I planned to continue my technical analysis kit and I know persistence is a virtue. However, nobody is perfect. At the last day of trading game, I forgive myself to be a lazy bird.

At the day of saying goodbye, people will always be sentimental. I could not say I really fall in love with trading game. But the emotion in trading game seems to be like the feeling in love.  (I am really unwilling to compare trading to love, but they resemble to some extend). You may be secretly delighted when your secret admirer ask you whether he/she can join your discussion group or 15% rise of your portfolio value; You may be regretful of being impulsive to bare your heart and buying or shorting positions at not the exact right time; you may be hesitant on whether to break up with xxx ex and which contract (what price) to order… well,  if you have a love-hate relationship with trading and you can’t hold back to see your open position and CME website, then you may fall in love with it…

Why I am interested in trading game?

The trading game is a journey to experience real market turbulence and explore individual’s personal nature. The unpredictability future market drives participants to discover its real philosophy, however, everyone fails. Probably, that is the charming of future market as everyone see one of its face, but no one ever see its panorama. During the journey, you can observe the hiding nature of yourself. Are you more prudent than ever or greedier beyond what you thought yourself to be?

The sense of reality of simulated trading game overwhelms any case study and exercise. Straightforwardly, it test not only what you learn from textbook, but also how you combine all what you learn with your instinct. Besides, the futures market is like a resource bank. You could find tremendous learning materials and resources if you dig it deeply.

What I supposed to do in trading?

Trading is definitely an art.  A great work is a combination of inspiration and exquisite skill. What I can do is to learn every ‘painting’ skill, prepare canvas and painting brushes. Ultimately, waiting for inspiration.

Technical analysis kits are all kinds of colors. If you want to draw a fabulous painting, you should be aware of the combination of colors. And Economic or industry condition is the framework of your work. Good works depend on how you utilize those items.

Lastly, I am really grateful for Mark and my dear classmates. I learned a lot from your patient instructions, fabulous ideas and rich learning experience. 

Even though, U.S. government shutdown ended with a new budget agreement, monthly reports of USDA for Oct.14 were canceled. Some traders may wait and see until report updates. Then, you miss the chance. This bullish week (especially soybeans and corn) largely depends on speculation that China has boost purchases from U.S. In my perspective, previous expectation on increasing demand from China (because of the flood) seems to be proved. However, I am not sure whether this two events are likely to be directly connected.

What did I do?

I decided to step out of safe zone, heavy positions are taken. I took 20 contracts of corn DEC, 10 contracts of corn MAR and 10 Soyoil DEC on Oct 14.  The main reason for I do these transactions are (1) amortization of cost (2) higher demand expectation

Most of my long position are for diluting my cost. I bought 20 contracts of corn DEC at 4.35 which is below my previous cost 4.41 with 5 contracts. For Soybean oil, It nearly bottomed to starting value, I bet it may rebound in response to expected Chinese demand. And I won about 15000. Below attached my portfolio summary till now.

Why did I turn to technical analysis this week?

I define myself a kind of person who believe macro economy impact and long term observation more. Because I think I am really not that kind of smart guy who can remember so many kinds of lines and play them around with a breeze. Honestly, candlestick methodology is still a mess in my brain. For previous personal experience, candlestick chart is a basic tool traders should grasp. Another anecdote is that I quit leaning investment when I was taking my master degree of China because of being afraid of K-line, red and green numbers and so on. I even scared to talk about my finance background for I have never done any transactions in any financial markets, at that time, I have learnt Finance for seven years. Absolutely, loser!

Back to the theme, however, technical analysis could help you to earn quick money and fit for short-term speculations. So I immersed myself a little into some shallow and simple technique tools. Still step away from K line (candle stick chart)!

Technical kits—part 1

Bollinger bands: it is used to measure the highness or lowness of the price relative to precious trades.it consists of an N-period moving average( familiar?) , an upper(lower) band at K times an N-period standard deviation above (below) the MA. A conventional interpretation is Bollinger bands are indicating an overbought market. An overbought reading occurs when the close is nearer to the top band that the bottom band.

