I have to say that this week means a lot to me, for not only I’ve gained 11 grand dollars (60879.82 – 49385.55 =11494.27), but also I’ve learned so much new stuff from the trading game.

When it comes to my trading operation, one thing you should know is that I traded tons of contracts this week and harf of them are for experimental purpose,but still, based on my research on the market(Yes,most of them were short contracts). Through these experiments, I’ve found answers to many of my questions,like what time the exact trading hours are,how to operate limit and stop orders and what the volume and open interest and their functions are,etc.

So, what went right?

1. Prior to the release of USDA Wasde report

Just as I mentioned in the last week,I went short on everything. I pulled out of the market to take the profit on Wedensday because of worrying about the “surprise” that USDA might give.

2. On and after the day that USDA Wasde report released

I got up at 5:30 on Thursday morning to check the USDA report.

(1) Corn

It seemed that corn production and stock level had been lowered in the revised report^①. For traders, it’s obvious a bullish signal for corn price.

So I took 7 long positions on Dec.2012 corn(C2Z), which turned out to be a mistake,because my price-in was at the price spike. On Friday, corn price plummetted on traders’ locking-in profit and bad weekly sales accoding to USDA Weekly Export report^{②③ .} I lost a bunch of money and learned a lesson called The Importance of Timing.

To avoid further loss, I offset my 7 corn contracts on Friday(approxiamately $6000 lost).

(2) Soybeans

Soybeans’s production had been revised higher and the stock level also went up^①. I took the report very bearish for soybeans futures.

So I went 5 short on soybeans.

To my surprise, soybeans price jumped at the beginning on the release of the report, although finally went down on the same day and the next day.I interpreted the price dive on Friday as a late response to the bearish report plus pretty much the same reason as corn’s listed above. But why would the price surge first on Thursday? I talked to some of my classmates and were told that corn and soybeans prices usually moved together,in the same pattern,for corn and soybeans,to some degree,are subtitutes with each other. I found it sensible.

As what I did with corn,I retreated from soybeans market with around $6000 gain,which is just enough to cover the loss from corn. I feel like not a speculator,but a pathetic hedgher.

But I’m happy in general. Anyhow, I had some money in my pocket this week!

Reference:

①http://www.usda.gov/oce/commodity/wasde/latest.pdf

②http://www.cmegroup.com/education/market-commentary/ag/2012/10/us-corn_1245.html

③http://www.fas.usda.gov/export-sales/h401.htm