The Economics Trade

oildollarRemember when the Economics of supply and demand screamed that oil at $65 per barrel was about to take the plunge to a low of $25? What did you do?

How about when the 10-year treasury was approaching 3% and the world, including Bill Gross, said higher and higher. The economics dictated a different direction. What did you do then?

Now a commodity has joined the list of economics pointing the way! What to do? Perhaps a thought from the greatest trader of all time, Jesse Livermore, can help point the way.Newsletter300x250

According to Livermore always determine the total amount you want to commit to a position BEFORE you start. The first trade should be 20% of the total. A 10% stop loss is immediately put in place. If your decision is wrong you have lost only 10% of 20%, not 10% of 100%. Livermore knew he was not infallible and always cut his losses.

 

But what do you do if you are right? As your position appreciates between 5-7% add another 20%, then another 20%. The final trade, according to Jesse, is 40%. Always raise your stop to 10% below your last trade.

That is the HOW. Now the question becomes which commodity is the WHAT?

PS: Want specifics? There is more to learn in the FULL article that my subscribers get. Sign up today for a free 7-day trial and learn about which commodity I think presents an economic opportunity. 

Written by
With his passion for economics, Bill Tatro has been entertaining audiences on the radio and in seminars for over 30 years. Bill’s dynamic and no nonsense style has made him one of his stations’ most popular show hosts.