Search This Blog

Sunday, March 31, 2013

The Big Idea Formula by Marc Charles

The Big Idea Formula

 

7:01 AM


Hi Gang:

I’ve been a “scrappy” entrepreneur for about 30 years.

I’ve learned some incredible lessons along the way.

I’m trying to pass some of these lessons on to my kids, associates, partners, subscribers and even people I “bump” into.

There have been several people who have impacted my life in a big, big way.
A few of the people include Philip Sterling, Nick Guarino, V.P. Wierwille, Gary Halbert, and “Piggy” from South Minneapolis.

But also near the top of the list is Bill Bonner and Michael Masterson. 

I’ve worked with Michael directly, Bonner indirectly. Although I have worked with Bill’s son Will.

Anyway, these guys have impacted my life. The single greatest lesson is with a little thing called “The Big Idea”.  The concept is still impacting my marketing, writing, relationships and business ventures.

So you know what I’m talking about I’ve enclosed a breakdown of “The Big Idea” in today’s post.
I hope it helps you as much as it has me.

Have fun and play nice!

Your humble host……..


Marc Charles
“The King of Business Opportunities”

 PS Be sure to sign up for Early to Rise too. I'm serious. It is the best email newsletter on the Internet for building wealth and health.  I was a faithful read long before I became an Early to Rise "Expert" and regular contributor.


The Big Idea

I have learned many valuable lessons from my 15-year consulting relationship with Agora's legendary CEO, marketing genius Bill Bonner. None is more important than the "big idea."
The concept was originated by David Ogilvy, perhaps the most successful commercial advertising man who ever lived.

Nowadays, Bill is recognized as the man who brought the big idea to information publishing. And by doing so, he has sold more than a billion dollars' worth of publications. I know. I saw him do it.

I want to share Bill's secret with you today. It may be the best direct-marketing technique of them all.

When I started consulting with Agora in the early 1990s, I came equipped with half a dozen theories about direct marketing that I had used to start a bunch of successful businesses.

We applied some of these theories to Agora's marketing, and did very well. But when I worked directly with Bill, I discovered an entirely new way to create blockbuster promotions.

I had never heard of the big idea at that point. But when Bill told me about it, I went directly to Ogilvy's book, Ogilvy on Advertising, and studied it from cover to cover. I remember being particularly struck by the following:

"You will never win fame and fortune unless you invent big ideas. It takes a big idea to attract the attention of consumers and get them to buy your product. Unless your advertising contains a big idea, it will pass like a ship in the night.
"Big ideas come from the unconscious. This is true in art, in science, and in advertising. But your unconscious has to be well informed, or your idea will be irrelevant. Stuff your conscious mind with information, then unhook your rational thought process."

How do you recognize a big idea? Just ask yourself these five questions, said Ogilvy:

1. Did it make me gasp when I first saw it?
2. Do I wish I had thought of it myself?
3. Is it unique?
4. Does it fit the strategy to perfection?
5. Could it be used for 30 years?

The first package that came over my desk my first week with Agora was a prime example of a big idea promotion. It was written by Lee Euler for a newsletter called Strategic Investing. The copy was formatted as a "bookalog" (a direct-mail format, new at the time, that looks like a paperback book) and titled "Plague of the Black Debt." It was a huge success.

If memory serves, Agora mailed more than 14 million of those bookalogs and generated more than $7 million in revenues. The novelty of the format was an important part of the promotion's success. Just as important was the copy itself.

It opened with this:

"You don't have to be a conservative, a liberal, or anything at all to understand that America is about to be flattened by a tidal wave...

"That's right, folks. Now that Clinton's budget bill has passed -- and if his economic projections are on target -- we're going to add $1 trillion to the federal debt in the next four years. That's more than George Bush added in his four years. And it's almost as much as Reagan added in eight years.

"It doesn't matter whether you prefer my figures or Bill Clinton's. We're merely talking about different shades of disaster. When you're dead, you're dead. There aren't some people who are 'more dead' than others."

This wasn't the first big idea package Agora had mailed. The very first promotion Bill wrote for the International Living newsletter was based on a big idea. It was the "control package" for almost 20 years. All told, 30 million pieces must have mailed. (If Bill had gotten two cents per piece -- standard for copywriters -- he would have made $600,000 in royalties!)

