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Thus is the case with <tonic>Kerry J. Knoll, the veteran mining executive who recently took over the captain’s seat at Canada Lithium (TSX: V.CLQ, Stock Forum).  The tiny developer of the Quebec Lithium Project sealed a pact with Japan’s Mitsui & Co. for laboratory tested lithium concentrates for batteries and other industrial uses.

Canada Lithium’s shares, at a two-bagger 40 cents Canadian, are outpacing gains of most, if not all, lithium carbonate hopefuls that trade publically.

“There is some stuff passing on (at the accompany),” Mr. Knoll tells me from Toronto, “but I don’t think it warrants the litigate in the stock. It seems that lithium is at the top of the queue right now for speculators.”

The trading action in scores of small miners, wanna-be makers of lithium, moly, gold/silver or rare elements tantalum and niobium, is animated this summer. One can catalogue a hundred significant gainers on Stockstream – flashing green, evolving 30% and 40% higher each day.

Matters not where these geographic expedition companies are staking their 1-in 10,000-claim to mining reality: Wyoming, Nevada, Ghana, Colombia, Mongolia, Mexico, Indonesia. They are all swelling on volumes 30% to 300% greater than their 30-day averages.

I asked Mr. Knoll: Why the doubling of stock price in in brief order on miniscule news? This just after a hullabaloo about Canada Lithium board’s terminating of now former CEO Judy Baker? Whom does he respect among the multiplying lithium ranks? (Lithium One (CNY) was the answer. He owns shares of the James Bay Lithium Project proprietor.) What’s next for tiny Canada Lithium and its impeccable Japan connection? How long to production at Quebec?

The 50-something executive has engineered more than a few success stories at gold and lithium miners. He knows his molybdenum economics, and Kerry Knoll also was a diary keeper at Northern Miner magazine and Canadian Mining Journal. (See previous article.)

Mr. Knoll says he never has worked with a junior that did not eventually become a producer. “The odds of finding them are 1 in 10,000,” he says.

His associated companies spanning three decades include Glencairn Gold Corp., which is now B2GOLD Corp. (TSX: T.BTO, Stock Forum); Wheaton River Minerals Ltd., which is now Goldcorp (TSX: T.G, Stock Forum); Blue throw off Mining Ltd., which acquired Thompson Creek Metals; Thompson Creek Metals; and gilded Goose Resources.

Possible events that are triggering Canada Lithium’s moves higher, Kerry says, includes an impending appointment of new board members, a timeline to production of 1 1000000 tonnes of lithium-laden ore by 2012 and the granting of more than $2 billion of USA government money to research lithium ion technologies for powering vehicles.

“People also may be coming mindful that inside lithium deposits you have spodumene, which is used in glass and ceramics,” he says. Spodumene is also known as lithium aluminum silicate.

I will add to Kerry’s list: articles naming the company and rare element wanna-bes as stock picks: like this one from the other day. (Some of these companies, such as TNR (TSX: V.TNR, Stock Forum) and Commerce Resources (TSX: V.CCE, Stock Forum), are actively pursuing their respective rare element fields with veteran verve and not a little apprehend. Still, this in Mr. Knoll’s view, and my own, does not guarantee they ever will see light-of-production day.)

Above all, Canada Lithium has the advantage of share-out its lithium carbonate concentrate samples from Quebec with a manufacturer, Mitsui, that is willing “to give us its own customers’ specifications for what they need from the element’s properties,” Mr. Knoll points out.

Plain speaking damage?: All lithium carbonates are not created follow among ever-evolving technologies for electric-powered vehicles and rechargeable devices.

Where does this leave you and me? With the reality of mining. Going from paper to rock takes 5 to 8 years, almost anywhere in the world with the possible exceptions of Wyoming, Mexico and Russia. That is, unless you are Red Laker Rob McEwen, in which case you can divide that hail in half an make friends with all of the town’s folk, and your workers to boot … or you are Robert M. Friedland, in which case you can multiply that number by 1.5 or even two, frighten half the population of a hungry put forward with your bold underground purposes yet still raise money from London and Dubai and Geneva participants, and still manage to slim the jobless rate in a 50-square-kilometer patch of the mining district by 40 percent or more.

