Week 2: 1. What went wrong
Last Friday I made a long contract on the soybeans, expecting the imbalance of the demand and supply will lead a long rising of the soybean’s price. However, the USDA’s report posted on that day saying the expecting output is underestimated lead a big diving at the opening order on Monday.
I planned to sell the contract on Monday, but I was really unwilling to make such a huge lost. In consideration of the common sense (big drought will impact the output of crop ) and abundant research on the producing area’s real situation, I believe the reduction of production will happen in the coming days. So I choose to wait. However, several days have passed and the bear market had no sign to rally up. I started to doubt my judgement and made an offset with a 401.00 lost on 27th September.
As might have been expected, on 28th Sept. the USDA posted a report to correct the anterior output data——the supply of the soybeans is in a large shortage!!! God, then the soybeans market reversed immediately. Unfortunately, I have already sold the long contract….
In this week, I had two lessons:
1. Be patient! Trust your judgement. As Andrew told us on the first lab class, despite the skills in the game, the consistent process and strong inner mind are very important. There are too many information around us, and most of them are posted for commercial speculation. We should learn how to select the efficient part for ourselves.
2. Don’t just keep eyes on the fundamental plane, the historical data is also a key to the success. If I studied the relationship of the price trend and the report dates earlier, I would not hesitate for such a long time to sell the contract. After analysing the last year data, I find the correlation between the price’s variation and date of report is really high. And the impact often lasts for a period (at least for 3days).
All in all, what happened this week really let me realize that “Trading is an art form!” So, cheer up, let’s make the game more interesting!
Reference:
http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1046
Hopefully things are going smoothly this week. Thanks for sharing.
One more thing, now I can see that you posted the report from TradeSim and I’d like to make sure you understand the report fully. If you need a help with understanding, please let me know.
Hi，Jessy.It is happy to read your article. I just puzzled about why you expecting the imbalance of the demand and supply will lead a long rising of the soybean’s price？You know，some times I got so many news and policies about agriculture market，but I do not konw how to identify which information is more important to us？Can you tell me what kind of source will make you feel more important？In addition， as you said，don’t just keep eyes on the fundamental plane, the historical data is also a key to the success. This is a good suggestion to me. Have a nice weekend！