Week 6 – What Went Right and .. Wrong

Despite some technical difficulties, I had a good start in trading in the past week.  I tried to play it safe and lock in small profits on each contract.  I was able to do that by longing wheat and offsetting it in the middle of last week.

Last weekend, I expected the futures of wheat would rise at least for Monday due to the news of worries about Ukraine halting wheat export^[1].    I already had a long contract on wheat (W3K) before that,  so I placed a  short, Price Limit order to offset it. I also placed a Stop Loss order to offset it and minimize the loss in case the otherwise happened.

W3K

• Long – Price-in: 889 , Close Price last Friday: 886.75
• Short- Price Limit placed over last weekend: 895
• Short- Stop Loss placed over last weekend: 880

I expected the price limit order would have been executed on Monday because the price of W3K went above my price limit (895) that day.  For some reason, it wasn’t executed and I left my Price Limit and Stop Loss order in.  The futures of wheat fell on Tuesday.  At the end of Tuesday, there were news about wheat harvest falling in Australia^[2] and declining wheat exports in Turkey^[3] which, I anticipated, should stimulate a upward price on wheat futures on Wednesday.  It did and my price limit to short W3K wheat was reached and executed.  My price- out was 901.25 against price- in at 889 which resulted a profits of $611.50.  I was happy.

I tried to get in the corn market in the latter of last week.  I made an erroneous long, price limit order on corn (C2Z) where the number of contracts and price limit were misplaced/swapped into the boxes.   I didn’t realized that until the order was processed and couldn’t be cancelled. Since the corn prices was falling at that point, I placed a short market order to offset them.  At the end, TradeSim executed 74 longs and 37 shorts to offset the longs, leaving me 37 shorts on C2Z on the end of Friday.  Offsetting these 37 short corn contracts are key which I would talk about in my road ahead.

References:

1. Ingwersen, Julie  and Nelso, Sam. Reuters. (2012, Oct 19). U.S. soybeans fall, wheat pares gains on macro worries. Retrieved from http://www.grainews.ca/news/u-s-soybeans-fall-wheat-pares-gains-on-macro-worries/1001782004/

2. Sedgman, Phoebe. (2012,Oct 23). Wheat Harvest in Australia Falling 28% to Five-Year Low. Retrieved from http://www.bloomberg.com/news/2012-10-22/wheat-harvest-in-australia-seen-slumping-to-lowest-in-five-years.html

3. Harte, Julia. (2012,Oct 23). Turkey’s Wheat Exports Decline Due To Climate Change, Says Industry Official. Retrieved from http://www.greenprophet.com/2012/10/turkeys-wheat-exports-decline-due-to-climate-change-says-industry-official/