“There are 50 moly companies in Canada alone(p),” says Mr. Knoll, who uses molybdenum as an example. “Yet how many of us know that moly prices almost always go after with the price of oil? Or that rare elements are peculiar marts with peculiar characteristics?”

Kerry Knoll continues, “There is plenty of lithium in the earth’s crust, but who is really getting it? In the next four years, we’ll see a shortage of lithium concentrate coming out of the ground,” says Kerry Knoll, who adds that investors can make one strong assumption – “Before this is over, there will be hundreds of companies staking claims to the lithium market.”

At the Quebec Lithium Project his company owns. Kerry Knoll’s small team (no public relations or Investment Relations department, he notes) has signed on several contractors who will survey “the old drill holes from the 1960s and twin some of the holes.”

He sees a “full-blown” resource estimate of the property sometime in first-quarter 2010.  Then come the feasibility studies for a working mine, the pilot plant, collaboration with workers and community groups at the nearby town of Val D’Or. Of row, along the way are requests for cash in exchange for stock.

Canada Lithium’s last fund-raising was in June for $4 million. We’ll keep following the story.

Sentiment: See Bernie Schaeffer’s second issue of Sentiment magazine, just out. My article on gold sentiment is on Page Zero.

Photo: I took the above photo, and many more, at a mine tour last week on behalf of Ticker Trax. Name the mine or the company in the next 60 minutes following publication of this article and I will send you a copy of the next issue.

Active Trading: David Banister’s Active Trading Partners is now live atwww.activetradingpartners.com. We at Stockhouse’s Ticker Trax are discussing collaborating with the New Englander’s clamant rate helper.

David A. Banister, as you recall, analyzes price and pattern waves, sentiment, products and people. His track record is verifiably just short of excellent for May, June and July. I have known and followed the analyst since about 2002.

As a real-time test, aside from the 50 selections he examined and selected in a beta-test of his service, I personally went long on one of Mr. Banister’s choices:Medarex (NASDAQ: MEDX, Stock Forum) at approximately $8.15 a share. (Please see previous article.)

Bristol-Myers Squibb (NYSE: BMY, Stock Forum) announced its intention to bargain Medarex, a developer of auto-immune technologies and biologic drugs, some 36 hours later for $16 a share, some $2.15 billion. Mr.

Mr. Banister explains that Medarex’s shares had largely been abandoned in the marketplace. David, who is especially adept at choosing undervalued pharmaceuticals and natural resources companies, also notes that large companies are well aware that half of all top selling drugs in coming years will be so-called biologics, fashioned from aliveness organisms, compared with less than a third of them at inaugurate. The typical premium in a cash or stock get going for a biologics company last year was about 80%.

New Orleans: When October rolls approximately, my calendar slots in New Orleans as one of North America’s most diversified investment conferences. The New Orleans Investment Conference in previous years has given me great satisfaction meeting colleagues, subscribers and real miners, scientists and alternative economists/technicians. And making money.

I’ll be presenting a down-and-dirty workshop at this year’s gathering; I hope some of you can join me. Brien Lundin of The Gold Newsletter produces the conference, which runs Oct. 8-11. Many of my trusted colleagues and investment sources attend the show. This year will sustain an excellent crop of counter-clockwise and contrary thinkers in the areas of mining, emergingmarkets, commodities and life sciences.

The tradition of the New Orleans conference goes back to the mid-1970s, when gold was just catching wind at its back from ordinary investors, people in garage lofts who had little idea they could buy gold and silver.

Just as good are the select companies that decide to dangerous undertaking out Brien Lundin’s show with their executives. Several dozen companies in all, nearly all natural resources and about half of them worth reviewing.

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To start the day session, December corn surged to its highest point since June 1st, but it eased back to the mid point of the day’s trading range into the close. Traders said that some of the late selling was profit taking along with selling by spreaders versus wheat and some light hedging pressure. Corn was a follower of soybeans and wheattoday as those markets rallied on fresh demand news. Traders in corn are looking for tomorrow’s export sales number from the USDA to come in well above the 286,800 tonnes that are needed each week to reach the USDA’s export projection for the remainder of the 2009/10 crop year. In fact, old crop sales have averaged 884,300 tonnes for the past five weeks. Weather predictions for the Corn Belt are somewhat drier than previously predicted into the end of the week. Temperatures are still expected to warm to above normal levels into Friday and Saturday. This is considered beneficial to the developing crop although traders are looking with some concern at forecasts of above normal temperatures starting in the first half of next week.

