Currency Guru – Forex is the Golden Ticket.

This week I have moved away at my weak attempts to successfully day trade, instead I am working on a weekly strategy. At the start of the week I decided that I would make an overall move for the week, Short for all 3

Look at the Average Daily Trading as a Percentage of overall total.

This week closes.       Corn                            Soybean                     Wheat

Mon                            645                             1,235                          660.6

Tuesday                     640.6                          1,239.4                       626.6

Wed                            638.2                          1,257                          618

Thursday                   640                             1,270                          622.6

Exchange rates          USD/EURO                 USD/CDN

Monday                      .7474                          1.0392

Tuesday                     .7385                          1.0301

Wednesday                .7336                          1.0292

Thursday                   .7291                          1.0222

Friday                         .7265                          1.0202

GOLD

Monday                      1,672

Tuesday                     1,662

Wednesday                1,682

Thursday                   1,667

Friday                         1,681

I waited to see what the values were on Monday, then I looked at the Close for Tuesday. Half a percent down, half a percent up; wheat had a significant -6% decrease, this looked promising for a short contract for the rest of the week.

The Grain Commodities Overall for the week: down -1% for Corn, a minor +3% increase in Soybeans and a -5% decrease in Wheat.

I took an over aggressive -8% move on Tuesday for wheat, (closed 8% higher then my bid), this bid was far out. Wheat moved -6% from Monday to Tuesday so my bid of -5% was a pretty good, except the market had really slow decreases for the rest of the weak -2% with the 1% increase to finish the week.  Corn had very minor movements all around -1%, -1%+1%

Overall my bids were all to far off and with the market staying pretty stagnant this week my dramatic bids only added to my losses.

I think that all things set aside there is 1 key indicator for the way these Commodity Markets move, and it is Currency Most Importantly Exchange Rates.  I think speculators will always respond to supply/demand weather crop reports. But I think ultimately trade follows the USD. So now I am starting to focus in on the USD/Euro and UDS/CDN exchange rates. This Week they were remarkably comparable.  I am also interested in Gold and its trading patterns.  I just wonder, if for every positive report on the Internet you can find there is an equal negative report.  As for the overall review on the week,  I read that a Buying Signal occurred for Wheat, (so I wonder if there is one coming for Corn as well) as for Soybeans, I think I may now move into positive long contracts. So again I will have to offset and take another loss.

Soybeans probably increased this week because of buying news coming out of China. As well the volume for soybeans was 3X higher then last week that must have helped rally the price up.

I am thinking that Corn and Wheat will trend now closely to the US dollar, there is some sort of consciousness that when the USD goes down I think these commodities will as well.

My focus on the Exchange rates:

1. USD
2. EURO

It will be interesting to see what happens to these rates in anticipation of the upcoming G-20 summit. Topics due include solutions to the debt crisis.

I Offset soybeans tonight, but I am still going with my short strategy for Corn and Wheat! Wish me luck – or lets just hope the USD plunges!

Capricious Moves Market!

Maybe it was my subtle naïve thoughts that if I finally offset my long contracts and moved into the selling game I would start to see some profits.

Wrong!

I moved in with 2 short contacts in both Corn and Wheat.  I figured with all the negative news last week and with no new buying signals triggered by the MACD lines I would be sure to see the market continue in a downward motion.   I am trying to stick to 3 major sources for each commodity. I review the futures.tradingcharts.com Intraday-Daily-Weekly chart terms, I am trying to look at highs and lows, also now I am using some of the technical analysis tools trying to identify trends and buy/selling signals.  Unfortunately I came to the understanding this week that maybe these indicators are not really helping.  2 things could be occurring,

1) There is too much of a lag with the indicators and the actual market is beyond unpredictable

2) These indicators are correct but they are forecasting movements to far in the future.

I put in my bids all below the daily high Corn-576 and Wheat -603.

