What went wrong, but could have gone worse
I opened the week by taking a long position on two soy contracts and a short position on two contracts of corn on the 25th. Checking the markets early the next morning I decided to exit my long soy position at a stop loss, taking a loss of $4000. Feeling the sting of a healthy loss in the soy market, I decided to double down on my successful position in the corn market and purchased an additional three contracts on the 27th, setting a stop loss order on my five corn contracts to prevent a loss from a sudden shift in the markets. Sure enough the opening hour of the 28th saw a dramatic price spike that I was completely unprepared for. While I lost about $5500 from this unexpected market shift, it could have been much worse. Hind sight I should have closed the original three corn positions on the 27th instead of betting big. Also, my limit should have been no greater than the initial purchase price.
I noticed on the 27 that the wheat price was nearing its lower holding price so purchased three in expectation of a moderate market rally. I plan to exit the position Monday morning given the state of the market.
The bullish volatility of the market can likely be blamed on a quarterly report on corn that came out on Friday placing stock estimates at 988 million bushels; this is below the previous estimate of 1.11 billion. We can expect the additional volatility in the coming days as the market adjusts to this new, pessimistic outlook. As of this evening I’m sitting long in all commodities.