The big idea of the International Living package was presented this way:

"You look out your window, past your gardener, who is busily pruning the lemon, cherry, and fig trees... amidst the splendor of gardenias, hibiscus, and hollyhocks.

"The sky is clear blue. The sea is a deeper blue, sparkling with sunlight.

"A gentle breeze comes drifting in from the ocean, clean and refreshing, as your maid brings you breakfast in bed.

"For a moment, you think you have died and gone to heaven.

"But this paradise is real. And affordable. In fact, it costs only half as much to live this dream lifestyle... as it would to stay in your own home!"

I was eager to learn how to write big idea promotions myself. But it wasn't easy. My first few attempts fell flat. I asked Bill about it and he gave me a Yoda-like answer that I didn't really understand.

Bill's protege at the time was John Forde, a bright young man with a classical education. John had developed an intuitive way of decoding Bill's cryptic way of answering questions. He was very helpful in getting me closer to mastering the big idea.

Writing about the big idea some years later in his Copywriter's Roundtable e-newsletter, John had this to say about it:

"Think about it.
"When you have a 'great' conversation... read a 'great' book... or see a 'great' documentary... what grabs you? Is it the litany of small details? Or the golden thread that unites them?
"More often, for most of us, it's the latter.
"And the more you 'get' the core idea behind a story, a speech, a revelation... the more memorable that one core message becomes.
"This is just as true in sales copy.
"One message, well developed, just has more impact than ads -- short or long -- that are overloaded with competing ideas."

When I finally figured out how to apply the big idea to direct marketing, I was able to teach it to some of Agora's young marketing bucks. One of them, Porter Stansberry, soon wrote one of the biggest big idea packages in Agora's history.

His big idea, in a nutshell, was that the Internet was going to have as big an impact on the 21st century as the railroad had had on the 20th century. Here's how he expressed it in his lead:

"Imagine yourself wearing a top hat and tails, on the balcony of a private rail car, the wind whistling past as you sip the finest French champagne...
"It's 1850; the railroad is growing like a vine towards the west. And, although you don't know it yet, the same rail that you are riding on today will soon more than triple your wealth, making you and your family into one of the great American dynasties...

"America's economic history is illuminated by such stories of quick fortunes made by daring entrepreneurs with new technologies -- railroads, motorcars, and more recently, computers. I've spent nearly my entire professional life studying exactly how great entrepreneurs made their fortunes -- both in the past and today. What I've learned contradicts what most people believe about wealth building -- and explains why 95% of mutual fund managers can't beat the market's average return.

"I'm writing to you today to show you what I've found. This year, four out of the six stocks I've picked for a well-known investment club have more than doubled the S&P 500's return for all of last year. Meanwhile the other stocks are poised to earn more than my first recommendations combined by the end of this year. I'll show you exactly how I did it. But for now, flash back again -- it's 1908...

"You're an urban banker in Detroit, living a life of country clubs and summer ballroom parties..."

Throughout its history, Agora has published hundreds of big idea packages. And they have been a big part of the company's growth -- from an $8 million business when I started working with them to one with revenues in excess of $300 million today.

The big idea is now widely known and talked about. But most direct-response marketers who use this technique fail because they don't' really understand how to do it.

Recently, Bill and I met with the copywriters for one of Agora's financial advisory divisions. They presented us with a number of leads that they thought contained big ideas. In almost every case, they were wrong. One of those leads predicted that China and the U.S. were going to be battling it out over the dollar, and that this was going to have a major effect on investing in the next 10 or 15 years.

"Well, that's not really a big idea," Bill said.

They all looked at us, wide-eyed. "How could that not be a big idea?" the writer of the lead said. "Our two economies combined dwarf most of the rest of the world. If we get into a major fight with one another, it will affect every investment everywhere."
"That's a big concept," I chimed in. "But it's not a big idea."
"Isn't that just semantics?" someone else asked. "Big idea, big concept. Don't they both mean the same thing?"

The answer was no. A big and definite no. But, though we tried, we were not able to get them to understand exactly what we meant by a big idea. ("It's ironic," I remember thinking. "I've become a Yoda too!")

These young copywriters were producing the promotions Agora was relying on. So I set to work to write down for them, in the clearest terms, just what the big idea is and what it isn't.
Here's what I came up with...