My Values – what I am trying to trade is overall 1% of the total value; this amount is usually where I start my bidding. I figure that anything under 1% is not significant enough to make a difference on my net position.  Unfortunately we have seen the market rise this week there has been 3 out of the 4 days this week with an overall gain of about 2%. This doesn’t help out my new Short Contract position.

But my strategy is still going to stay the same this week; I am just taking this as a minor rally back from the market after seeing 2 consecutive weeks of significant market decreases.

Soybeans this week moved a day later and in opposite directions from Corn and Wheat, at least I had the right idea with Soybeans, unfortunately my bid were to low at 1155. The markets lowest point this week was 1152 on the 4^th and that’s where I made a small gain.  Wheat moved erratic this week, up-down-up-down anywhere 3 and 4% so I guess my conservative 1% movement is not enough to keep up with the Wheat traders.

The other 2 sources that I am looking at for information are: grainfuturesupdate.com they give a daily technical analysis review of the grain futures.  Today the author identified a sell signal on the daily charts, I am going to follow this a bit further to see if these indicators can really predict some market changes.  Overall my net position was down this week because with the market increasing for Corn and Wheat, and holding pretty steady for soybeans, and myself holding short contracts in all of these I just didn’t make any money. Lastly I have been reviewing the International Grains Council igc.int.  I find this site gives a good Global assessment of our 3 commodities.  I am going to work backwards to see what sort of news was released early in the week for Corn and Wheat to perhaps influence the changes in the market.  There were releases about spring yields being disappointing, economic theories start rolling through my head, decreased supply – increased price.  Also this week talk of increased Demand for Corn in China, again increase in demand results in a higher price… I guess I will just wait and see what the USDA Crop Production and S&D reports disclose.  Soybeans are looking grim for next week as well, Palm Oil is down, and Soybeans finished 8cents off yesterdays close. I will keep with my short position here for sure.  Wheat seemed to be the most erratic this week, overall my position of short was a good strategic move for the week it is just luckless that my price was to low.  Looking today the last dip before the market closed could be due to news that the Ukraine may cancel export duties for wheat and corn, this would increase global competition for exports.

Lastly when I am making decisions for the weeks strategy I look at the trading markets not pertaining to grain commodities. I like to compare how currencies and the Indexes are trading, mostly the UD dollar and the Dow and Nasdaq.  This week I took some interest to the energy and oil futures and see if there was a significant correlation between Corn/Ethanol and in general Oil.  I also am trying to see if there are additional relationships between the grain commodities and the metal futures, (mostly Gold and Copper)

Overall I am going to wait to see if the technical analysis indicators can really make decent predictions with regards to buying and selling signals.

I will continue with my short contacts and re-evaluate by Tuesday is I should re-price my short contacts to a more conservative value.

Does the reverse apply…. What goes down must go up??

When I ended trading last week I was unsure of what overall position I would take, I knew that I was going to try and offset my losses of Wheat and Corn and try to make some profits with Soybeans, Essentially hedge my Soybeans.

Ideally I would use the Soybeans contacts to offset the long position I took with Corn and Wheat, and take a short position with Soybeans. This way I could still be making some profit somewhere. Here is where there is difficulty with our 501 game, we can only trade 5 contracts a day. So essentially if Soybeans are going down, then most likely Corn and Wheat are also trading down, and in order to make enough profits on the downside in order to breakeven or to offset my current losses I would need to bidding on a much higher quantity of contacts for Soybeans.

Ok so new plan, lets try and successful trade just Soybeans this week, I figured after such a bad week last week there would be some rebound room in the market and prices would increase, (as more buyers would be interested in last weeks lower prices increasing Demand and therefore prices.

I decided to not bid on Monday to see what prices would do,  Monday all 3 commodities closed higher then Friday  10cents for Wheat, 6cents for Soybeans, and 8cents for Wheat. Good A rally I thought.

