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The
COSMIC Speculator will help YOU Make Better Trade
Choices |
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Look
for it over on the Weekend
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Commodities
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Options
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Stocks
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Metals
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Interest
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Currency
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C
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O
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S
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M
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I
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C
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Commodities
Futures
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Options
on Futures
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Stock
Index Futures
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Metals
Futures
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Interest
Rate Bond Futures
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Currency
Futures
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We
trade the 1st 2 hours after the NY Open…
then we’re DONE for the day the day! |
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For
your own protection, trade only one of the above until
you master its
trading behavior...
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Caveat Emptor!
B4 1990, market speculation was the play ground of the
rich and famous. Now,
the likes of us mere mortals have accumulated enough
capital to become a danger to our meager wealth, but,
everyone wants to play!
So, play at your own risk! People
need leadership in most endeavors. Market speculation is
a dangerous game but not as bad as Vegas style gambling.
Why? Because
we measure and apply probability, an instinct / practice
not generally mastered in casino games. Let us provide
the leadership you require.
Our leadership will be the best you can get… at
any price. Protect your wealth first. Second, try to
grow it. We
don’t need your wealth because we already have ours,
but we just like helping others.
The table below demonstrates how we will deliver
trading ideas. Each
entry in the table will be explained in depth [See].
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Category
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Future
Contract
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Contract
Symbol
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Trade
Direction
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Risk
Reward
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Entry
Area
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Target
Area
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Stop
Limit
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Currency Futures
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Euro
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Sep 08
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Buy
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1.5650
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1.5961
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Options
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Apple
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Stock Index Futures
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Russell
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Buy
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3:1
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740
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745
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Metal Futures
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Silver
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Sep 08
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Buy
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17.00
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18.90
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Interest Rate Futures
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30 Yr
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USM08
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Commodities
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Oil
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QMN08
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Matt
Reynolds is The COSMIC Speculator, our leader; our guru.
He enjoys an established following in his Daily Live
Trading Room but recognizes that not all traders have
sufficient time to join in because of their demanding
work. To help folks with the means but not the
time, we forecast high probability trade opportunities
from weekend analysis based on broader time frames.
Trade ideas are delivered on the weekend.
Enter only if certain conditions materialize.
Each high probability trade opportunity will be
delivered complete with profit target, exit area and
stop limit. The Speculator Report will help you focus on
the right stuff… the highest probability action.
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Market: Commodities
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COSMIC:
As recently as a year ago, except for index futures, commodities were primarily pit traded requiring
special handling by
brokers on
the exchange floor's order desk… a world of
professionals working for the rich and famous.
Orders were called in to the floor by the speculators.
There was very little mouse clicking going on.
This is no longer true!
Today,
we execute commodity trades with mouse clicks just like
we traded the eMini S&P since 1998.
Using rapid action leverage, commodity traders
[you and me] are able to generate about five times the
reward as stock traders… using an equivalent capital
base.
There
are 5 commodity exchanges specializing in these
entities:
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CBOT
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Chicago
Board of Trade
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Treasuries
Grains [merged w/CME]
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CME
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Chicago
Mercantile Exchange
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Indexes
Currency Livestock Dairy
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NYMEX
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New
York
Mercantile Exchange
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Energy
Metal
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NYBOT
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New
York
Board of Trade
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Cocoa
Coffee Cotton Sugar
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KBCT
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Kansas
City
Board of Trades
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Wheat
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While
commodities like beans, cotton, corn and wheat have
risen in value as The BRIC Countries [
Brazil
,
Russia
,
India
and
China
] emerged increasing demand on world markets, we sit by
and watch those market reports on the evening news.
Traders are not well suited to trade everything
available to trade just because they are traders.
Traders need specialties!
The
COSMIC Speculator, Matt Reynolds, focuses on the Russell
Index Future, goes for the Gold or Copper in the Metals
arena and Euro Future in Currency. He trades beans
and oil as well as interest rates.
