The balance of margin accounts
| Contract | Price in | Price out | Initial position | Offset position | Gain/Loss |
| C2Z | 754 | 747.75 | short | long | 311.5 |
What I went wrong
From my last blog, I was a long position for wheat. I expected that demand for wheat to increase by two factors: USDA reports and substitution effects. USDA released on SEP 28TH that all wheat stocks decreased by 2 Percent and corn stocks decreased by 12 Percent from what they expected. From that, I assumed that greater demand would occur. However, the fewer stockpiles seemed not to influence on consumer behavior to buy more grain. Also I thought that high corn price was going to affect increasing demand for wheat. However, wheat price was decreasing from 890.75 to 857.50. So my potential loss would be -1662.50. I could not offset it. I am going to offset it when unexpected fluctuation happens.
About corn price, I chose short corn when the price was decreasing. I expect corn price would decrease more since corn reached limit up price. Based on supply and demand curve model, when current price of corn remained too high, not many people could afford that price. Demand for corn decreases. Less consumption leads to decreasing price.Then I gain profits 311.5
Hi Elly,
Enjoyed reading. It’s great to see that you’re applying economic concepts. And just for suggestion, (as Andrew, the TA, mentioned), when you’re experiencing a big loss, it’s better if you offset asap. Thanks for sharing your strategy.
thank you so much!!