Trade at China-week 2

I was really not surprised to find I was still in Pudong District, Shanghai after one-hour’s highway drive. The traffic jam! After 12 hours flight and 3 hours stuck in highway, finally I arrived home. The old story happened again: a good news and a bad news. The good news was my portfolio value increased about 10000 bulks. The bad news was I couldn’t open some English websites, like Bloomberg probably because of the internet censorship in China (Just like we can’t use Facebook, Twitter in China).

My portfolio summary is shown below:

Lesson 1: Do not fear to buy when price slump

When future price slump, irrational traders go panic and reject to buy as they afraid of price falls again. A metaphor is that the stupid donkey stuck into the same hole twice. My story is I bought 5 contracts of corn (C/Z3) at 4.61 on 19th, then its price decreased to 4.49 on 24th when I covered 2 contracts. Two days later, the price hovered around 4.50. I continued to cover another 7 contracts at 4.52. The action I do is to amortize my cost. After covering my position at lower price, my average cost for 14 contracts is 4.54, which is lower that former 4.61. (Picture below).As the deviation of corn price seems to be not active, I sold all contracts at 4.56, earning 1287.5 dollars.

The point is a big slump is always the right time to buy when you hold the future for a much higher price. The judgement of right time may be based on comparison between current price with the lowest price daily, weekly, monthly, or yearly (Best!). I learnt from somewhere (I can’t remember it is the technical analysis of stock course or my father) that the lowest price line could be a support for price.

Lesson 2:  Play with short under clear expectation!

Search “soybean” in Bloomberg commodity news of last two weeks. The tone is DROP! I shorted 1 contract of soybean (ZK/X3) at $13.34 for fun as I saw the second news about soybeans drop. When I saw the 5th news about soybean drop, I cover my position at $13.09 and earning $1262.5. Luckily, the next day “soybean advance….” It seems like the soybean price has a negative correlation relationship with rainfall. So keep an eye on weather report, it can make you be wealthy. Trust me!

Lesson 3: The emerging market countries could be a huge push to price deviation.

The wheat is the star of this week which enabled lots classmates turn the tide. The reason of latest rise maybe speculation on China to boost purchase. But I am not sure about the selling time point. I closed my 6 contracts of wheat position on 27th at 6.83 as the volume is not large enough above 6.8065. So I chose to guarantee my profit.

 

P.S: I am not sure whether the link could be opened as I save them in my Favorites before I came to China.

A newbie’s sticky notes on future trade-week 1

People who play in financial market must have their own preferred style.  They could be long-term investor, short-term speculator or switching between both. I find two things that trading games attract me: one is possibly making money instantly; another is exploring self-identity and inner potential. (Sorry for not interested in any economic thing!)

For a future trade newbie, the biggest challenge is not lack of information, but information overload.When I opened all kinds of websits loaded with tons of news about economy, finance, commodities, I totally got confused. So lesson 1 for future trade newbie: learn to screen information for you decision. Besides, I should learn to weight those information as a reference of order and time of order.

When I first opened a transaction, the initial thinking is ‘NOT LOSE MONEY’. I did some stupid transactions:

The prices of same futures product in different months go the same direction, as the shape of price curves of same futures in different months (i.e. Corn Dec 13 and Corn Mar 15) is nearly the same. I bought 1 unit DEC corn contract and short some quantity of MAR 14. This might be a good strategy to lock risk and only works when premium gets wider (price of DEC contract goes higher and higher than price of MAR contract).

Same day, “Fed unexpectedly refrains from QE taper, keeps bond buying at $85 billion”.Everything rose. I bet commodity market would rise at least only one day,then quickly covered my short position and kept my long position and add another wheat long position. Luckily, the bet turned out to be right.

Lesson 2:  before applying any strategy, consider the condition it mostly fits for.

Lesson 3: quickly response to any big bomb news. As quickly as possible!!

Wheat futures rose the most in three weeks on signs of increasing demand for exports from U.S. Export sales of wheat jumped 30%. The Fed decision may provide a lift to the commodity cycle.”

Lesson 4: demand and supply are basic principal for price judgement. Policy will affect the marco expectation for a certain period. But how long??

The last but not the least, HAPPY MID-AUTUMN FESTIVAL!  但愿人长久,千里共婵娟