While there are thousands of tradable stocks and
options, Matt selects from the best… a few good commodities.... The highest probability rewards
will be derived from identifying support and resistance
in Commodities, Options, Stock Index Futures Metals,
Interest Rates and Currencies.
Due
to the economic growth of The BRIC Countries:
Brazil
,
Russia
,
India
,
China
,
India
, world consumption has dramatically increased causing a
surge in world commodity prices.
We
trade these major commodity products: Crude Oil, Natural
Gas, Soybeans,
Cocoa
, Coffee, Cotton, and Corn.
To select the best trades among these choices
each week, we employ a combination of technical and
fundamental analysis.
Our objective is to position trade the prevailing
trend of these markets; however, we may recommend some
counter trend trades when markets are at extremes
[support or resistance].
Our
indicators are good at generating specific technical
signals of retracement.
Sometimes, we see a substantial amount of money
flow occurring from commercial interests as indicated by
the commitment of traders [COT] report.
If you are a large speculator, unlike us, the
Commodities Futures Trading Commission [CFTC] requires
reporting of major holdings of one commodity.
When
position trading, longer time frame charts are viewed to
recognize patterns that could materialize into high
probability trades.
For example: monthly, weekly and daily and,
sometimes, hourly charts are watched.
We look confluence among multiple time frames
that are all generating signals in the direction of the
trend and we use multiple support/multiple resistance,
on multiple time frames to get into the market.
Even
though we conduct our in-depth research over the weekend
for reporting to you on Sunday when the markets are
still, the entries we forecast may not materialize on
Monday or Tuesday. Sometimes
the condition triggers on Wednesday or Thursday but
perhaps never. Not
all setups trigger!
We look to
confirm the generated signal with COT and supply and
demand ranges. Once
we have determined our current direction and possible
entry price, we shift to a 21 minute chart to pinpoint
entry by applying the Derivative Concepts Zone-Trader
Philosophy while viewing our proprietary indicator
called volatility measurement built from volume and open
interest [VMI-VOI].
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Market:
Options Strategies
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COSMIC: Options
strategies are as close as we get to individual stock
trading… takes too much denaro to diversify a stock
portfolio to earn at the same level as using derivative
concepts on futures or options. Using a lot less
cash, we concentrate on the most straight
forward, least confusing, entries in the market. These
"best case" option trade opportunities are
designed to offer high probability entry with specified
exit target or stop.
An
option gives a trader the right to buy or sell the
underlying instrument at the strike price, within a
specific period of time.
A call option gives the trader the right to buy
an entity and a put option gives the trader the right to
sell something.
Financial
Engineering is the practice of using derivatives as building blocks to
create specialized products.
As the field of financial engineering has grown,
the use of options to create synthetic positions and to
hedge cash positions has tremendously expanded.
A
Synthetic Position is the simultaneous
buying and selling of opposite options.
For example: if a trader feels that the price of
the underlying instrument is going to decrease but does
not want to take a short position in fear of a
short-term rally, he or she could buy one put and sell
one call at different strike prices and time frame.
This creates a synthetic short position with less
risk. The
premium is the price of the option and is composed of
two elements: intrinsic value and time value.
An option
is said to have intrinsic value if the option is in-the-money.
When out-of-the-money, its intrinsic value is zero.
The
intrinsic value for an in-the-money option is calculated
as the absolute value of the difference between the
current price
(S) of the underlying
and the strike
price (K) of the option, floored to zero.
IV = max{0, | S − K | }
More
specifically, for a call option IVcall
= max{0,S − K}
while
for a put option Input = max{0,K − S}
For
example, if the strike
price for a call option is USD
1 and the price of the underlying is USD 1.20, then the
option has an intrinsic value of USD 0.20.
The
total value of an option is the sum of its intrinsic
value and its time
value (intrinsic
value 9). We prefer to use options in several
strategies from creating artificial stops, to taking
advantage of markets that are at extremes, and to
generate consistent profit by writing options that are
counter trend, which are selected by using delta and
applying some specific formulas to the option Greek.
