull market change now let's take a look at our
range chart this is the same price movement that we have seen previously in
the 15-minute chart in the 5-minute chart and what you're seeing is that we
were able to change the direction of trend and we've even put this little
area right here of which we've had strategies that we teach our members how
to indicate that we have moved from a bear trend to
a bull trend and actually we had several different possible trades all during
this particular price movement so why do we choose the 233 tick bar are the 610
tick bars because it is based upon price action not time and because of that
we're able to execute and indicate the change of trend faster but how do I
learn this well it's very simple you become a member of our training room
you're going to watch how and why we place trades what was our reasoning for
our trade what are the strategies that we could basically indicate that we have
a new bull trend what are some of the strategies that we can use when we have
some scalping trades during this particular time as well you're going to
learn all of this by becoming a member of our trading room now I've discussed
crude oil but as you know as we begin to develop our trade very soon we're going
to have not just besides crude here we're taking a look at the e-mini S&P
using very similar strategies and this is why you're going to be able to learn
this rather fast because you're going to learn how to take trades in regards to
crude oil the e-mini SP and here we're taking a look at the e-mini Nasdaq I
finish this video so you can see what we're working on in regards to our
monitor and our presentation for our trading room we're going to have the 233
tick bar for basically execution as well as analyzing the trends on a short-term
basis we have the 610 tick bar chart because we use that for as a quote
anchor chart but we also use that to execute trades as well that seek a
larger profit objective here i'm showing you even a larger period in regards to
almost the 16hundred tick bar chart but we do have to watch from time to time Christ
base charts this is why we'll have a appearance of
the 5-minute chart the 30 minute and of course we have the daily and weekly
chart so we get a long-term perspective and at the bottom what I'm now working
on is to easily gives us the ability for our membership and myself to be able to
call the trades look at the dollar risk and as well as our dollar objectives for
our particular trades either than the 233 and the 610 we'll look at the price
in regards to swings above and swing below we're going to be able to look at
this easily which means I'll be able to call these trades the hours of our
trading room run from 7: 30 to noon eastern standard time and I do want to
prepare you for the kind of training that we do ether I am a day trader.com
we are short-term traders so you're going to see trades many times during
the day this is a very active room of course if the market gets very very flat
we will probably not trade at that particular time of course we can then be
able to answer any questions our members have in regards to our trading I think
you're going to find that this is a very very different from many trading rooms
that you see on the Internet I hope you've enjoyed this video I look forward
to seeing you in our trading room at I'm a day trader.com this is john seely
director of research and development