July Wheat finished up 9 1/2 at 461 1/4, 6 3/4 off the high and 10 1/4 up from the low. December Wheat closed up 10 1/2 at 504 1/2. This was 11 up from the low and 6 1/2 off the high.

Wheat was the leader to the upside over corn and soybeans today with the December contract trading at its highest level since May 28th by late morning. Prices eased from the late morning peak into the close, but the market still closed the day with a considerable gain. Traders said that support came fromnews of a major tender by Saudi Arabia, continued wet weather in the Canadian Prairies and some buying in wheat by spreaders versus corn. Traders are also keeping a close eye on fund buying given the enormous net short position that trend-following funds continue to hold in wheat. Forecast models are showing up to 4 inches of rain for parts of southern Saskatchewan and Manitoba. Traders in Europe report that Saudi Arabia is in the market for 990,000 of wheat. Delivery periods are said to extend from October 2010 through April 2011. The Australian Bureau of Agricultural and Resource Economics (ABARE) revised its estimate of 2010/11 wheat production up by 1% from its previous estimate this morning to 22.138 million tonnes after recent beneficial rains in the east. This compares to the current USDA estimate of 22.0 million tones. 

July Soybeans finished  up 8 1/4 at 957 3/4, 4 off the high and 8 3/4 up from the low. November Soybeans closed up 9 at 924 1/2. This was 9 3/4 up from the low and 1 1/2 off the high.

November soybeans posted modest gains overnight and then added to those gains to start the day session. The market made a new high for the day in late morning and then traded just under that high into the close. However, the November soybean contract failed to take out yesterday’s high. Meal and oil were both moderately higher on the day, although July meal lost ground to the new crop December contract on the day. Traders credited today’s strength to a surge in wheat as well as unconfirmed reports that China may have bought an additional one or two cargoes of US soybeans. Continued wet weather in the Canadian Plains was also supportive in that it is expected to reduce acreage for canola along with acreage for wheat, barley and has led to steep downward revisions in oat production. Drier weather into the end of the week is considered favorable with the next rain system expected this weekend in the form of scattered showers and thunderstorms in the western and NW Corn Belt. Traders are concerned about the possibility of above normal temperatures late this week and in the 6-14 day timeframe. Egypt has reportedly bought 20,000 tonnes of soybean oil and 6,000 tonnes of sunflower oil. The USDA will release its latest Export Sales report tomorrow morning. Sales need to average just 58,300 tonnes each week to reach the USDA’s current export projection for the old crop season. Traders are expecting this week’s total to come in below last week’s combined total of 550,600 tonnes for soybeans.

July Soybean Oil closed up 0.32 at 38.13, 0.09 off the high and 0.42 up from the low.

July Soymeal finished  up 1.3 at 287.0. This was 1.1 up from the low and 1.3 off the high.

July Oats closed  down 4 at 270. This was 8 1/2 up from the low and 5 1/2 off the high.

 July Rice closed  up 0.065 at 11.06, equal to the high and 0.09 up from the low.Edit this text

This blog is published by Andy Waldock.  Andy Waldock is a broker, asset manager, trader, and analyst.  Therefore, Andy Waldock may have positions for himself, his clients, or his relatives in any market discussed. The blog is meant for educational purposes and to develop a discussion among those with an interest in the commodity markets. The commodity markets may not be advisable for all investors due to the high degree of leverage. There is considerable risk in investing in futures.

The daily commentaries provide an analysis of the factors that influenced price activity, a recap of any reports released that day, a summary of each commodity’s traded price activity, and a look ahead at the next day’s schedule.  Market commentaries for soybeans, corn, wheat, silver and gold are provided by CME Group.

