How time flies! I have been in Vancouver for 3 months exactly and I have already finished half of the study tasks for the first term in Vancouver’s beautiful autumn. As I finished my last transaction on Friday morning, the futures trading game also comes to the final.

Thanks for Mark’s comments which encouraged me to insist on my own rule to trade. He said, finding out what you are good at and sticking to that for best results. I finally find that wheat is my best friend and it can always be in control while others are often change in a way different from what was expected. 

So I shorted 15 contracts of Dec. wheat in the final order this morning. The open price is $6.97 and it rise to $7.02 in the early morning. But the general price action for wheat today showed a downward trend. In fact, when I waked up and analyzed the trend, the wheat has experienced 2 waves of continuous decline. But I thought I did not miss this wave actually. Luckily, my forecast turned out to be CORRECT !!!

In this 6-week trading game, I learnt a lot. From knowing the definitions and rules of futures to figuring out the “short-term trading” strategy which fits for myself, it is great gains. In the end of the blogs, I summarized a series of detail strategies and lessons learnt for my futures trading journey.

a)      POSITIVE ATTITUDE AND A STRONG HEART

We must overcome one of the human failing —— Greedy. To get the meager profit is the core of this kind of strategy. The game trained me to be more resolute and broad-minded when facing the profit and loss.

b)      CHOOSE YOUR MOST FAMILIAR COMMODITY   

You can rarely get profit from the unfamiliar items. Keep an eye on the things which you are really good at, no matter in the futures trading or in your life.

c)       BUILD YOUR OWN TRADE TIME STRUCTURE

Use the 5- minute chart to make a short-term decision. After you open the position, you need to take actions in 3-4 price movement. Do not take any actions in the first 30 minutes after opening.

d)      RISK CONTROL

How well can you use the limit and stop order? It is a criteria to evaluate a good risk control trader.

e)      HAVE A QUALIFIED TRADE RECORD

Save minute chart and the daily transaction records, and then make transactions conclusion. It is an important part of the trading.

……

It was actually a precious experience for my following investment decision making in the “future”. (*^_^*)

Looking forward to the Halloween week~~

This week I insisted on my short-term trading strategy and get some deeper cognition.

Last week retrospect

I suffered from a great loss for 2 reasons last week. All of them derived from the right trend predictions but wrong trades.

1)      Wheat

I anticipated a downward trend of wheat price and I shorted 10 contracts of wheat on $6.93. After 3 price movement I got an acceptable return. According to my lessons learnt last week, I rejected my “voracity” and placed an order to cover on $6.90. Unfortunately, it was Friday afternoon and the transaction stopped soon. The delayed transaction on $6.96 in the next Monday morning made me suffer a loss of $1750. This short-term transaction asserted a failure.

2)      Feeder Cattle

It is actually a new kind of commodity to trade for me. I also estimated the price trend correctly but I placed the wrong order. It was a funny but sad story. I predicted the trend with the chart of Nov.13 feeder cattle contracts but I bought the Oct.13 feeder cattle contracts. (T_T) That made me suffer a $2325 loss.

This experience confirmed the strategy I mentioned in the blog’s lessons learnt part. “Choose my own best understanding and familiar commodities to trade.”

Do not try to catch up with the missed market

Wheat showed an amazing price movement these 2 days and I again missed this wave of market till the afternoon on Friday. The price of wheat (Dec.13) reached the highest since July. But the news shows that this price trend may not continue for long. As a short-term trader, once I miss the market, I cannot purchase it.

Highest price of Dec.13 Wheat since July

According to the trend, I cannot catch up with this wave of market which I missed.

There are some useful news link about the wheat.

http://www.bloomberg.com/news/2013-10-18/wheat-bears-prevail-as-demand-slows-for-record-crop-commodities.html

http://www.bloomberg.com/news/2013-10-17/australian-index-futures-climb-as-yen-gold-hold-advances.html

Risk and strategy of short-term trade

Short-term trading helps investors to cultivate a keen sense of market trends so that we face daily challenges of the market without the burden, and thus maintain a good attitude. Of course, there are also short-term trading obvious defect, which is mentioned below.

