Profitable Strategies for Trading

mini-sized Dow, Gold & Grain Futures

John Carter & Hubert Senters

Sponsored by Berkeley Futures, Ltd.

Live Presentation Starts at 11:30 AM Chicago Time

DISCLAIMER: Futures and options trading are speculative and involve risk of loss. The information in this seminar is taken from sources believed to be
reliable. It is intended for information and education only and is not guaranteed by the CBOT as to accuracy, completeness, nor any trading result. It is
not intended as investment advice, nor does CBOT endorse or support any product or service represented in the presentation. The views and opinions
offered by individuals or their associated firms in interactive seminars are solely those of the authors, and do not necessarily represent the views of the
Chicago Board of Trade. The Rules & Regulations of the CBOT remain the authoritative source on all current contract specifications & regulations.
"Dow Jones," "The Dow," "Dow Jones Industrial Average," and "DJIA" are service marks of Dow Jones & Company, Inc. and have been licensed for use
for certain purposes by the Board of Trade of the City of Chicago (CBOT). The CBOT's futures and futures-options contracts based on the Dow Jones
Industrial Average are not sponsored, endorsed, sold, or promoted by Dow Jones, and Dow Jones makes no representation regarding the advisability of
trading in such products. Information provided is taken from sources believed to be reliable but is not guaranteed as to its accuracy or completeness. The
Rules and Regulations of the Chicago Board of Trade should be consulted as the authoritative source for information, rules, and contract specifications.
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 Trade The Markets

Profitable Strategies for Trading Electronic Mini-Sized Dow,

Gold and Grain Futures

John Carter & Hubert Senters

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 DISCLAIMER
• HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS
BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY
SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR
TRADING PROGRAM.
• ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN
ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR
THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING
PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE
NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH
CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT
ACTUAL TRADING RESULTS.
• THIS COMPOSITE PERFORMANCE RECORD IS HYPOTHETICAL AND THESE TRADING ADVISORS HAVE NOT TRADED TOGETHER IN THE MANNER SHOWN
IN THE COMPOSITE. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO
REPRESENTATION IS BEING MADE THAT ANY MULTI-ADVISOR MANAGED ACCOUNT OR POOL WILL OR IS LIKELY TO ACHIEVE A COMPOSITE
PERFORMANCE RECORD SIMILAR TO THAT SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN A HYPOTHETICAL COMPOSITE
PERFORMANCE RECORD AND THE ACTUAL RECORD SUBSEQUENTLY ACHIEVED.
• ONE OF THE LIMITATIONS OF A HYPOTHETICAL COMPOSITE PERFORMANCE RECORD IS THAT DECISIONS RELATING TO THE SELECTION OF TRADING
ADVISORS AND THE ALLOCATION OF ASSETS AMONG THOSE ADVISORS WERE MADE WITH THE BENEFIT OF HINDSIGHT BASED UPON THE HISTORICAL
RATES OF RETURN OF THE SELECTED TRADING ADVISORS. THEREFORE, COMPOSITE PERFORMANCE RECORDS INVARIABLY SHOW POSITIVE RATES OF
RETURN. ANOTHER INHERENT LIMITATION ON THESE RESULTS IS THAT THE ALLOCATION DECISIONS REFLECTED IN THE PERFORMANCE RECORD WERE
NOT MADE UNDER ACTUAL MARKET CONDITIONS AND, THEREFORE, CANNOT COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL
TRADING. FURTHERMORE, THE COMPOSITE PERFORMANCE RECORD MAY BE DISTORTED BECAUSE THE ALLOCATION OF ASSETS CHANGES FROM TIME
TO TIME AND THESE ADJUSTMENTS ARE NOT REFLECTED IN THE COMPOSITE.
• HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS
BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY
SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR
TRADING PROGRAM.
• ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN
ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR
THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING
PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE
NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH
CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT
ACTUAL TRADING RESULTS.
• THIS COMPOSITE PERFORMANCE RECORD IS HYPOTHETICAL AND THESE TRADING ADVISORS HAVE NOT TRADED TOGETHER IN THE MANNER SHOWN
IN THE COMPOSITE. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO
REPRESENTATION IS BEING MADE THAT ANY MULTI-ADVISOR MANAGED ACCOUNT OR POOL WILL OR IS LIKELY TO ACHIEVE A COMPOSITE
PERFORMANCE RECORD SIMILAR TO THAT SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN A HYPOTHETICAL COMPOSITE
PERFORMANCE RECORD AND THE ACTUAL RECORD SUBSEQUENTLY ACHIEVED.
• ONE OF THE LIMITATIONS OF A HYPOTHETICAL COMPOSITE PERFORMANCE RECORD IS THAT DECISIONS RELATING TO THE SELECTION OF TRADING
ADVISORS AND THE ALLOCATION OF ASSETS AMONG THOSE ADVISORS WERE MADE WITH THE BENEFIT OF HINDSIGHT BASED UPON THE HISTORICAL
RATES OF RETURN OF THE SELECTED TRADING ADVISORS. THEREFORE, COMPOSITE PERFORMANCE RECORDS INVARIABLY SHOW POSITIVE RATES OF
RETURN. ANOTHER INHERENT LIMITATION ON THESE RESULTS IS THAT THE ALLOCATION DECISIONS REFLECTED IN THE PERFORMANCE RECORD WERE
NOT MADE UNDER ACTUAL MARKET CONDITIONS AND, THEREFORE, CANNOT COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL
TRADING. FURTHERMORE, THE COMPOSITE PERFORMANCE RECORD MAY BE DISTORTED BECAUSE THE ALLOCATION OF ASSETS CHANGES FROM TIME
TO TIME AND THESE ADJUSTMENTS ARE NOT REFLECTED IN THE COMPOSITE.