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Arranging for future years is an excellent idea, and everyone ought to do it at some point. Planning for the financial future of your young children is something that plenty of couples do, which is another way to solidify the future of your family group. There are actually a large number of different ways to set your young children up monetarily, but quite a few moms and dads are going to invest in some rather popular investments. Here are a number of of the most common investment options while you are contemplating your little ones, especially if you have an objective in mind.

For those moms and dads who wish to conserve up for the higher education of their youngsters, most opportunities exist. There are particular state backed resources that you can invest in. They’re profitable for the state in addition to the moms and dads in a number of ways. First, the state rewards because they be sure that another student will attend a state college. For the families, you can find sometimes financial bonuses that can be enjoyed when money is put into this type of account. Not only can they gain any offers that they state has such as matching a certain percentage, but they can often ensure that their small children will have all of their requirements included.

For moms and dads with no certain goal in mind, there are various ways to invest income so that you have something built up once your little ones reach an age where they can make use of the income. Standard investing is a method, but quite a few families want to get their kids involved in the operation. As a result, you can find custodial accounts that can be opened up in your child’s name. These accounts belong to them, but are in your custodianship until they are a certain age. Not only are there accounts that have a few nice development prospective, but there are actually also tax breaks for families who choose these kinds of investment strategies for their youngsters.

Ultimately, it doesn’t matter if you realize all of the best and worst investments of 2010, but it will make a difference that you began to conserve and schedule early. Every year the expense of university rises, so it’s more critical now than previously to provide your youngsters the financial assistance that they will need to escape into the real world when they get older.

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The Institute for Supply Management’s September survey of the non-manufacturing (i.e. services) sector came in better than expected today, at 53.2%. With ISM decisionbar survey’s any reading over 50 normally indicates expansion; under 50 – contraction. Today’s number was the 9th straight 50+ number for the services sector. Better yet, employment in the sector also improved, likewise edging up over 50 and giving the third positive reading in five months.

In overnight trading this week, gold prices hit an all-time high of more than $1,365 an ounce.  What’s more, many gold stocks keep moving higher as well. 

Gold, after all, is the one currency governments cannot devalue.  So as the U.S. dollar and the euro fall, gold prices rise.  Same with other commodities, so long as global demand for raw materials keeps climbing.

Coming off the best single September in the stock and binary option markets in two generations, investors have been looking for this kind of economic foundation to support a bullish hypothesis, and there has been real worry of late that weaker-than-expected economic figures would take the wind out of any market rally that started. But on the other hand, if ever the old adage that bull markets climb a wall of worry would hold true, it would be now. Indeed, we’ve been so worried for so long that it is very easy to find a situation in which a stealth bull market develops while everyone is still complaining about what they see in the rear-view mirror.

Granted, we’re not ragingly bullish. There are still serious political issues to tackle, gold is saying (yelling, actually) that the market is strategically on a very precarious foundation, and there are major risks with both inflation and deflation. Nonetheless, September’s gain is not without merit; the last six times September racked up gains of 5% or more, the anyoption markets were positive for the fourth quarter and for the year, averaging 7.4% and 23.2%, respectively. Indeed, the lowest quarterly gain was 2.44%, in 1997, and the best was a 20.8% bump in 1998. Incidentally, the weakest annual tally following a 5%+ September was 20.26% in 1996, and the best was a whopping 45% run in 1954. At least historically, the strong showing in September 2010 should be a precursor to a more sustained tactical move upwards.

Meanwhile, the Fed’s dangerous policy of quantitative easing is beginning to have serious international repercussions, and it is from this angle that we see potential icebergs ahead. As the Fed floods the system with dollars, the dollar naturally weakens versus other currencies, which while perhaps in the interest of the United States is an event rarely welcomed by export-oriented nations like Germany and China. Amidst talk of a “global currency war” on trade desks around the world, Japan’s central bank unexpectedly cut interest rates today and sent an unmistakable signal that it will do whatever it can to keep the record-high yen in check. Elsewhere, commodity-rich nations like Brazil and Indonesia have taken steps to control the “fast money” moving in and out of their currencies as massive amounts of investing capital flow in their direction, while “hot” emerging markets like South Korea have done the same. Such reactions are understandable, although perhaps unadvisable; as a veteran of both the breaking of the British pound by George Soros and the draconian currency controls in South Africa, your editor can attest to the slippery slope on which these nations are beginning to tread.

