With the release of reports that soybeans would be having a very good crop in November, I decided to take a short position. The idea behind this was that an increase in supply should lead to a lowered price for soybeans. However, by Sept 21st, the prices did not follow this pattern and their prices actually rose. I was confident in my analysis though, so I did not close my position. My confidence paid off and prices saw their largest price drop in a year by falling 5%. I closed my position at that point with gains over $4k. Following the closing of my position, soybean prices saw a bit of a rally so I was able to get out at the right time. This is clearly how everything went right. The source that I used was well respected and the prices followed with the news. I followed with my knowledge of basic economics and it clearly helped. The main key was that I got into the market right when the news came out, before other investors were able to get in. I would strongly suggest following @WILLIE1701A who is the person that first tweeted about the surprisingly large harvests of soy and suggested that prices would fall. He has also suggested that corn supplies would be lowered in the near future so I have also longed corn and will wait and see what happens by Monday. The resource that I used is incredibly useful not just for the quality of information that you get, but also the mix of both reporting of news and rumours. There is also good variety of types of information that is distributed by him. For example, one day he will mention different weather patterns in Brazil or the U.S.A, but then the next will start to mention the latest reports from Russia regarding the rumours of them creating new export bans on different crops. However, the most useful thing that I find about this resource is that he also explains the logic behind the conclusions that he occasionally makes. As a beginner, it is invaluable to get the news, but also some help on how this may affect markets or even explanations as to why recent price changes had occurred. I had previously longed corn earlier in the week for similar reasons involving Russia’s recent stance on exports, but corn prices did not follow so I made a stop loss trade. However, I have decided to continue on my previous idea in the same way that I stuck with soy prices even when they did not work in my favour.
http://in.reuters.com/article/2012/09/17/markets-grains-idINL3E8KH41Z20120917
https://twitter.com/Willie1701A
Good going! It’d be nice to see more detailed comments on the calculation. 🙂