Tuesdays bid went in for Soybeans at 2 long contracts at 1272, this bid was successful and ended in a positive net position up 500 that day.  I would try this same strategy for Wednesday, again a 2 long contracts priced at 1280, I was trying to keep my bids at overall 1% of the total price (I also take into consideration the rule of  Short – the price has to be lower then the daily high and Long – the price has to be higher then the daily low) Then Thursday hit, Bam another big drop in the markets, and therefore another big drop in my overall net position.  I am not a Day trader~! Lesson learned

The decline was due to what most say was “reaction of report estimates” upon further investigation of what this meant I came to the understanding that storage was to blame.  The US has underestimated how much of certain commodities they had in storage so that the supply was actually much higher then they had originally thought.  Increase Supply… decrease Price~

There was a small rebound to the drop the next day so some of my losses were mitigated, yet I was still holding way to may long contracts.  Last Friday there was reports that Chinese buying would show up on the next report and to expect a “good number” right now I am asking myself…. Are good numbers higher prices or increased volume?

This is what led to todays trade decision. OFFSET!  And start again.

October is a new month! I have looked at the historical charts from http://futures.tradingcharts.com/ to see if I could visually identify any trends for October in any of the markets.

My strategy for the week/month, start off short until the USDA monthly crop reports come out on the 9^th then I expect there to again be some sort of rally back by the markets due to the harvest (it’s a bit later this year I understand because crops were planted later) once those reports come out I will reassess my stance and continue trading.  One thing that I have learned about life itself and I can fully apply this to trading is: past performance is not indicative of future results.

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

1. 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?
2. 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)

http://blogs.worldbank.org/latinamerica/is-climate-change-to-blame-for-high-food-prices

Commodity Futures,

With this being my first trade ever i thought starting with 1 commodity would be interesting and challenging enough.  I am looking at this market as a Pure Speculator, i am asking myself how far will this market go…. 6 months, 9 months, 12 months.  This course runs 4 months, these numbers once i make sense of them will just im sure i will reference for life from here on out.

my two options right away are “short the stock” this is thinking that the stock is going down, This is what I initially assume with a quick snapshot of a futures graph. this would suggest the economy is not growing, if the US is not growing the rest of the world is not growing right?  The other option is taking the “long run” this is to my understanding thinking that the commodity is going up. crops are increasing is quality, better fertilizers, (i think potash at the top of the market) overall in the long haul the stock would be better, and you would turn profit.

Bearish – economy is going down,  Bullish – economy is going up…. ok

ok so i don’t think that the agricultural  commodities are going to keep rising. i think this is already peak for Corn, Wheat and Soybeans. (mostly looking now at Corn) so i am moving towards starting my trades with some Short Run Contracts.

Reasons: The GDP is shrinking, and the US market is not returning the growth that they had projected the growth of 0.01% fall short and emphases the idea that the US is not growing, and in the market if the US is not growing, the rest of the world is not growing. There would be less stimilus being dedicated down to farmers, less money spent on invoations and technology, no purchasing of new equipment , no government grants to increase crop quality and yield. Just overall less action plans.  This would really just leave the farmers out on there own in the market, (hedging??)  so if i was a farmer …. i would be producing less, so the supply would go decrease (the economy is not growing)

This is just more Downside then Upside.

more analysis  – – – – lets see where Corn was trading last year at this time, ????  Woa 420 low last Jun 2010…. thats a gain of 80% over the past 14 months, Pure Speculations.

The Trade –

Short -Run Contract Price 680  (down 40 points)

I’m thinking the market is trending downward, and has come to its peak, Less money spent on Corn, on Feed, on Ethanol, and the fact that it is trading at its all time highest prices (peaking at 7.99) just below $8 a bushel.  Inflation cost or Prices and going up, less people are willing to consume, this is the downside.

Any idea what the daily trades maximums are for Corn? Wheat? or Soybeans?

Summary

These markets look choppy and volatile, i prefer not to go the long route, as there is risk to other problems could materialize, weather could change, demand could shift, there is just more downside.  inside i look for a 5% gain on the down, on the short 680 price at 40 points of todays close

Long run is a misleading guide to current affairs. In the long run we are all dead.
John Maynard Keynes