Finally, we’re putting together the next Cash Cow issue, and will be bringing you several new portfolios aimed at Asian emerging markets, commodity currencies and commodities themselves. We’ll also be adding additional recommendations in specific U.S. market sectors in light of the stronger market we see possibly developing over the next several months.

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While it can be hard to invest with and for your kids, one can find some elements you can do to make the procedure simplier and easier and even entertaining. The end objective is to educate and to show your children about the monetary globe. Maintain these aspects in mind and see just exactly how far your kids can make their cash go.

You’ll find most child friendly stock selections accessible that you simply can help your children pick from. Anything like Sony, or other products that they’re familiar with, help make good choices. These choices will allow them to connect to the investment that they’re making, furthering the lesson that you simply are trying to teach.

In the end, it will probably be the fact that they can pick from corporations that mean something to them that will cement the knowledge in their head and get them excited concerning the prospect of putting their money away rather than spending it.

It might be wise to hire a specialist broker to purchase shares on behalf of your kid. This is particularly true if you’re not well versed within the ways of stock investments. Make sure that you simply choose a broker that is willing to talk to your son or daughter and explain details to ensure that they can understand it.

Keep in mind, you do not want this to be a poor experience, so do a little research and find the broker that’s correct for the scenario. One can find plenty to pick out from, so ask close to and look online for ideas of where you may start. Remember, discovering the right broker can make all of the distinction in the world.

Investing is something that numerous men and women decide to get involved with, and there are tons of elements that your youngsters can learn from the operation. It is a great concept to get them involved with investing early on, even if it only means purchasing a couple of shares of a corporation that they are well versed with. Ultimately, you won’t only be setting up your children for financial success, but you will be enabling them with knowledge that they will use all of their lives, which can make the entire procedure well worth the effort that you put into it.

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10-26-10 – Corn Market Recap Report

December corn remained in a relatively narrow range today just below the 2-year highs established in early October. The overnight session trended lower, but December corn recovered from late overnight through early afternoon before ending the day with a modest gain. Early pressure was credited to strength in the dollar and selling by spreaders versus wheat. Later strength was credited to short covering. Very windy and occasionally wet weather moved into the Midwest today with high winds expected to continue in the region until tomorrow. This may cause some very minor delays to the corn harvest, although Illinois and Indiana were nearly finished with their harvests as of Sunday at 97% and 96% complete respectively. Winds are expected to be strongest in these states along with Michigan. Iowa lags a bit farther behind at 86% complete and Ohio stands at 77% complete. Minnesota was 77% complete and North Dakota 55% done. Analysts reportedly are looking for the USDA to again lower its US average corn yield on the November supply and demand report by near 1 bushel per acre.

December Corn finished  up 2 1/4 at 571, 9 up from the low and 6 1/4 off the high.

March Corn closed  up 2 1/2 at 584. This was 6 off the high and 9 1/2 up from the low.

November Rice finished 0.095 higher at 14.765, 0.095 off the high and 0.225 up from the low.

Wheat Market  Review Report for 10-26-10

December Wheat finished 18 higher at 692, 21 1/2 up from the low and 7 off the high.

March Wheat ended up 18 3/4 at 731. This was 6 1/2 off the high and 21 1/2 up from the low.

December wheat surged to start the day session and then added to its gains into early afternoon. Traders credited the gains to technical buying, buying by spreaders versus corn and concern over a lower than expected good-to-excellent quality rating of 47% for the US winter wheat crop on yesterday’s weekly Crop Progress report from the USDA. This was the agency’s first rating of the winter wheat growing season and it was 15% lower than last year. Funds and other specs were buyers in wheat today despite a rally in the dollar. The rally took the December wheat contract to its highest level since October 18th. The tender schedule remains light so far this week with only Oman’s bid for 60,000 tonnes announced so far today. No word yet this week from the world’s biggest buyer, Egypt.

December Oats closed 6 higher  at 371. This was 5 3/4 off the high and 7 1/4 up from the low .

Soybean Complex Market Analysis  for 10-26-10

November Soybeans ended  1 1/4 higher at 1219, 5 off the high and 10 1/2 up from the low .

