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Tuesday, May 15, 2012

Iowa Nerd Clears $1.3 Billion in a Strange Business

Iowa Nerd Clears $1.3 Billion in a Strange Business
The Door is NOW Open for Small Entrepreneurs to Profit in This Market

7:01AM

Dear Entrepreneur:
 
The business I’m going to show you today have made some people very rich.

The moneymaking potential in this business is staggering!

Here’s what I mean…….

Iowa nerd John Henry turned $16,000 into more than $1.3 billion with this business. He purchased the Boston Red Sox, Fenway Park, and the New England Sports Network with his “winnings”. 

Ed Seykota turned $5,000 into $15,000,000 in 12 years in this business. A lot of people consider him the “grand master”.
Richard Dennis made his first million at age 25 in this business. He went on to amass more than $200 million.
Monroe Trout is a multimillionaire because of this business. He lives in Bermuda now and manages a $2 billion fund in this market
Michael Marcus has made “several” fortunes in this business. He’s been profiled dozens of books, newspapers, magazines, websites and financial talk shows. 

Let’s get serious for a second…..

Most of the best businesses require some cash to get started and there’s always risk involved.

My focus in Weekend Business Blueprint is on businesses which don’t require a boatload of money to start, and have limited downside risk.

But every business, including pool cleaning and pet sitting has some risk. 

Entrepreneurs should be willing to take calculated risks if they can make money.

For example, selling fire arms and ammunition is a great business and it can be very profitable. But you need money, contacts and buyers. Plus, there’s a risk of getting caught because the business is illegal in some countries!

Another example of risk…..

Drugs…..I mean the legal, pharmaceutical kind. Drugs can be an incredibly profitable business. 

My good friend M.R. sells pharmaceuticals to hospital pharmacies in the Southwest US. 

The top ten pharmaceutical companies in the world are now worth more than $995 billion.

But again, you need capital, contacts, and buyers. In that business there is also a downside risk of getting sued, losing market share, or losing a patent and so on.
There's a risk of losing money in the business I’m sharing with you today too.

But you can run this business from a kitchen table, home office, laptop, or iPhone from anywhere in the world. 

Millionaire sheiks in Dubai run this business from luxury tents in the desert.

I've run this business poolside at the Floridian Resort in Orlando.

Surprisingly, it doesn't take a boatload of money to get into this business.


Ed Seykota whom I mentioned earlier started with $5,000. 

In some cases you can get started with less than $2,500 (or less).

But don’t start throwing your cash around just yet.

I’ll show you how to run this business “on paper” without risking a dime!

Granted, you’ll only have paper, pretend profits. 

But if you can learn how to run this business “on paper” and make a profit, then there’s a good chance you could run it in real time…and generate real cash.

What’s more, there are other ways to make money in this business without exposing yourself to great downside risk. I’ll show you this angle.

So…let’s get this party started.

The world financial markets are predictable to a degree.

This includes stocks, bonds, commodities, currencies, energy and even water futures.
If you can predict where a market is going with just a little consistency, you can make money.
If you know how to leverage opportunities properly (and contain or eliminate the downside risk) you can make a fortune!

When learned the principle of probability my life and money making ability changed.
Every market tends to move in cycles, trends, or "waves."

One of the best tools for predicating with some probability where a market is going is a historical price chart.

Please don’t get me wrong….or take this to mean a person can predict the future.
But it’s possible to predict where a market is headed by applying the principle of probability.

If you study historical price charts for any asset, market, product or commodity you’ll see fairly consistent cycles, trends or “waves”.

If we can apply the information and the principle of probability to investing or speculation we can improve our odds of being successful.

Okay…enough background.

What the heck is this business?

The business I’ll show you today is commodity trading. We’ll focus on agriculture futures.
I’ll show you an "insider" approach or strategy to this business. I learned this strategy from a very successful entrepreneur, who took me under his wing.

I made a lot of money with this approach. 

Yes…I had plenty of losses too, thanks for asking!

But I learned the greatest method for reducing losses on the planet. I’ll explain the details in a second. 

Most people just laugh when they see the simplicity of this business.

It is simple and that’s what makes it so powerful.

The approach I’ll teach you has probably produced more millionaires than any system ever devised.

Granted, there are thousands of so-called "systems" for this business on the Internet today, some are better than others. 

But my approach has nothing to do with software. 

Although a smart programmer could build the “essence” of this system into a software program quite easily. 

But there’s always a small flaw with software program….it’s called human logic.

But before we get to the approach here is a quick overview of commodity trading, so you understand the basics.

A commodity future contract is an agreement (obligation) to buy or sell a given quantity of a particular asset at a specified future date at a prearranged price. 

Futures contracts have standard delivery dates, trading units, terms, and conditions.
Futures can be based on any number of underlying assets. There are futures contracts available in individual shares and stock market indices, bonds, interest rates, coffee, sugar, orange juice, and agricultural commodities.