Below graphs depicts bollinger bands of soybean oil DEC 30min, daily ,weekly.In 30 mins short-term graph, soybean oil turned out to be an overbought market. Whereas in daily, the overbought features weakened. Market inverse in weekly graph.

Moving average 3 lines indicators: in evaluating the shorts term, MA(4) plots represents the fast moving average, and MA(9) plot is the slow moving average. For the longer term analysis, MA(9) is the fast moving average and MA(18) is the slow moving average. From short term perspective, corn market is bullish because the fast moving average is above the slow moving average.

From long term view, the market is bearish because the fast moving average is below the slow moving average. So it may be a warning that the bullish situation of corn would turn someday, so be care of heavy position and be prepared to for risk exposure!

To be continued….

This week, I am occupied with assignment and time lag. Everyone is likely to wait until U.S. government re-open. Let me talk something else in the waiting period.

A good news for Chinese commodities futures industry : the set-up of new Shanghai free-trade zone.

It is reported that central government of China plans to allow foreign commodities exchanges to set up delivery warehouses in the mainland’s first free-trade zone in Shanghai and help Hong Kong Exchanges and clearing to expand into commodities trading. In the meantime, Beijing would also “gradually approve foreign firms to participate in commodities futures trading” in the free-trade zone which would be established in the Pudong New Area. This news may attract interested eye sight worldwide to the booming Chinese futures market.

To be honest, futures especially commodity futures are not always mainstream financial product in life of Chinese. Possibly, because of black history, higher risk exposure and lack of certain knowledge. However, it seemed like that Chinese futures market did wonderful performance in world stage silently.  I am surprised to see a research paper which indicated Chinese future market joined the ranks of the world’s most actively traded futures. In year 2011, the three most active agricultural futures in the world by contract volume were Chinese-the ZCE (Zhengzhou Commodity Exchange) cotton and sugar contracts and SHFE (Shanghai Futures Exchange) rubber futures. Out of the top ten agricultural contracts by volume, seven were Chinese.

Black History

China built its first true futures exchange in 1993 and soon boomed. The over fast and early boom buried evil seed for the futures. Fraud and price manipulation prevailed in chaotic environment. After the notorious scandal in the bond futures contract (the “327”event), China Securities Regulatory Commission close down 80% futures brokers of the 1000,with only three exchanges remain. Until 1990’ did the futures market start to grow under reform and rationalizition.

Today

Overview of Chinese futures volume

Chinese futures market experienced up and down during its development. The big country has great potentials, so does the futures market. However, running may not be Chinese style, to walk step by step is more rational choice.

Reference:

Chinese futures markets:coming off a booming decade

new shanghai free-trade zone to lead push in futures

The first week of October is the National Day Holiday of China. Cool and sunny weather across the country, toll-free highways, admission ticket discounts and lower gas prices have combined to make this so-called Golden week the best time for travelling. However, creative netizens rename Golden Week as “golden mess” for the best description of the situation as the Chinglish phrase “People mountain, people sea”.

My second hometown, Soochow, as a well-known tourist city attracts tons of travellers during the “Golden Week”. People can hardly move a step in the famous old scenic spot, Humber Administrators’ Garden. The exquisite and gorgeous classic garden overburdened. This scenario is similar in other sites, like Jiuzhagou Valley which is famous for its snowy mountain, colorful water and marvelous forests got into trouble when its shuttle buses failed to cope with a rush of 40000 tourist.

By the way, I was astonished when scanning a comparison map of highway toll station of China with U.S.A.

Another bomb news should be a partial U.S. government shutdown. I won’t stress the serious impact on economy of U.S. and global economy but a quite interesting news.”Don’t Fret a Government Shutdown (Stocks Won’t)”. It mentioned the fiscal cliff fears from last December as “a bunch of sound and fury signifying nothing”. So will the U.S. government shutdown?

It seems like that things are not always golden or black even they are called so.