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Cool Source of Information The Road Ahead Trading Game What Went Right/Wrong

Week 10 – Wrap up.

What Went Right / Wrong in the past week’s trades:

Last week’s corn, wheat, soybeans futures all went up which favored my long contracts (3 longs on W2Z and 2 longs on S3F). My overall gain compared to the previous week is $5012.55.

Corn:

I was uncertain about the corn futures as the trading volumes appeared in a downward trend meaning weakening in the pricing trend if there’s any.  On the other hand, there’s not much new information from the fundamental point of view to allow me to make further analysis.  It seemed to me the corn futures are going to be volatile.  I meant to pay closer attention to how it’s going to pan out over the week. The corn futures (C2Z) went up by 2.3% overall last week (C2Z: opened at 826’4 on Monday and closed at 845’4 on Friday)[1].

Wheat:

For wheat, I had anticipated the wheat futures prices to go up since the beginning of last week where I saw the ending of an inverse head and shoulder in the W2Z price chart.   The wheat futures (W2Z) went up by 1.5% overall last week (W2Z: opened at 835’4 on Monday and closed at 847’6 on Friday)[2].

Soybeans:

Last week, I made a predication of a trend reversal in the soybeans market based on its weeks’ downward trend entering into the condition of being oversold.   It seems right and the futures prices of soybeans (S3F) went up by 2.3% overall last week (S3F: opened at 1386’6 on Monday and closed at 1418’6 on Friday)[3].

Fundamentally, the weakening US dollars seemed to play a major part in bringing up the prices as more exports happened for that reason during last week’s trades[4].

 

The Road Ahead / Cool Source of Information:

Coming into the week 10’s trading and wrapping up, I think I am going to miss it.  I have had quite a lot of fun participating in this trading game. Paying attention to daily news in the grain market started as a chore and now has turned into a habit of mine. Before this game, my sources of news were mainly the local Chinese TV/radio stations,  now I certainly have a much larger pool of cool sources of information to refer to.  I’d like to extend this habit beyond the sense and scope of the markets. When you see the news about the price of this year’s thanksgiving dinner going up, it’s really not just about the market anyways.

I’d also like to take this opportunity to thank those who inspired me over the weeks in sharing trading strategies, organizing trading blogs, understanding the TradeSim, etc.  Thank you also for sharing the ups and downs, frustrations, excitements with me and allowing me to do the same. =]

Cheers!

 

References:

1. CME Group. (2012, Nov 24). Corn Futures. Retrieved from http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/corn_quotes_settlements_futures.html

2.CME Group. (2012, Nov 24).  Wheat Futures. Retrieved from  http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/wheat_quotes_settlements_futures.html

3. CME Group.  (2012, Nov 24).  Soybeans Futures. Retrieved from http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/soybean_quotes_settlements_futures.html

4. Polensek, Tom. (2012, Nov 23). U.S. grains reach multi-week highs on weak dollar, export sales. Reuters Chicago. Retrieved from http://www.grainews.ca/news/u-s-grains-reach-multi-week-highs-on-weak-dollar-export-sales/1001879167/

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Trading Game What Went Right/Wrong

Week 9: What Went Wrong -it’s the Down Down Down…

Last week, I used technical analysis and identified an inverse head and shoulder pattern on the wheat prices chart which should indicate a trend reversal. I anticipated an upward price trend to follow.  I made an order for 3 long contracts on wheat (W2Z) at the beginning of the week and left them there, hoping the wheat prices would go up.  However, it was a week about downfalls, the prices of all three crops had gone down overall over the week.

Here’s an overview of my trading in the past week:

Contract Position # Date in Price in Current Price Gain/Loss
W2Z Long 3 Nov 12,12 851 838 -$1950
S3F Long 2 Nov 06,12 1514 1383 -$13075

I carried the soybeans long contracts since the week before, since then the price of soybeans has been falling as well.  I have just been hoping that some news might come up (some change in the market) could bring up the soybeans price again.  However, the downward trend of soybeans was accelerating upon the news about China cancelling the soybeans import order[1]. For the other crops, the better crop report still seems to be a force pushing down the prices in the past week.  The recent news about the “fiscal cliff”[2] seems to be another factor ensuring the downward prices.  “fiscal cliff” (the possibility of another recession) is not a news itself but the time of it happening is approaching, it’s normal that traders now have come to worry about it more than before.

The corn prices were up on Friday supported by the news about the US upholding the ethanol mandate[3]. Basically, a lot of corns will continue to go into producing bio fuel in the future.  However, the gain of corn here couldn’t make up for the loss over the week.  I don’t have any corn contracts at the moment, but I will consider.

In a word, I seem to be stuck with the long contracts on soybeans now… and I still need to offset the long contracts on wheat before I am losing too much on them.

 

References:

1.Polensek, Tom. (2012, Nov 16). U.S. soy sets five-month low as China scraps orders. Retrieved from http://www.grainews.ca/news/u-s-soy-sets-five-month-low-as-china-scraps-orders/1001863110/

2. Franz-Warkentin, Phil. (2012, Nov 16). Grains, oilseeds seen pulled toward ‘fiscal cliff’. Retrieved from http://www.grainews.ca/news/grains-oilseeds-seen-pulled-toward-fiscal-cliff/1001862502/

3. Rucker, Patrick  and Timothy. (2012, Nov 16). U.S. upholds ethanol mandate.  Retrieved from http://www.grainews.ca/news/u-s-upholds-ethanol-mandate/1001862517/

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The Road Ahead Trading Game

Week 9: My Road Ahead

This week, I will continue to learn about technical analysis and exercise it in my tradings.  At this point, I am so new to technical analysis. I will say that my “predictions” would be mixed with guessings as well.  Therefore, I will still go back to the fundamental side of the information to make my decisions.   On a day without too much new information from the market, let’s look at the technical here:

Corn: It appears to me there’s the descending triangle formed before the past week’s trade and the breakout below the support was the Friday before where the corn prices fell hard upon the release of USDA Crop report.  It’s that’s correct, the price should pick up a declining trend which hasn’t quite happened yet.  On the other hand, the open interest and volume appear to go downward which suggest if there’s trend, it’s becoming weak.  I guess I just need to be patient and see how things pan out next week before making any move in the corn market.

