Trading Week Two,
Now this is a learning curve, I started off this week with an idea; the Market would be going down. I had a firm understand of what the short and long trading concepts involved, what prices I would be looking at as specific market indicators, some knowledge on world reports Supply & Demand. What I may have not had an understanding on what the trading game itself. This became evident later in the week.
Mondays trade went in, I made the assumption the market would continue trending downwards. I wanted to make sure my contract would be filled so I made my bid of 685 – the bid was successful because it was lower then the 694.4 the “Daily High” therefor my price was lower, and the contract was filled. This was also the case with Soybeans and Wheat. Bid of 1335 in the Soybeans market, in a short contact was also accepted as it was lower then the daily high of 1357.4. Wheats bid at 675 was below the High at 691.2
Tuesday things turned, I thought the market had trended downward long enough and that there might be a bit of recovery. I thought I would just try and make some money of the upward trend. What I didn’t realize was I had just offset my position by cancelling out what I currently had. I had netted out all of my commodities. Trial and Error….
It gets better…..
My real error this week came when I decided that the market would again depress. I figured the market still had some room to move down, and because of that I would place an order for more short contracts. There was so good backing of my assumption in the news, recent drops in the market around 5% for the week.
(error…. If your entering a short contract in the Trading game you enter a Positive Number) this error would cost me 6000.00 roughly.
My Mistake was entering a Short Price bought in a Long order.
And with the significant drop in the market that day for all commodities I took a serious hit.
Moving forward.
Coming Monday there are two ways to look at the week
- The market will rally higher because so much of the commodities have been sold off that sellers will think there price is to low and to much is being sold (possibly to much commodity in the market? – increased Supply?) so the price will be driven up But by how much?
- With so much bad news recently the market could continue to fall. I guess the question I am going to think about over the weekend is Will the Market rally back or continue to fall, and by how much.
I guess this is why it is the Art of trading.
I am going to look at the option of possibly hedging my soybeans against my losses of Corn and Wheat.
Short – the price has to be lower then the daily high – marking going down (+ve)
Long – the price has to be higher then the daily low – market is going up ( -‘ve)
yea….from the technical analysis, we all believed that the market should at least got some rally after so much decrease. However, it seems there is NOT any resistance level at all. The prices kept going down, down and down. I am in the Hell now. I have got so many long postition contracts in corn, wheat and soybean.
I think that next week, we may not focus too much on the technical analysis. After all these graphs just described the past.
hahah zheng, so interesting because many of us not in the technical analysis group think we should focus more on ur expert blog and not supply/demand. But you state otherwise hahah
You have a clear sense of logic and how to act based upon the movement of the trends. However, when you predicted that the trend would continue to decrease or take a turn and increase, what did you base your assumptions on? I deduced that you were studying the technical analysis for sure, but which other factors did you take into account?
Oh no…you could’ve made quite a lot of profit this week because your predictions were quite accurate, if only you didn’t make those careless mistakes..>.<
I've talked to several other classmates and many of them say that after such a big drop in the market, prices will shoot back up again. You have also mentioned this in your blog, I'm just wondering, why do u think so? I don't really understand the logistics behind that. I'm just thinking could it possibly be because commodities have been sold off into market causing prices to significantly drop, but people would also want to buy commodities when the prices are low, thus gradually bidding up the prices again?
Thanks for sharing! just curious..are u still in a positive margin balance?
i dont know if the market has the ability to rally back right away, i am going to hold off and see if i can minimize my losses on wheat and corn to see if it will rise back up.
i think buyers may feel that the price is to high (or was to high) so they would be buying less, i am looking at this from a world view on the markets, that falling dollar prices, and decreasing economic growth, along with the increase in european and US debt. mostly a fear of a second recession hit.
but yes, still in the positive!