Let's start with a definition that borrows from Ogilvy: A big idea is an idea that is instantly comprehended as important, exciting, and beneficial. It also leads to an inevitable conclusion, a conclusion that makes it easy to sell your product. Furthermore, it is an idea that will continue to be important and exciting for a long time.
That's a mouthful. 

So let's break it down.

A big idea is important.
By important, I mean important to the customer -- not the copywriter -- and relevant to the product being sold. The devaluation of the dollar may be important to American investors, in general. But it won't be important to a customer who is being asked to buy a newsletter about a type of investment that won't be affected by the dollar's decline. The swine flu may be important to this same customer -- but it cannot possibly be relevant in a sales letter that is selling investment advice.

A big idea is exciting.
You are not going to excite your customer by repeating the predictions or promises that the rest of the media is publishing. They have already been exposed to those ideas. To provoke real excitement, you need to go beyond the conventional. You need to find some new angle that makes your customer sit up and pay attention.

A big idea is beneficial.
The excitement created must benefit the customer. Put differently, it should make the customer want to buy the product being sold. Let's say you're selling grass-fed beef. You can get your customer excited by telling him about how quickly people in this country are becoming poor. But that kind of excitement will make him less -- not more -- likely to buy the expensive type of meat you're selling.

A big idea leads to an inevitable conclusion.
The big idea must contain some internal logic that is fundamentally simple. It must be easy to grasp and easy to see how the product you are selling solves a particular problem or delivers on a stated promise. The best big ideas tie into something that makes the product unique. As soon as the customer hears the idea, he begins to feel the need for the product, even before it is mentioned in the copy.

The best big ideas do all of that work with very few words. The sale is half-made in the headline or by the end of the first paragraph.
Let me give you three examples.

In this first example, the big idea is aimed at readers concerned about health-related issues:

How the French Live Longer Than Everyone Else...
Even though they eat like kings and smoke like chimneys!

This headline offers to solve a riddle that has puzzled the reader for many years: Why do the French -- who eat cheese, meat, and rich sauces -- stay so thin? And another riddle that the reader just discovered by reading the headline: Why do the French -- who smoke like chimneys -- outlive everyone else?!

Implicit, here, is a promise that will appeal to almost anyone: You can eat like the French eat... and lose weight... and live longer.

This next example is a big idea that would interest avid golfers:

Want to slash strokes from your game almost overnight?
Amazing Secret Discovered by
One-Legged Golfer Adds 50 Yards
to Your Drives, Eliminates Hooks and Slices...
and Can Slash Up To 10 Strokes From Your Game
Almost Overnight!

The idea that there's a secret discovered by a one-legged golfer is exciting. It implies that if the reader has two legs, he'll have an even greater advantage. Plus, the promise that this secret could add 50 yards to his drives and slash up to 10 strokes from his game is both VERY important and beneficial.

The reader can't help but come to the conclusion that he needs this secret.
Finally, here's an example geared toward savvy investors:

Outlawed for 41 years, now legal again,
this investment launched the largest
family fortune the world has ever seen...
and could return 665% in the next 12 months.

The big idea is that this secret investment was once illegal. It's exciting, because it's the same investment that launched the largest family fortune in history. What's more, once the reader learns what this investment is, he could stand to make a 665 percent return on his money in a year or less. That makes it important and beneficial.

The inevitable conclusion: "I've got to read this and find out what this investment is."

If you want to become a master of the big idea, keep reading Early to Rise. We'll be writing about the concept in the future. And you can see it in action by reading the newsletter each day.

Wouldn't You Love to Be In On That Conversation? 

Imagine stepping into a room filled with half a dozen of today's most successful business owners. Michael Masterson is relaxing on a couch in the center of this high-profile group - they are some of his closest friends and business associates. 

Everyone is chatting comfortably. But make no mistake... some of the hottest business deals, investments, and money-making strategies are being discussed. 

1.     The latest, hidden profit opportunity that could generate over $28,000 in just a couple weeks...
2.     The real estate deal that could generate 100% return (or more) within a few weeks, without ever owning a single piece of property...
3.     Playing into the "Great Diamond Hoax" that has the potential to return 15% to 40% ROI in a single transaction that costs little or no time.
(And that's just a tiny taste of the deals being discussed.) 