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John Carter’s First Trading Setup

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John’s current trading setup in Austin, TX

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Professional Trader’s Workshop

TTM Trend

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 Trade The Markets (TTM) Trend
What is it ?
• We use this indicator a lot, so we want to explain
it early in the seminar as it comes up on many
charts.
• Modified Version Of the Heikin-Ashi Technique.
• It’s just a easier way to look at candle sticks.
• The heikin-ashi method (heikin means
"average" or "balance" in Japanese, while ashi
means "foot" or "bar") is a visual technique that
eliminates irregularities from a normal chart,
offering a better picture of trends and
consolidations.

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 Trade The Markets Trend
how is it calculated?
• The heikin-ashi candlestick technique uses modified
open-high-low-close (OHLC) values and displays them
as candlesticks but I had them converted to paint bar
studies . The modified values are computed using these
definitions:

• haClose = (O+H+L+C)/4
• haOpen = (haOpen (previous bar) + haClose (previous
bar))/2
• haHigh = Maximum(H, haOpen, haClose)
• haLow = Minimum(L, haOpen, haClose)

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 TTM Trend
• The "open," "high," "low," and "close" referred to are of
the current bar. The prefix ha- indicates the
corresponding heikin-ashi modified values.

• The value haOpen is always set to the midpoint of the

body of the previous bar, while haClose is computed as
the average price of the current bar. The modified high,
haHigh, is chosen as the highest value of the set {real
high (H), modified open (haOpen), and modified close
(haClose)}. The same logic applies to the definition of
the modified low: It is the lowest value in the set {real low
(L), modified open (haOpen), and modified close
(haClose)}.
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Notice how the candle lie to you but the TTM did not

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Professional Trader’s Workshop

Gap Plays

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 Gap Plays: The Right Way
ƒ “Gap” in prices from 4:15
p.m. to 9:30 a.m.
ƒ Gaps are like open
windows: At some point
they will be closed
ƒ Best gaps are in indexes
and in opposite direction of
previous day’s move
ƒ Best gaps are between 15
to 40 YM points or 1.5 to 4
ES points. Over this
increases odds of a
breakaway gap.
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 Why Not Individual Stocks?
ƒ Stocks that gap “with the index” and don’t
have any stock specific news are good gap
candidates.
ƒ However, stock specific news gaps should be
avoided. Enron won’t be filling its overhead
gaps anytime soon.
ƒ Gaps in stocks that are not part of a major
index should be avoided.
ƒ Playing gaps on specific stocks that receive
upgrades and downgrades is not consistent.
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 Why Index Gaps Get Filled
ƒ When an index gaps higher, there will be many
sectors and stocks that move higher with the gap,
but there will also be sectors and stocks that are
down on the day (vice versa for gaps lower)
ƒ The initial pullback, combined with the already
negative pressure on some sectors, causes the
index to fill its gap (vice versa for gaps lower)
ƒ Many larger funds won’t commit until a gap is
filled. This lack of commitment often causes the
markets to drift to their gaps at some point during
the day.
ƒ They like to “get the charts cleaned up” before
committing more money to the current market. 15
Gap Play Methodology: FILTER
ƒ Watch pre-market volume in key stocks to get
an idea of the “power behind the move.”
ƒ KLAC, MXIM, NVLS, AMAT, are good overall
candidates. Less than 15,000 shares each,
gap has a 90% chance of filling. 15,000 to
30,000 then its “moderate.” HALF GAP FILL
ƒ Over 30,000 shares pre-market, the chances
of the gap not filling rise significantly. Look to
50% gap fill.
ƒ Over 50,000 and I don’t fade.
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Gap Play Methodology: STOPS
ƒ When the gap is at 35 YM points/3.5 ES points or lower,
on low pre-market volume, I use a ________ risk reward
ratio. These are “set it and forget it” parameters. This
keeps a trader out of the “noise” and in the play. Ideal
for people who have to set parameters then go to work.
ƒ So if it is a 20 point gap, I’m using a ___ point stop.
ƒ When the gap is at 35 YM points/3.5 ES points or higher,
on low pre-market volume, I use a ________ risk reward
ratio. These are “set it and forget it” parameters. So if it
is a 40 point gap, I’m using a ___ point stop.

