Nov 15, 2011

Today I earned a small amount of money only because of luck since I was holding 1 long contract for corn, and I did not offset it. However, based on the technical indicators, they indicated that the market just started bearish. I did not think that it would be bullish again that fast unless there are some significant news happened in the market.

I found out that the major reason why the corn market surged today was because Sinograin bought 1 million tons of corn from the U.S. Usually I was easy to disregard these kinds of news since it did not make too much effect on market price. However, this was the major reason why all the markets of the three commodities surged today (Sinograin did not just buy corn, it also bought soybean). So I marked down this news as an important news to affect the market price in order to be more sensitive about these kinds of news in the future.

Today I took 2 short positions for corn and 1 short position for each of soybean and wheat because of the following reasons:

For Corn and Wheat:

Technical indicators are still the major strategy that I used in my bidding. The indicators suggested that corn and wheat were all in the bearish mode, and they suggested that their prices would fall for a little while before they increases to cross the slow moving average again.

Soybean:

At the end of the following news, it suggests that “Still, China’s imports from Argentina and Brazil will rise, which may decrease U.S. exports to the Asian nation, Oil World said yesterday.” So I believed that the factor that affect the price today can only have effects in a very short time, probably just one day. Thus, I decided to take 1 short position for soybean.

Reference: http://www.bloomberg.com/news/2011-11-16/sinograin-said-to-buy-600-000-tons-of-u-s-soybeans-to-boost-state-stocks.html

 

Nov 16, 2011

I earned around $440 today according to yesterday’s strategy.

I did not do anything today since I believed that the market would still be bearish for a little while according to the technical indicators.

 

Nov 17, 2011

Finally, based on my bidding and strategy yesterday, I earned almost $3,500 profits today by holding 1 short contract for each of the three commodities. It was quite a big success for me today since I think I did not earn that much profits before…

This is our last day of bidding in the trading game in this course…but I start missing it already…how come? aii…

Today I took 2 long contracts on Soybean and 1 long contract on Wheat for Friday based on the following reasons:

Soybean:

-China purchased the inventories of soybeans holding in the U.S, which decreases the domestic supply in the U.S. So the price of soybean will increase temporarily.

Why do I think that this news is important and significant?

Actually I was confused by all kinds of demand and supply news from all over the world before. For example, the news always said that China will import more soybean from the U.S, but it just never happens to be the case to drive the price up…However, in this news, it was stated clearly by a commodity strategist that they have observed significant purchases of soybean and the export amount of soybean from the U.S increase significantly in the past few days. And according to the news from these days, the situation matches his speaking, so I think that this might be a significant news again.

Why do I think that it was temporarily?

According to the news on Tuesday, the price surged on that day was because China increases its import of soybeans from the U.S by 600,000 metric tons. However, this surge in price only affects the market for one day. Today, according to the news again, China purchased the inventories of soybeans holding in the U.S. I think this will be a temporary surge in price since the Euro depreciated against Japanese Yen at this moment, and it implies that the Debt crisis in EU will continue to be a factor that affects the prices. (“The euro is poised for its second-straight weekly drop against the yen amid concern European policy makers can’t stop the region’s debt crisis from spreading to larger economies including Spain, Italy and France.”)

Reference: http://www.bloomberg.com/news/2011-11-18/soybeans-rally-from-five-week-low-as-china-boosts-purchases-for-reserves.html

-Also, according to MACD and SMA, the fast moving average is converging to the slow moving average, and the fast moving average was about to cross the slow moving average from the above. This indicates clearer in MACD. This may imply a significant change in price movement again: the market might be bullish in the near future.

So, I took 2 long positions on soybean.

 

Wheat:

According to my observation about prices in these two weeks, the price movement of corn and wheat are in very similar trend (I also learned this from Rick’s class and Nick’s blog). So if either corn changes in its price movement, the price of wheat will follow its change in a small lag of time.

Also, according to the technical indicator, the market of corn and wheat should still be in a bearish mode, so I think even the movement of price of wheat changes its direction due to some reason, it will come back to bearish in the near future.

So I took 1 long position on wheat to offset the contract, and kept 1 short position on corn according to the analysis above.

However, I forgot to consider that this could be a signal for wheat to increase its price first, and corn might follow this price movement since the market bearish signal now from technical indicator was not as strong as before. So it might imply that the price of corn might increase tomorrow…

Anyway, let’s see what is gonna happen tomorrow…

 

Nov 18, 2011

Result: Corn kept decreasing as the technical indicator suggests, even though it does not decrease a lot. However, the price of wheat moved the opposite way as corn did: its price increases today.

The price of soybean did not increase or decrease today, so I think my strategy did not work that well today loh…but just did not lost money anyway…

Anyway, I felt so happy since I earned almost $5,000 in total in this week. I start making money!!!~Although my margin balance is still negative…but it doesn’t matter, since I think the most thing I “earned” from this game is I “learned”!!!~

 

Finally, my summary of this trading game (these are just my summary and the experience that I gained from playing this game). It will also be the part of my memories or strategies if I am going to continue playing this game in the future:

-Do not consider too many factors at a time

-Read more news, and sometimes we do not have to bid very aggressively. We can read news for a few days in order to consider which should be the most important factor to affect the price during the week (since we all know that the factors that significantly affect prices were different from each week)

-I start having more senses about the market and about the game after 10 weeks of bidding, and in these few weeks I figure out more about which kinds of news will affect the price after regular discussion with my classmates and reading their blogs

-Combining technical analysis and news is an effective way to bid successfully for me

-Marking down the news which has significant effects on prices for everyday or every week is very useful

-Looking at the price change at the end of the day before we bid will be helpful sometimes since sometimes it indicates a right track of price movement

…I forgot…

But I think I have already written down some of the useful strategies in my previous blogs…so I can take a look at it if I am going to play this game again in the future…

Guys, now we need to start working on our final presentation, project and exams, and good luck for all of you!!!~