On the one hand, once a commodity price trends established, the anticipated price movement in one direction will be a great distance after the formation. Short-term traders could have earned the profit by the fixed positions easily, but they have to divide the profit into a profitable short return. Thereby these kind of transaction greatly reduce the earnings rates as well as increasing the risk.

On the other hand, when one-sided market trends occurs, in order to prevent traders from large losses in case of the sudden price change by a wide margin, traders should not place orders only by short-term contrarian indicator.

How to play the advantages of short-term trading while overcome its inherent flaws should become the main issue to consider to be a good short-term investor. In my opinion, this is actually a problem of identifying the market trend and use a mixture strategy of trading. Long position fits for the clear trend in one direction; short-term trading might be a better mode of operation when the trend is not obvious to predict.

Look forward to next week trades based on these strategies.~

As I mentioned in my last week blog, I planned to change my strategies to handle the trading game. Yes! It is short-term trading which I need to focus on the “Meager Profit”.

Many a little makes a mickle                                       

A Strong Heart is the priority to trading the futures with a short-term strategy. We must overcome one of the “human failing” —-Voracity. To get the meager profit is the core of this kind of strategy. That is to say, a successful short-term trader wins in Quantity with a certain percentage of quality. So keep that in mind and then we have chance to get profit from short-term trading.

Actually, this week’s attempt seems not as good as I expected. The leading cause is that I cannot control the transaction time well and a desire to earn more in a single transaction.

In order to overcome the voracity, I plan to set a specific objective in every single transaction.

Intuition goes first~

If you are a short-term trader, market and policy analysis is not the most important factor, but intuition is.  Market and policy analysis fits for the long-term investment as the short-term traders need to know how to “follow the trend”. If the market runs as we expect, just follow the trend. If not, stop as soon as possible! We cannot wait passively to open position after the market proves that my anticipation is right. It might be less profitable. We also will suffer from a great loss if we wait for the market confirmation to close a position.

Saturdays’ lab seems useful for me to predict the trend to make a short-term trade. Just follow my intuition with the help of the 5-15min trend chart to make a decision.

Lessons Learnt

1.Choose my own best understanding and familiar varieties. This week I tried feeder cattle for 3 contracts. And then I found that Wheat is actually my best friend~

2.When I miss a market wave, don’t chase it! I missed a good wave today because of a nap. I felt depressed but it was the true time to test my Strong Heart~

3.Save minute chart and the daily transaction records, and then make transactions conclusion. It is an important part of the trading.

New resources:

I noticed a analysis index today which fits for short-term trading. It is RSI—-Relative Strength Index.

Just share a link on Youtube about RSI https://www.youtube.com/watch?v=LT2LpZ_TWrc

Maybe we can talk about the details next week if I find that it is useful.

Happy Thanksgiving!!

Strategy of next week–  Short-term trading

The market is always fluctuating in disorder. When the traders make directional selection of buying and selling, they do not depend on the judgment of long-term trend, but on their own price expectations for next wave. Short-term speculators always earn a volatile profit in a trading day, definitely without overnight positions. The short-term traders need to stop out immediately when suffering from losses. The loss of every single transaction should be kept in one price movement. We must distinguish strictly between the short-term speculation and the general investment.

We aim to earn the meager profit in short-term trading. So never be hesitate to cover the position.

The traditional trend traders have enough time to study the market, they can make use of a variety of market planning and risk control means. But for short-term traders, we do not have much time to think.

Points:

1)  Selecting the direction of trade is the key to success. In other words, make it clear whether this market is a bull market or a bear market. Only by grasping the direction of the market, we will be more likely to make money.

2)  Good grasp of the stop.
Even if you have no trading experience, you can control the risks by control the stop.