January Soybeans settled up 1 at 1231. This was 5 off the high and 11 up from the low .

December Soybean Oil finished up 0.06 at 49.53, 0.17 off the high and 0.3 up from the low.

December Soymeal closed 0.9 higher at 335.5. This was 1.4 off the high and 3.9 up from the low.

November soybeans moved lower to start the overnight session and then started to a slow recovery rally late in that session and into early afternoon of the day session. This took the November contract to a fractional new high for the move and a new high close, although the gains were modest. The dollar was moderately higher today, but other outside factors were considered slightly supportive including a sharp rally in wheat. No soybean sales were announced by the USDA this morning. Weather forecasts remain unchanged from yesterday with high winds pushing down through the Midwest today and tomorrow triggering some scattered moderate shower activity in the process. This is not considered a crop problem since soybeans are 96-97% harvested in Illinois, Iowa and Indiana with Ohio at 95% harvested. The heaviest winds are expected in Indiana, Illinois and Michigan. Harvest figures are as of Sunday, so the completion percentages are even higher as of this morning.

After reading ï»¿today’s commentary,traders might want to take a peek at the commercial traders  momentum.  The Commercial Trader momentum can be tracked by using the Commodity Futures Trading Commission Commitment of Traders reports.  Our idea is that, in a value driven commodity futures market no one knows fair value like the people who produce it or, have to use it.  In fact, it is precisely their sense of value that provides the commodity market’s rhythmic meanderings that swing traders love so much.  Let’s face it, producers know when their product is overvalue and it should be sold just as well as end line users know when they should be stocking up at low prices.  Therefore, trader should be able to incorporate this valuable information into their futures market education.

The daily commentaries provide a summary of each commodity’s traded price activity, an analysis of the factors that influenced price activity, a review of any reports released that day, and a look ahead at the schedule for the next day.  Market commentaries for wheat, soybeans, corn, silver and gold are provided by CME Group.   The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.

Andy Waldock publishes this blog.  Andy Waldock is a financial advisor, analyst, broker, asset manager and traderfor Commodity & Derivative Advisors, located in Sandusky, Ohio.  As a result, Andy Waldock may have positions for himself, his relatives, or his customers in any commodity future market reviewed. The blog is meant to develop a discussion and educate those with an interest in the commodity future markets. The commodity markets may not be appropriate for all investors due to the high degree of leverage.  Investing in the commodity futures could result in substantial risk.  If you are interested in reading other published articles, commenting  on his publications or subscribing to Andy’s blog, please visit http://blog.commodityandderivativeadv.com, or if you have any questions, please call 1-866-990-0777.

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1. Make sure that your portfolio was designed for your investment goals -not for how it reacts in up and down markets because that is an unknown.

2. How much time you have to meet your goals will help you consider what to put in your portfolio . The longer the time horizon; the more risk you can take.

3. Assess your risk tolerance . If you panic when you lose 10% of your investments, then a portfolio of more risk adverse vehicles would be more appropriate. Keep in mind though that you may need to invest for a longer time if you take less risk .

4. If your financial circumstances haven’t changed, then stick with your long term plan no matter what the economy is doing. Studies show that long term investing always gives a better return than darting in and out of the markets. Fees and taxes magnify your losses every time you trade .

5. Don’t look for short term fixes like selling everything and waiting till things get better. Things may get worse before it gets better but you will be guessing as to when it is the right time to get back in. You could miss out on the recovery.

6. It’s a great time to be buying for long term investors . You can start by dollar cost averaging which is buying shares consistently over time so that your average purchase price is lower .

A $10,000 investment in the S&P 500 Index would have grown to $45,098, three years after the bear market of the 1970s . In five years after the bear market of the same period, a $10,000 investment in the S&P 500 Index would have been worth $85,605 .

Don’t let emotions let you stray from the facts. Your investment goals, time horizon and risk tolerance should drive your investment decisions, not the daily news or financial television networks. Cope with a market decline by having an investment plan that you are comfortable with and stick with it. Your financial future depends on it. -Fern Alix LaRocca CFP® Wealth Coach

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However, it is beneficial to understand that often the investor can begin with much less than the minimum through notional funding. For instance, an trader could notionally fund a managed futures or trading systems account at the $50,000 amount yet tell the manager to trade at a nominal $100,000 amount. In other words, the account will trade as though there were $100,000 in it even though there is not. The investor is simply making use of additional leverage.