The delta
measures the sensitivity to changes in the price of the
underlying asset. The Δ
of an instrument is the mathematical derivative
of the option value V
with respect to the underlyer's price:

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Market: Stock Index Futures
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COSMIC:
Stock
index futures are used for hedging, spreading &
speculating. Hedging using stock index futures involves
hedging against a stock portfolio or equity index
options.
Generally, we are speculators avoiding stock because of
the huge capital requirements.
Instead, we trade Stock Index Futures, generally,
The Russell 2000. This
Index Future enjoys a much improved probability of
higher reward by entering near support [buy] or
resistance [sell] points.
Holding periods range from 3 hours to 3 days.
However, the typical holding period for The
COSMIC Speculator is a few days. To populate The COSMIC Speculator we analyze daily, weekly, monthly charts
to collect inflection areas, not specific points, and
then apply propriety indicators to pinpoint estimated
entry levels and exit targets together with stop loss in
event our trade wanders.
The main
U.S.
index is the Russell 3000 Index, which is divided
into several sub-indexes, including the well-known
small-cap Russell 2000 Index, the bottom 2,000
(the smallest companies) make up the small-cap Russell
2000. It’s this Russell 2000 iFuture that we favor and
trade from the
New York
open during only the 1st 2 hours.
Trading using stock index futures involves volatility
(the greater the volatility, the greater the likelihood
of rapid reward – usually taking relatively small but
regular rewards. Investing via Stock Index Futures
involves exposure to a market or sector without having
to actually purchase shares directly.
The S&P 500 is the stock index containing the
stocks of 500 Large-Cap corporations.
The index is the most
notable of the many indices owned and maintained by
Standard & Poor's. After
the Dow Jones Industrial Average,
the S&P 500
is the most widely watched and traded index. It is
considered to be a bellwether
for the
US
economy.
But we have learned that, while the S&P
500 is the most popular, the Russell
2000 is a better trading vehicle. The Russell's family
of global equity indexes, including the industry-leading
U.S.
equity indexes, allows investors to track the
performance of distinct market segments worldwide.
And, the price per point is $100, where the eMini
S&P is only $50.
Since both Index Futures move in tandem… one
follows the other, why
not trade the higher price spread!
Many investment
managers use the Russell Indexes as benchmarks to
measure their own performance. Russell's innovative
index design has led to more assets benchmarked to its
U.S.
index family than all other
U.S.
equity indexes combined. As of May 2007, Russell's
indexes had US$4 trillion in assets benchmarked to them.
Equity index futures and options
tend to trade in liquid markets and deliver in cash.
Indices for futures are well-established: S&P,
Russell, FTSE
]British], DAX
[German], CAC40
[French] and other G12
country indices.
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Market: Metals
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COSMIC:
Precious
Metals maintain an intrinsic value and should be a part
of a major portfolio.
Precious metals, especially gold, can be used to
hedge against the decline of the dollar, which has
sparked an increase in the volume within metals futures
and the creation of the mini gold and mini silver
products. Metals
volume also has increased as a result of Global economic
growth, especially, The BRIC
Countries:
Brazil
,
Russia
,
India
and
China
. This
economic growth engine is creating greater demand for
copper, iron, steel and silver.
Gold
has been the most sought after metal in the world for
hundreds of years. Gold
has a unique blend of rarity and is seen as a flight to
safety or a hedge against day-to-day uncertainties of
paper money. Gold
also plays a role in industrial markets, due to its
ability to conduct electricity and its non-corrosive
properties.
Silver
is the most consumed PRECIOUS metal of industrial raw
material. Major
industrial usages of silver are: photographic, jewelry,
and, most of all, electronics. For example, computer
screens contain silver.
Unlike gold, most silver placed into industrial
material is consumed and not always recoverable.
This makes the price of the metal highly
responsive to supply and demand dynamics.
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