You can "open" a futures position by either buying or selling a contract

You can "close" your futures position by doing the opposite – either selling or buying the same contract. In practice, most futures contract positions are "closed out" before they expire.
If you hold a view that the underlying asset will rise, you could buy a LONG futures position, which commits you to take delivery of the underlying shares, or equivalent cash value, at a prearranged price and by a certain date.

If your view is that the share prices for the underlying asset will fall, you could sell a SHORT futures position, which commits you to deliver the underlying shares, or equivalent cash value, at a prearranged price and by a certain date.

Futures contracts are typically traded on government-regulated exchanges like the Chicago Board of Trade (the largest futures exchange).

There are also commodity futures exchanges in most industrialized countries.

A Little-Known Approach to Commodity Trading 

The most powerful aspect of commodity futures trading is leverage. The leverage can work for or against you.

The most successful traders have learned to let the market determine how much leverage to use.
In my experience, new traders typically become emotionally overcharged when they have a large winning trade. It's very common. Amateurs always trade like they're in Vegas. When they have a “big” winning trade they become “invincible” (in their minds), and then start making stupid mistakes. It happens 90% of the time.
My approach to commodity trading is easy to follow and understand.
Here is the essence of my trading strategy or approach:
You leverage your positions through a series of four trades, remove your profits, and start over again small.
When you are starting out your will NEVER hold or control any more the 4 contracts.
Let's take a hypothetical trade in the corn futures market.
Each "futures contract" of corn on the Chicago Board of Trade consists of 5,000 bushels. The deposit or margin to control this contract is about $500.
Every time corn moves one cent, the value of the futures contract increases or decreases by $50.
If the price of corn on the futures exchange closes up five cents that means the value of this corn futures contract would increase $250.
If you bought a corn futures contract when the market opened and sold it after the contract had gained five cents, you would have made $250 net profit.
The corn market typically trades within a 15-cent range.
Let's say that you purchased one corn futures contract and it closes up 10 cents.
But you hold on and don't sell.
Over the next couple of days, corn futures close up 20 cents and you decide to sell.
You would have made $1,000.
But rather than take your money out and celebrate, you think the market may go higher. You base this opinion on the fact there's been too much rain, too much sun, historical price charts or a combination of this information.
There are basically only two ways to approach any market. The first is from a technical point of view. A technical view is based on historical charts, cycles, Elliott Waves, mathematics, or probability etc.
A fundamental view is based on supply, demand, weather, crisis, or purchases from China, etc. If you can use both of these approaches, it's even better!
Let’s get back to our trade….
This time, you're going to buy two corn futures contracts. The market begins to drop … but you don't panic, because the market goes up and down all the time.
You're confident corn prices will continue to rise (based on your technical or fundamental point of view, and maybe probability, and they do.
The market closes up 15 cents by the end of the week. You sell the two corn futures contracts.
Important note: Unlike real estate, coins, brick-and-mortar businesses, and hundreds of other things, the futures market is immediate. This is especially true for the markets which have large volume and open interest. The corn futures market on the Chicago Board of Trade is huge. When you place an order to buy or sell, it's filled almost instantly.
Okay…. you've made $1,500, because the market closed up 15 cents – but this time, you have two contracts (10,000 bushels x 15 cents = $1,500).
The following week, you buy three corn futures contracts at the market.
This time, there are rumors regarding a pending drought, which of course affects corn in a big way.
The prices jump 25 cents in two days!
By the end of the week, corn futures prices are up 40 cents and you sell all three contracts at the market.
How much have you made?
15,000 bushels x 40 cents = $6,000.
You've barely slept the entire weekend, because you just can't believe it.
Then Reality Comes Knocking at Your Door
But on Monday, you have ice water splashed in your face … because the corn price drops 30 cents!
On Tuesday, the price drops again, but starts back up by the end of the day.
This time, you buy four corn futures contracts at the market.
The prices continue upward and then stay flat all week.
The following Monday, the prices start up again – and by Wednesday, the price of corn is up 10 cents. You sell all four contracts at the market.
The price was up 40 cents, dropped 10, and then closed on Wednesday up 10. The total gain was 20 cents.
So your profit is calculated as follows: 20,000 bushels (4 contracts) x 20 cents = $4,000.
Bottom line profit for all four series of trades is:
$1,000 + $1,500 + $6,000 + $4,000 = $12,500.
Often this kind of money is made every few seconds on the exchange like the Chicago Board of Trade.
The three most important things to remember about my approach are:
1.     Only pyramid positions through four series of trades.
2.     Remove all of your profit from the market. (Wire it to another account or have your broker send you a check.)
3.     Start over again small.
When you are starting out never hold more than 4 contracts at one time.
That's how the most successful professional commodity traders do it!
Amateur traders never remove profits and start over again small.
They keep pyramiding positions over and over again. In the end, they usually end up giving back all of their profit and their original stake as well!
I’ve seen it a thousand times in 30 plus years.
On top of that, amateurs always overtrade without an approach or system. New traders become "entangled" in the daily action of the market and lose their perspective.
Obviously, I used a hypothetical example to illustrate how this little-known approach to commodity trading works in the real world.
I wish the markets were this simple!
And I'd like to add one more element to the scenario. Panic!
That's right, PANIC.
Panic and hysteria can be a commodity trader's best friend.
In 1993, the Midwest United States suffered one of the worst floods in history. I saw the devastation, because, at the time, I was moving my family from Colorado to Maine.
The AG futures market went berserk. Soybean prices were "limit up" for days on end.
When markets go "limit up" or "limit down," that means no one can get in and no one can get out.
But you can trade these markets successfully. You'll begin to understand how fortunes are made.
If a cataclysmic event like an earthquake, drought, flood, or massive frost happens in a place like Brazil's coffee country, you'll know where prices are most likely to go. Up!
Sometimes, there's a cataclysmic event that causes prices to plummet – maybe a massive increase in the jobs report, record mortgage foreclosures, or the explosion of a nuclear bomb somewhere.
In cases like that, the dollar, stock market, and bond market would probably drop. Gold and the Swiss currency would probably skyrocket.
As a trader, you could take advantage of the situation.
I didn't say take advantage of people. I said take advantage of the situation.
The soybean market that I mentioned earlier went up as much as $4.50 a bushel during the flood panic of 1993!
That means one soybean futures contract would have increased $2,250. If you had controlled 20,000 bushels without pyramiding your positions, you would have made $9,000 in less than two weeks.
Soybean traders typically control several hundred contracts at a time.
If you had controlled 50 soybean futures contracts during the entire six-week flood scare in 1993, and you had sold them before the top, you would have made $112,500.
Can you see why people are attracted to the commodity futures markets?
Another important aspect of commodity futures trading is "stop-loss" orders.
You can place stop-loss orders above or below your entry points to insure that you'll "lock in profits" when the market rises or "limit your losses" when the market falls.
Spend some time learning about the commodity futures markets. You'll be amazed by how easy it is for the "small guy" to make a living at it … or even a fortune!
This business may be a perfect fit for you. It’s important to never open an account or trade with money you cannot afford to lose…that would be foolish.
If you have limited resources then I highly recommend trading commodity options (which I’ll cover in future issues) or commodity exchange traded funds (ETFs). Your downside risk can be limited in a big way….but the upside profit and leveraging potential will be limited as well.
Learn what you can about this fascinating business, and then call one of the brokerages listed below and ask for more information.
Your Humble Host,