In the previous example this means that the account will be trading at 2-to-1 leverage. Meaning the trader will have gains and losses at two times the level. Had the trader just put up a third of the nominal amount minimum then he would see gains and losses at 3 times the level and so on.

Why individuals making use of Trading Systems or Managed Futures May Want to Consider Notional Funding

Notional funding can easily be an effective use of capital, since frequently a trading system or managed futures account will not come anywhere near to using all the money in the account. For example, in Hoffman Asset Management’s case we have a margin-to-equity ratio of typically less than 10%. What this means is that for every $100,000 invested, generally speaking, we will be utilizing less than $10,000 at any given time for margin. The remaining $90,000 rests on the sidelines stagnant. Although it is correct that interest on those unused funds can be earned, most investor’s think they could do better investing those funds elsewhere. Often time’s high net worth individuals or corporations will even put NOTHING in their accounts and trade 100% notionally. The question for investors should be “how can I determine a reasonable notional level to invest at”.

We feel the answer to that question is one that can be calculated based on several statistics. Specifically, what is the largest drawdown expected and what is the highest margin that might be required. For example, Hoffman Asset Management (as of this writing) has had a maximum drawdown of about 17% on a $125,000 nominal account size. This indicates a $21,250 drawdown in cash terms. The greatest margin usage is about 15% on $125,000 or, about $18,750 in cash terms.

To figure out a notional investment amount, we recommend that an investor add the maximum expected drawdown and the greatest expected margin usage. This amount would provide the investor the absolute minimum they could invest in the account without having a margin call.

In the prior example, if an investor had began on the worst possible day, and had a $21,250 drawdown, and at the same time had the maximum margin usage of $18,750, he would have needed $40,000 of cash in the account to fund that $125,000 nominal account size. Once again, some organizations and individuals who are not concerned about margin calls may actually decide to fund the account with less than that (or zero).

Advantages to the Trading Systems or Managed Futures Investor

This allows the smaller, but more aggressive investor to get involved in the program without needing to tie up the whole amount in cash. This can boost their gains and losses at the added leverage level they are using. If, for instance, the manager made a 30% return with a 17% drawdown, then the investor at 2-to-1 leverage should have experienced 60% gains with a 34% drawdown.

Once again, this is a more aggressive technique, and we recommend this just for investors who completely understand the advantages and risks of notional funding. However, for the appropriate investor, this can be a valuable tool to have in his or her arsenal.

Dean Hoffman
DH Trading Systems
http://www.RelativityTradingSystem.com

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Why would that final point matter? I could be biased, but I think you get far better info on your financial futures from a writer who is also in the ditchs every day investing their own as well as their customers ‘ portfolios. They’d have way better revelations with reference to what works and what does not than somebody who has got the rumination down but no practical experience. Are they suggesting you get into a certain alignment like mid cap, miniscule cap or huge worth? Or are they picking particular investments based basically on a range of technical signals? They are first based typically on my trend tracking indicator giving us the green light and secondarily on the choice of retirement funds based totally on momentum research. The more accurate the suggestions, the better, because that permits you to follow along either just on paper ( which you must do initially ) or with your particular portfolio.

Are they advising when to sell a fund either due to gains or to control your losses? This to me is the most significant issue. If there is no plan in place for getting out, how are you going to ever know when to sell? This has been the best downfall of most publishers ( and investors.

) since the bear market of 2k not selling whether or not market conditions dictate it’d be in your own interest to do that. For many people investing is an emotional issue.

The pendulum swings between fear of loss and greed for larger returns. There is no sense in following an investment approach, that might have merits, if it implies restless nights for you. You will not keep it going for the long term and long-term investing is required for making your portfolio grow and flourish. Following these tenets may not make you rich, nevertheless it will help you to avoid some dreadful advice. Ulli Niemann is an investment advisor and has written about systematic approaches to investing for over 10 years. He dodged the bear market of 2,000 and has helped numerous folks make better investment decisions.

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