Tuesday, March 26, 2013

"We Don't Sell Cars That Way"





"We don't sell cars that way,"

This is what the dealer principle (owner) of a top automobile dealership said to me.

A good friend gave this guy my name and number.

"I know", I replied. "Your TV commercials cost $15-$20k month. Your junk mail runs about $5,000, but probably more. Your FREE HOT DOGS sale-a-brations...don't cost very much, but you don't sell any cars".

"Look kid.....you came highly recommended. But I've been in this business for 32 years. You can't sell cars by direct mail, or on the Internet (1999)" -- Mr Auto replied.

They sold more cars in two months than in any other consecutive two months in 32 years.

My secret: Focus on qualified prospects ONLY. Do not spend any time or money on people thinking about buying a car.


Marc Charles



Friday, March 22, 2013

Wealthy “Connector” Reveals Inside Track for Making Money

Wealthy “Connector” Reveals Inside Track for Making Money


Question: I’ve heard there are ways to make money bringing people together for deals or by making simple introduction. Is that true?
                                                                                           
                                                                                L.T. Mountainaire AZ



8:33 AM

Dear Entrepreneur:

Yes….you can make money “connecting” people. I’ll show you how I make money doing this.

A “Connector” is someone who brings people or companies together and collects a fee or commission when a “deal” or agreement between two or more parties is consummated.

When I started out as a “Connector” I charged a flat fee to the entrepreneur who was interested buying a business in Colorado.

A few years later I leaned toward earning a percentage of each transaction or deal. I found people are very receptive to concept of percentages on a deal. But I still made commission on some deals.

My first year as a “Connector” I made $22,000. By my third year I was making more than $50,000 per year…all by making a few phone calls, sending some email and once in awhile face-to-face meetings and travel.

Another recent example…..

I read about an entrepreneur looking to acquire travel focused websites in a business newsletter.

The prospective buyer was only interested in travel websites with significant traffic, fully functional ecommerce and professional programming code.

I contacted the prospective buyer by email, introduced myself, and sent him a link to my website with background information and client testimonials. The buyer responded immediately expressing his interest in working together.

I explained my “Connector” service, and submitted a proposal with a fee recommendation. The buyer/client agreed to the terms of the deal.

Simple Steps to This Business

1)    I located two travel websites which met his criteria.

2)    I introduced the prospective buyer to both travel website principles. One of the websites was a perfect fit and the prospective buyer made an offer to the seller through yours truly. The final sale price was negotiated in a few days.

3)    When the travel website sale was completed, I received a wire transfer for $2250, which was my “Connector’s” fee – in this case 3% of the deal. The entire deal consisted of less than 3 hours of work.

You can locate people and companies who looking for products, businesses, land, commercial real estate, surplus inventory, bankrupt companies, and capital, etc. in top national business newspapers such as The Wall Street Journal, Investors Daily, The New York Times (Sunday Edition), Chicago Tribune, Miami Herald, and the Los Angeles Times.

There are hundreds of useful websites for finding clients and “Connector” deals too.

Here are some sites I used for locating clients and “Connector” deals:

·        Alibaba.com is an excellent source for finding companies looking for specific products.

·        International Wealth Success publishes electronic and print newsletters with an abundance of contacts and leads for “Connectors”.  They also publish a comprehensive course on becoming a “Connector” (also known as a Finder’s Agent).


For smaller deals, you can find Finder’s Agent or “Connector”  prospects on classified sites like CraigsList, Crain.com Classifieds, eBay Classifieds, and Backpage.com .

You can also advertise your availability as a “Connector” to qualified prospects on business networking like IWS Money, Ryze, Biznik, and FastPitch.

You’ll also find a boatload of joint venture clients and “Connector” deals on these sites:


Being a “Connector” is a fun sideline business for anyone who enjoys putting deals together and introducing prospective buyers and sellers.

Most of the “Connector” deals and introduction I’ve developed over years have been done online, but this is a great offline service too.

Another recent example….

I recently introduced a gentlemen looking to buy a small marina with a women interested in selling. My prospective “cash out” should be about $10,000 if a deal is consummated!

Getting Started ASAP

The first step to success in this business is choosing an area market to “connect” people to, such as real estate, money, business purchases, commodities, products, web-based business brokerage, etc.