Marc Charles
(Ed Note:  Marc Charles is referred to as "The King of Business Opportunities" ....and for good reason. He should be known as "The King of Legitimate Business Opportunities"...because he's launched, bought, sold reviewed and advised on hundreds of businesses and money making opportunities. He understands legitimate opportunities. Marc has agreed supply League of Power members with crucial updates regarding legitimate business and money making opportunities.)

Action Strategy
Take a few minutes this weekend to review today’s issue.
It might take several times before you “get it” and the light bulb goes on above your head.
Now, open a $20,000 practice account absolutely FREE – here.
You can “paper trade” commodities without risking a dime for as long as you like.
Order one of the books I’ve recommended and set a goal to actually read it. You can pick up used books at huge discounts at AbeBooks.
After you’ve paper traded for a while and you know what you’re doing you can open a real account.
Trade small when you are starting out in this business or even the smaller e-mini contracts! You will thank me. The profits may be smaller with the e-mini contracts but you’ll be able to sleep at night.
Valuable Resources
World Commodity Futures Exchanges
ICE
CME Group
Global FOREX
Kansas City Board of Trade  
NYSE Euronext
London Metal Exchange
Minneapolis Grain Exchange
Shanghai Futures Exchange
Tokyo Commodity Exchange
Dubai Mercantile Exchange
Hong Kong Mercantile Exchange
Singapore Mercantile Exchange

Recommended Books

"Trade Your Way to Financial Freedom," by Van K. Tharp
"Commodity Trading Manuel," by the Chicago Board of Trade
"All About Futures," by Russell Wasendorf Sr.
"Market Wizards: Interviews with Top Traders," by Jack Schwager
"The New Market Wizards," by Jack Schwager
"Reminiscences of a Stock Operator," by Edwin Lefevre
"Agriculture Options," by George Angell
 “Winning in the Futures Markets," by George Angell
"Elliott Wave Principle," by Robert Prechter Jr
Commodity Brokers
Farr Financial (FarrDirect)
e-Mini Commodity Contract Brokers (firms specializing in smaller accounts and e-mini trading


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