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 Parameters for the GAP Scenario #1
ƒ Target is a full gap fill for “low volume” gaps.
ƒ If moderate volume, will use same parameters
and a full gap fill IF gap is in the opposite
direction of previous day’s 1% move.
ƒ If YM is at 11150 previous day was a -112 point
down day in the YM (over 1%), then I’m using
this technique to short a +20 point gap UP the
next day whether it is low or moderate volume.
ƒ This situation represents the highest probability
full gap fill.
ƒ However, all “low volume gaps” have a high
probability for a full gap fill whether or not we
had a 1% move the previous day.
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 Parameters for the GAP Scenario #2
ƒ Target is a 50% gap fill for moderate
volume gaps for markets that moved less
than 1% the previous day or if the gaps
are in the same direction as the previous
days move.
ƒ You can hold on for full gap fill, but safer
play is to take half off at 50%, then move
stop to your entry point.
ƒ You can also just take all off at 50% and
move on.
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Professional Trader’s Workshop

Using TTM Trend with Gaps for

timing and tighter stops

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Gap up look at TTM need 2 to go short and or a tick hook

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Still got you first 10 point before it reversed on you

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Part 2 TTM turn Blue Step up go long.

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 How to manage the Trade
• 10 point stop from entry
• Sell ½ @ +10
• Move Stop to BE -3
• Sell ¼ @ +20
• Move Stop to BE +3
• Sell ¼ @ Gap Fill

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Professional Trader’s Workshop

Volatility Plays

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ƒ The Squeeze is a measurement of the
relationship between the Bollinger Bands and
the Keltner Channels with their standard
settings.
ƒ It looks for the times when the Bollinger
Bands trade in between the Keltner
Channels.
ƒ They work on all time frames. I like the Two
Minute and Five Minute time frames the best
for day trades.
ƒ Five minute signals are more powerful than
two minute signals, but happen less often.
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 BB, KC

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 BB and KC

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GOLD 240 Minute Chart www.tradethemarkets.com 32
GOLD 240 Minute Chart www.tradethemarkets.com 33
BB, KC, MO and Squeeze

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BB, KC, MO and Squeeze

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 How to manage the scalp Trade on YM
Hubert’s Style
• 10 point stop from entry
• Sell ½ @ +10
• Move Stop to BE -3
• Sell ¼ @ +20
• Move Stop to BE +3
• Sell ¼ @ Tick Extreme and Pit Noise or at
Pivots or at Fib Cluster

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 YM Day Trade: John’s Style
• YM 5 Minute Squeeze: If YM is within 8
points of 8 EMA, then bid at 8 EMA and
trail bid until filled. If YM is further than 8
points, then bid at 8 EMA +5 points.
• Stop is 20 points.
• First target 20 points, then move stop to
entry -10 points/
• Second target is loss of momentum on
squeeze or trailing 21 EMA.
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39
Squeeze Swing Parameters: Gold
ƒ STOPS:
ƒ 240 & 120 minute charts: $6.50
ƒ 60 & 30 minute charts: $4.50
ƒ 15 minute charts: $2.20
ƒ TARGETS:
ƒ Stay “all in” until momentum runs out
ƒ Or, “scale out” every $2.00 until
momentum runs out