The next step would be assembling as much information as possible in your chosen field. Hopefully you’ll already be familiar with the field or market in which you chose to work. But either way you’ll need to compile some information on typical prices, demand, profiles of current deals, scarcity of items, etc.

Reach out to people or companies in need of the products, markets or items in which you specialize. Explain your “connector” or finder service and your proposed fees.

Present a simple Finder Agreement to prospective clients.

International Wealth Success offers a great Global Finder Kit for around $100 and it includes Finder Agreements. But you can also Google Finder Agreements in an Image Search.

Connecting people and companies to the products and deals they seek is a lot of fun and it’s a great part or full time business.

An entrepreneur contacted me out of the blue recently seeking a non-bank investment or loan for a group of upscale mobile home parks he’s seeking to acquire. I’ll be “connecting” the entrepreneur with three “A prospects”, and earn a small fee when and if a deal is completed – sweet.

If a “Connector” business is a good fit for you – click here and tell me about it.

I’m considering the development of a program to help entrepreneurs make money in this business!

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.)


***** Action Strategy *****

When you start a new venture one of the hardest things to do is take action.

This is especially true if you’re not familiar with a market, product, service or business.

But put this aside and take series of simple steps or actions.

Today you can do this by checking out the links and resources I’ve enclosed.

Then write down one idea that “pops” into your head.  Next, act on the idea.

For example, after checking the links and reading information one idea which pops into your head may be bringing a buyer and seller of a business together.

In your city, town or area you find a coffee shop for sale. You could post some information about this sale in a wealthy area of the country, either on CraigsList, business website or in the Wall Street Journal. Your objective is to bring two parties together and be compensated for it.

Use your imagination. What kind of deal can you put together? Who could you “connect”?

Have fun and play nice.


*****Valuable Resources*****


Tumano (small business classifieds)




BizBuySell (huge Internet marketplace for business)

Facebook (search business)


AskMarcCharles (send me your business idea or question)

Tuesday, March 19, 2013

The “Sticky Business” Factor Part 1

The “Sticky Business” Factor
By Marc Charles

A business partner said my idea was too “sticky”.

He meant it in a bad way. But at least he said it with a smile on his face.

My partner was referring to a business with endless tentacles, paperwork, overhead costs, government red tape and a potential lawsuit magnet.

I’m sure you’ve heard about or been involved with a “sticky” business on some level.  I tend avoid them like the plague.

That’s why I was surprised when my partner suggested my idea was too “sticky”…..the nerve.
In my launching, reviewing and advising hundreds of business ideas and products over the last 29 years or so, only a fraction of them could be considered “non-stick”.

However, that doesn’t mean sticky businesses aren’t profitable.

The “stickiest” business I ever saw was also one of the most profitable….transporting hazardous (and nuclear) waste. 

The entrepreneurs who worked this venture could make $20,000 to $70,000 per load. The cost (and headaches) of running this business included retrofitted tractor trailers, maintenance (cleaning), drivers, government inspections, insurance, fuel, special licenses and certifications.
I wouldn’t recommend transporting hazardous waste for anyone without political connections, world class insurance, smart people and very deep pockets. 

On top of that, you’ll need nerves of steel. My friends were threatened, shot at and their transport vehicles were sabotaged. 

There is a boatload of businesses in the “non-stick” category. When I dissected the business idea I mentioned earlier for my partner he reluctantly agreed it wasn’t as “sticky” as he thought….the nerve.

Granted, nothing is “non-stick” or problem free all the time.

The bestselling “non-stick” frying pans rarely offer a money back guarantee should something stick.

A great “non-stick” business I found focuses on a hot rising trend called China. 

Actually, the business focuses on Chinese products, commerce and worldwide demand. I’ll tell you about it in a second. 

But first, I’d like to show you some new things developing in China right now. These things leverage the opportunity in a big way.

According the Financial Times China has opened the floodgate of cash reserves to get their “export machine” cranked up again. Apparently some Chinese (in powerful places) believe the financial crisis the last two years is receding. 

Money is flowing to entrepreneurs and businesses again like it did pre-2007.

Granted, Brazil is getting the lion’s share of attention (and money) lately because they’re surpassing the US as China’s largest trading partner.

