Month: October 2012

This will start my three week segment of news sources. Over the past weeks I have focused on charts and discussion boards, I feel it is time to get back to the basics and talk about good old fashion sources of news. This week, bloomberg.com

Well, here it is folks, the gold standard in finical reporting. Besides having the characteristic of being read by darn near every self-respecting trader, it’s easily navigable, up to the minuet, and free! What more could you want from a news source? A dedicated futures forum you say? Well, no it doesn’t have that. That will have to wait for next week.

I expect corn to continue to fall. Harvest are nearly in so we should not expect to see any more price shocks due to major changes in the domestic crop report.  Wheat is in the middle of its pattern and heading down. I will take a long position the first day after an upward movement that comes from below 855.  Beans seem to be heading for a down ward trend. Time will tell.

Hurricane Sandy may cause some unexpected volatility in the market, and perhaps a small drop in volume of transactions as speculators in the region to be effected set their minds on more pressing matters.

After a bleak week of exams I reentered the market this week with renewed vigor. Seeing that wheat had approached it bottom resistance barrier I took a long position. Like clockwork the position appreciated by about a percent and a half over the week and I was able to lock in a modest profit. I am currently holding long on corn, in expectation of a continued downward trend heading into the next week.

http://www.reddit.com/r/investing/

Reddit.com has long been known as one of the top discussion boards on the web. While it has become famous for some of its less savory subpages known as subreddits, it has a long standing tradition of excellence in discussion of highbrow topics. r/investing is no exception. With an active user base of 31,850 professional and amateur investors, this page is an excellent place to discuss strategies in all aspects of investment. While the community tends to focus on the stock market and mutual fund performance, the community welcomes the discussion of commodities speculation and hedging.

Other subreddits that the class may find interesting include;

r/business

r/economics

r/econometrics

r/finance

r/lectures

r/statistics

r/academiceconomics

r/UBC

As a note, the reddit community supports a very wide range of opinions and views, and not all subreddits are as academically oriented as others, and some might be found to be downright offensive. I only indorse the subs listed above as places to find and discuss differing opinions in the investment world. But by all means explore the rest of the site; hear in lies the bowls of the internet, a spawning pool of memes and subcultural icons. But heed my warning if you do choose to wander,

abandon all hope, ye who enter here.

Wheat seems to be approaching the bottom of its resistance band. Now might be a good time to take a long position, protected with a conservative limit in case of an unexpected decline in price. Corn has been very volatile over the last three days. It seems to be heading down but could spike just as easily.  Soy beans continue to look weak; however, I will not be entering this market on basis of my historical performance in the market. Every week I’ve been in that market I’ve lost money. Call it what you will but I’m staying away from it like the plague for the rest of the semester. It’s not a crop I understand, and is no longer a crop I am willing to risk the performance of my portfolio on.

After two back to back weeks of substantial losses it feels good to come out positive at the end of the week. I started the week sitting long on four contracts of wheat taken the week before. Prices had fallen, but not to my exit price. I knew that with the crop report coming up prices could shift in any direction at any moment, so daily, as the price slow crept up, I set ever increasing stop loss orders in an attempt to minimize any sudden market shift. Fortunately on the day of the publication of the crop report prices surged and I was able to lock in a profit.

I was also short on corn this week. The speculators seemed to think the extent of the drought had been over exasperated. Whether it had or had not, it didn’t matter, the only thing that matters in the short term is the speculators expectations. So I went short up to the day before the crop report and then exited with a healthy gain. I got out before the report was published because I knew it was basically a coin flip as to whether the report would send prices up or cause them to fall. As the extent of my previous week’s losses had caused me to be a bit risk adverse, I figured I would lock in a sure thing instead of face another potentially bank breaking outcome. In the end I was able to walk away with secured profit.

http://www.finviz.com/futures_charts.ashx

This site gives market data down to a five minuet interval for all the major commodities (not that such a level of accuracy is useful given that the precision of our trading software is akin to using a sledge hammer to preform heart surgery). It hosts data from as far back early 2008, fantastic for viewing seasonal trends across commodities. It is easy to navigate and is aesthetically appealing. It’s certain to entertain.

Despite a really horrible week, I’m actually left optimistic. If it’s possible to lose 20 grand in a week, then it’s possible to make it back. This next week I’ll be looking for long term positions in an attempt to limit the destructive nature of our lovely trading software. Beans seems seem to be rallying, but I’m a bit skeptical of the market that just gutted my portfolio, so I think I’ll stay out of that market for the week. Corn looks weak, might be a good opportunity to short the market. Wheat is continuing to predictably bounce up and down every two days or so, this market has netted me a consistent $1000 / week, so I plan to stay in it. My only other change is to be religious about checking my orders. I don’t mind losing via my own stupidity, but when my sole tool begins to fail me I take it as a personal challenge. Every morning hence forth I will be checking my positions as part of my morning routine.

So I have a two stage goal, don’t go broke, and if at all possible make back my lost funds. Making 20,000 over the next four weeks shouldn’t be any more difficult than losing it in one.

This week went poorly. Spectacularly poorly. In fact I do not believe I could have lost as much money if I tried. It was a combination of bad bets, program glitches, and really unfortunate luck. On Tuesday I took a rather large long position in soy market expecting a market rally. I knew I was going against the technical analysis so I placed a conservative limit. In addition to this position I also took some favorable positions in corn and wheat, both protected by limits. Knowing that the corn and wheat had a strong correlation I took opposing positions knowing that if the market swung one way or the other the opposing contract would be canceled at a minimum loss and the favorable contract would be able to cover the difference. This work fairly well and I ended up about $1000 ahead between the two markets. However the soy market continued to fall, and my limit never triggered. By the time I figured out what had happened I had two margin calls and about $15000 lost to the market. This is what is known as a catastrophe. So Thursday morning, knowing I had just lost half my principle, I decided to apply a new strategy, day trading. We didn’t have class that morning, so I took the morning to take half hour potions in the corn and soy market. Little did I know that every order I gave was lagged exactly a half hour. That’s right, each time you place an order in this god forsaken program, it takes a time stamp then correlates that order with market thirty minutes after you placed it. This basically made it so I was backward in all the positions I thought I was forward in that morning, resulting in another $4000 in losses. Moral of the story, if the market is as volatile as it’s been lately and you’re looking for short turnarounds, you’re going to have a bad time. My net loss for the week, ~$20,000.

On the bright side I’m pretty sure that’s a class record.