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GOLD 240 Minute Chart www.tradethemarkets.com 41
 Squeeze Swing Parameters: YM
• YM Daily: If YM is within 50 points of 8
EMA, then bid at 8 EMA and trail bid until
filled. If YM is further than 50 points, then
bid at 8 EMA +20 points.
• Stop is 75 points.
• First target 75 points, then move stop to
entry.
• Second target is loss of momentum on
squeeze or trailing 21 EMA.
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Professional Trader’s Workshop

Multi-Time Frame Moving Averages

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ƒ Exponential Moving Averages are
similar to pivots.
ƒ They are a “fence” that keeps prices
in check.
ƒ The 8 EMA on a daily chart is a great
level to get in on existing trends—
longs when it is trading above the 21
EMA and shorts when it is trading
below the 21 EMA.
ƒ Remaining EMAs are targets and
reversals.
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Use multiple time frames to filter out low probability trades
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 EMA Recap
ƒ Visual reminder to go with the flow
ƒ Snapshot of current supply and demand
ƒ Keeps a trader from fighting the trend
ƒ Keeps a trader on the path of least resistance
ƒ Gets rid of emotions and bias
ƒ Prevents a trader from catching a falling knife or holding back a
freight train
ƒ Use with other indicators for maximum impact
ƒ Use wider stops to keep out of the noise
ƒ YM: 50 point stops on intraday charts up to 60 minutes. On 60 and
above use 21 EMA.

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 EMA Recap
ƒ The best policy on this play is to scale out in 2 parts.
ƒ First half is purely mechanical.
ƒ For a 5 minute chart:
ƒ On YM, after 20 points, take off half and move stop up to entry point.
ƒ Second half is discretionary. Waiting for EMAs to cross back is the
best result on trending days. On choppy days, look for TTM Trend
change to get out of second half.
ƒ For 60 minute charts:
ƒ On YM, after 50 points, take off half and move stop up to entry point.
ƒ Second half is discretionary.

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Professional Trader’s Workshop

RSI Reversals

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 Play Mechanics: Daily Gold

• Use 14 period RSI

• When RSI gets overbought, draw trendline
• Place sell stop below trendline
• Trail sell stop until hit (if long can also use this as a stop)
• Once short, close back above the trendline is stop
• 30 point target on first half—this is Mechanical and I
ignore exit signals that I use on the second half. Either
my target is hit or my stop is hit for the first half.
• Move stop to entry
• Target on second half is discretionary.
• TTM Trend Change is good.

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 Play Mechanics: Daily YM

• Use 7 period RSI

• When RSI gets overbought, draw trendline
• Place sell stop below trendline
• Trail sell stop until hit (if long can also use this as a stop)
• Once short, close back above the trendline is stop
• First target is 50% retracement of swing move
• Move stop to entry
• Target on second half is discretionary.
• TTM Trend Change is good.

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 About Us – Our Services

Each evening after we finish our market research, we post it on our site.

We each have our own newsletter that discuss our own unique views of
the market and discuss our trade setups for the next day

There is also a free video series available for sign up on the site

We have CDs and DVDs of previously recorded seminars available on

The site that discuss our trade setups and philosophy in detail.

We also develop indicators and systems available for TradeStation,

And to some extent, eSignal, and these are available on the site.

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 •Live Audio Internet
Trading Room
•Plays and market
analysis in real time
•New members must
be voted in

3 Day Online
Workshop
October 28-30

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Released in December, 2005

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Q & A/Contact Information

John Carter & Hubert Senters

Trade the Markets.com
Austin, Texas USA
[email protected]
[email protected]
Futures: www.tradethemarkets.com
+1 512-266-8659

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 Contact: Marc Quinn
Telephone: +44 (0) 207 758 4777
Email: [email protected]
www.bfl.co.uk
Address: Jackson House, 18 Savile Row, London, W1S 3PW, UK
A Member of the London Stock Exchange
A Member of the Futures and Options Association
Authorised and Regulated by the Financial Services Authority

This webinar is not intended as a solicitation nor an offer to buy or sell any of the futures and options mentioned.
Trading in these products is a high risk area of investment where you can lose in excess of your original deposit.
Trading in these areas may not be suitable for you; if in doubt, please consult a financial advisor. Berkeley Futures
Limited is not authorised to conduct investment business for U.S. residents in U.S. futures and options.

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Contact Information
CBOT
www.cbot.com
[email protected]

John Carter & Hubert Senters

www.tradethemarkets.com
[email protected]
[email protected]
+1 512-266-8659

Berkeley Futures Ltd

Marc Quinn
www.bfl.co.uk
[email protected]
Futures, options, CFDs, bullion, forex
Tel. 44 (0) 207758 4777

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