But entrepreneurs in any country can leverage the China trend and a “non-stick” business I discovered by becoming a “finder”…..more on this in a second.

Another issue is China’s currency.

Import and export entrepreneurs are wondering if they’ll suffer a backlash over China’s currency policy. It’s a no-brainer Chinese wants to control the value of their currency (Yuan) against all other currencies.

But China’s currency has a couple of things going for it. First, China’s economy is relatively stable compared to the US and other countries, and second they have low government debt.

I’m not an economist…but a sound economy and limited government typically increases the relative value of a currency.

In real world currency trading China won’t be able to “control” much of anything, if they plan to do business with other countries.

But overall the Chinese currency should play a major role in international commerce in a good way.

China needs trading partners to survive. The country does not have the resources to be self sufficient. That’s a good thing for the “non-stick” business I found.

China needs to make and export products to the world, as well as import and consume them.

China is a living, breathing money monster which needs to be fed.

Lastly….China’s population is still growing like wildfire despite all the restrictions on having kids.

According to the World Bank China’s population was 1.3 billion in 2009 (1,356,359,928 as of January 2011).

And get this….

Chinese planners want to merge nine cities around the Pearl River Delta in the southern part of the country. This would create the largest “mega city” in the world with a population of 42 million people. This is greater than the entire population of California (39 million)!

China has unlocked the cash vault, the population is skyrocketing and they need trading partners to survive.

A “non-stick” business opportunity…..

The opportunity is about bringing buyers and sellers together and earning a percentage of each deal. This is also referred to as an import export “finder”.

I saw this opportunity in action the first time in Wausau Wisconsin.

The entrepreneur was making money as a “finder” connecting buyers in China with sellers in the US. His product was the herb ginseng. The buyers were Chinese distributors and retail stores.  

The herb ginseng is still wildly popular in China.

The import export “finder” opportunity is one of the hottest “non-stick” opportunities around.

By “non-stick” I ‘m referring to a business minus the tentacles, paperwork, inventory, buildings, employees (unless you want them), red tape, and massive overhead costs.
When you’re a “finder” you match buyers with sellers or visa versa and make money if and when a transaction is completed.

In most cases a “finder” simply facilitate deals or makes introductions to prospective partners.
And the best part is the lawsuit magnet aspect is almost eliminated.
Granted, one downside to this business is the learning curve…..and don’t kid yourself, it takes time. There are no exceptions if you want to learn this business.

But in my research I stumbled on a website which can accelerate the learning curve a hundred fold.

On top of that, I was so impressed with the impact the site, market and trend was having on entrepreneurs I developed what became known as the China Wholesale Trader.

The China Wholesale Trader is the most comprehensive resource library, how to course and interactive community in the world. See what entrepreneurs are saying about it here.

China is on the move again and there’s money to be made.

China was crippled by the financial turmoil over the past two years just like every else. But they’ve opened the cash spigot enabling companies to import and export products again!

In addition, there are more than 70,000 importers and exporters registered on AliExpress.com right now.

There are more than a million companies and entrepreneurs registered on Alibaba.com. Most of these companies and entrepreneurs are aggressively seeking business partners and deals as we speak.

People have compared AliExpress and Alibaba.com to eBay.

But the comparison is weak.

eBay focuses on the consuming masses. And eBay is a great place to sell imported products!

AliExpress and Alibaba.com focus on businesses and entrepreneurs.

This is one of the great “non-stick” business opportunities of the 21st century.

Is the opportunity a good fit for you? I’m not sure. But it’s worth a peak”.


Marc Charles is often referred to as "The King of Business Opportunities." He is a regular contributor to Early to Rise and League of Power, Sovereign Man and dozens of other publucations. He's written dozens of bestselling e-books, Kindles, courses, and special reports on business and moneymaking opportunities. He recently launched The China Wholesale Trader.

Friday, March 15, 2013

A Unique Business Makes Money No Matter What Happens to Price of Oil

Get Rich and Stay Warm This Winter! by Marc Charles


Get Rich and Stay Warm This Winter!
A Unique Business Makes Money No Matter What Happens to Price of Oil

5:36 AM

Dear Entrepreneur:

The check was made out to me for $12,314! 

I stared at the stupid thing for almost a minute.

This was my second check in this silly business.

Now….don’t call the “authorities” claiming I promised you instant riches with absolutely no risk whatsoever.

Come on…..that’s not honest.

There is MAJOR RISK involved in this market and business.

But there are ways to protect yourself, or even get involved on a small scale, and this should help you reduce the risk.

What’s more…..

There are ways to approach this market and business that’ll give you an “edge”.

One “edge” is to know the market by researching and studying it like a professional, not a weekend gambler or football junkie.

I’ll show you how reduce your risk (and in some cases eliminate it) and make money at the same time.

But first it’s important to realize this market is highly leveraged.

That means you can put up a little money in the form of “margin” and leverage or parlay this amount into big gains.

In fact, the futures market is the highest leveraged market in the world…period!

And don’t kid yourself….

You could lose your initial investment in this market and MORE!

So….study, research and learn from savvy professionals.

The market and business I’m showing you today is heating oil futures.

So let’s get started………

There are two basic groups of people in this market:

·        First Group:
Large professional traders, money managers, mutual funds and institutions (like banks, oil companies and insurance companies)

·        Second Group:
Small speculators, traders, investors and beginners

One challenge in this market is to understand how it moves. 

But there’s a closely guarded money making secret I’ll share with now.

Everyone has access to the same information, statistics, charts, and advice.

But novice traders and investors will trade anything that moves. 

As soon as a stock, currency, commodity, or real estate property moves to a new high, everyone wants to buy it!

What’s more, novice traders jump from one market to another seeking the next “big” deal.
I knew a wildly successful futures trader when I started in this business. He said something I’ll never forget:

“You could lose several fortunes if you don’t focus on a specific market”

In other words, when it comes to trading futures (or anything for that matter) it’s better to focus on the nuances of the market you are trading.

Most new traders do NOT take the time to gain an understanding of each commodity market.
New traders don’t take the time to watch how it moves, trading ranges, cycles, or seasonal changes.

Novice traders don’t have a clue where the “Big money” is in a market (these guys control large sums of cash…think hundreds of million or billions).

And that’s not all……

The heating oil market is super easy to learn!

For example, let’s say you expected heating oil prices to rise during the winter months (which it often does but it’s tricky).

Let’s say that you purchased one March heating oil contract “at the market” (this means at the current prevailing market price) at 2.05.

Your expectations proved correct and the heating oil market moves up to 2.65 over the next few weeks. 

Now you decide to sell one March heating oil futures contract “at the market” and grab in your profit.

A heating oil contract on the NYMEX exchange consists of 42,000 gallons. 

When you opened the trade and bought one heating oil contract it was worth $86,100 (2.05 x 42,000 gallons = $86,100).  

A couple of weeks later when you sold this contract “at the market,” it would hypothetically be worth $111,300. 

In this example you would have made a profit of $25,200 (less commissions and fees).
That’s a lot of money for most people including me.

But for some people $25,000 is chump change!

Some of the traders, money managers and companies who participate in the heating oil futures market trade hundreds of contracts

In this example, if you traded 100 contracts on this same pricing move it would have meant 100 x $25,000 or $2.5 million!

Let’s come back to planet earth…..

In order to trade a heating oil futures contract you’ll need to make a deposit – this is referred to as margin. 

The required margin fluctuates daily - but for heating oil it’s currently around $1,000.


Heating Oil “Cheat” Sheet

Heating oil is a flammable liquid petroleum product normally used to fuel furnaces and boilers.
It’s similar to diesel fuel. Both of them are referred to as distillates. 

Heating oil is also known throughout North America as No. 2 heating oil. The market receives a lot attention every winter.

In finance, a futures contract is a standardized contract, traded on a regulated futures exchange. 

This is the easy part….

A contract is an agreement to buy or sell an underlying commodity at a certain date in the future, at a specific price. 

The future date is called the delivery date or final settlement date. 

The pre-set price is called the futures price. The price of the underlying asset (in this case heating oil) on the delivery date is called the settlement price.

A futures contract gives the holder the obligation to buy or sell. 

This differs from an options contract, which gives the holder the right, but not the obligation

Options are an entirely different market, but they are another way to greatly reduce your risk.
I’ll cover some interesting option opportunities in the weeks ahead.

An important thing about futures contracts…

Both parties of a "futures contract" must fulfill the contract on the settlement date.
The seller delivers the commodity to the buyer. 

Or, if it is a cash-settled future, then the futures trader who sustained a loss transfers cash to the one who made a profit. 

To exit a commitment prior to the settlement date, the holder of a futures position has to offset his position by either selling a long position or buying back a short position, effectively closing out the futures position and its contract obligations. 

The majority of futures contracts are exited before the settlement date. 

Most traders in the heating oil futures market have no intention of taking physical delivery of the commodity.  This is a major point.

The only companies interested in taking a physical delivery of heating oil are those involved the heating oil business.

You can watch heating oil futures prices on all of the major financial news networks, such as Bloomberg, CNBC, Fox Business, BBC, and others. 

You can also track heating oil futures on the top financial websites, such as Google Finance, Bloomberg.com, CBOT.com, FT.com, Yahoo! Finance and others.

How to Make Money with Heating Oil Futures 

One of the best ways to make money by trading heating oil futures is to avoid losing money.
This isn’t a play on words or a tricky trading rule!

In my experience avoiding losses has been a very big deal. You could become very rich over time if learn HOW to avoid losses and let your winning trades run wild.

As I showed you earlier, the heating oil futures market is easy to understand and even easier to trade. 

However, just because winter is around the corner and temperatures are expected to reach historic lows (rumors) this doesn’t mean the price of heating oil futures will rise.

In other words, it takes a little effort and research to understand how the heating oil market works

We need to understand the “ebb and flow” of the market. 

Historical price charts are a great way to do this! 

Here are two places to obtain historical price charts:

In addition, we need to know when the major players are buying or selling heating oil. You can get this information from the Commitments of Traders Reports.

It’ll also helpful to know the cash price (or dock price) for heating oil.

A bunch of heating oil traders make money specializing in the “spread” - or the difference between the futures price and the cash (dock) price.


Okay…let’s get back to avoiding losses…..

In my experience, there are three ways to avoid losses in the heating oil markey (actually any market now that I think of it):

1) Understand the nuances of the heating oil market (Typical trading ranges, where the “big money” is committed, cash prices, historical price charts, etc.)
2) Under trade. Trade less than you can actually afford to lose!  When your positions are profitable systematically remove profits and start over again small.

3) Use stop losses and options. A stop loss is an order below or above where you entered a trade. It enables you to “get out” of a trade if you are wrong. DO NOT CHANGE stop orders. Call or put options can be purchased above or below your entry points.

I’ve covered my “matrix” strategy in previous issues. But it bares repeating.


Here’s a hypothetical trade using my “matrix” strategy:
Buy one December heating oil futures contract “at the market” (the current market price)
The market moves higher. Your position is profitable.
Sell your one December heating oil futures contract “at the market”.
Then buy two December heating oil contracts “at the market”.
The market moves higher. Your position is profitable.
Then sell two December contracts “at the market”
Then buy three December contracts “at the market”.
The market moves higher. Your position is profitable.
Then sell three December contracts “at the market”.
Now buy four December contracts “at the market”.
The market moves higher. Your position is profitable.
Then sell four December contracts “at the market”.
Remove all of your profit from the market. Then start over again small.
NEVER trade more than four contracts (until you become a seasoned trader).
ALWAYS trade a series of four trades – never more, never less.
ALWAYS start over again SMALL.

You see…..

Rookie, novice traders ALWAYS over trade…especially when they make money. They become overwhelmed at the prospect of becoming “rich”. This is when 95% of the mistakes in judgment occur…in my experience.

Another Way to Avoid Risk is by Using Inverse ETFs

I really like inverse ETFs! They enable you to trade highly leveraged and volatile markets without a lot of risk.

In fact, ETFS are similar to commodity options in that your risk is limited to the initial investment….that’s it.

You can also make money with ETFs (and options) of the price of commodity goes down, stays constant or even goes up a little.

I’ll cover unique ETF and option strategies in future issues.

But for now….it’s important to know you can make a living in this business. 

There has never been a better time to learn this incredible market and business 
opportunity.

In no time flat, you’ll be warming up with your own heating oil profits!

Trade safe….and always look for ways to reduce risk and losses.

Have fun and play nice.

Regards,


Marc Charles