Source: CME Group

 

Soybeans: The soybeans prices clearly appear with a downward trend.  Based on the RSI indicated in the graph below, it’s oversold which could suggest a reversal on the way[1].

Source: CME Group

 

Wheat: The wheat prices shown in the graph below is below the moving averages (black: wheat prices, blue: moving average of 5 day, red: moving average of 10 days,  green: moving average of 20 days).  This indicates a sell signal.

Source: CME Group

 

I am still stuck with 5 losing contracts (2 longs on soybeans, 3 longs on wheat).  If my “conclusions” above are correct, I should look for a time to offset my long contracts on soybeans and set a stop loss for my long contracts on wheat or wait for it to go back up?  Ok, I still need to think this through or if you have any suggestion?

 

Cheers.

 

Reference:

1. Investopedia. (n.d.). Technical Analysis: Indicators and Oscillators. Retrieved from  http://www.investopedia.com/university/technical/techanalysis10.asp#axzz2CWdwOW7t

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Cool Source of Information Trading Game

Week 9 : Cool Source of Information – Back to the basics

I am not having new sites or new places to visit. This week is about back to basic, making good use of the tools already found and underused by myself over the weeks, for technical analysis or fundamental.

  • CME Group (e.g. http://www.cmegroup.com/trading/agricultural/grain-and-oilseed/corn.html):  As we develop more knowledge about technical analysis and want to use more of it, the types of charts and the features available for the charts we use become crucial.  CEM group trading pages not only provide the auto-refresh price information when the market is open, but also the charts of price movements in difference forms (e.g. line, bar, candlestick, area).  The charts also provide options to show features on top of the price movements like moving average, volume and open interest,  RSI (relative strength index), etc. All these come quite handy for technical analysis.
  • All the major news media, some particular for crops. It’s good to keep updated with the daily news as Jim suggested, not only for the trading purpose, but also for ourselves to be in touch with what’s happening in our community and the world.  All the information collected would be helpful for analysis of the economy as well.  Here are a few news media I have been using over the weeks and will continue to use. Some of them are found by google search, some are from fellow classmates’ cool source:

Cheers!

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Trading Game What Went Right/Wrong

Week 8 – What Went Right and Wrong

Here’s an overview of last week’s gains and losses

Crop Contract Position # Price in Price out Gain/Loss
Wheat W2Z Long 2 869.50 890.50 +2098
Corn C2Z Long 1 741.25 747.25 +311.50
Soybeans S3F Long 2 1514 -6275

Overall, my equity change last week was -$3865.5.

Upside:

The wheat prices rose 4 days in a row last week before they fell on Friday upon the release of USDA crop estimation report.  There have been news about increasing wheat export[1],  strong demand for wheat export and export hopes[2] which I think are most likely to be the price driver on the rising wheat prices last week.  I have my 2 long W2Z contracts from the week before and I made a price limit to short at price 880.  They were offset on Wednesday at price 890.50 which was higher than my price limit.

Downside:

Soybeans prices have been falling.  However, it’s not a good idea to just go long based on the fact that the prices seem to be low and go long from the “low” prices.  I also forgot to make a Stop Loss order to offset those contracts.

Neutral: 

Corn prices have been quite volatile, and the percentage change has been low.   I made a price limit which allowed a small margin to offset and it was triggered.  However, it might not be a good idea to trade in the corn market at the moment for its volatility and without a clear price trend supported by the fundamental. On the other hand, technical analysis shall still come in play quite well.

Anyways, continue happy trades into the 9th week.

Cheers!

 

References:

1. Ahad, Abdul.  (2012, Nov. 3).  EU wheat supported by good export demand, weak euro. Retrieved from  http://www.brecorder.com/markets/commodities/europe/88767-eu-wheat-supported-by-good-export-demand-weak-euro-.html

2. Ahad, Abdul.  (2012, Nov. 9).  US wheat rises with export hopes; corn, soy weak. Retrieved from http://www.brecorder.com/markets/commodities/america/89728-us-wheat-rises-with-export-hopes-corn-soy-weak-.html

 

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The Road Ahead Trading Game

Week 8 – The Road Ahead

This week’s focus will be on technical analysis. I am still learning about it and it’s interesting to see some patterns on the charts.  Like Andrew said in his workshop, the fundamental side of analysis usually confirms the patterns and trend identified with the technical analysis. For example, for the December wheat 2012 in the recent while, there’s inverse head and shoulder (if I am not mistaken) prior to last week’s 4 days rally.

Head and Shoulder (W2Z)
Source: CME Group

Along with identifying the patterns and trend from the price movement, the trend in volumes is also an indication / confirmation of how strong a price trend is and how likely it will continue to be or come to a reversal.  For example, “ff volume is starting to decrease in an uptrend, it is usually a sign that the upward run is about to end”[1].

I will continue to gather information from daily news to form my fundamental analysis when I jump into this technical analysis fest.  At this point, I anticipate the followings:

  • Soybeans: Prices would rise in a day or so as traders start to lock in their profits gained on last Friday’s plunge.
  • Wheat: Prices would go down for a day or so and go up again ( a technical analysis based on the observation of the downward price and upward volume).
Downward price and Upward volume (W2Z)
Source: CME Group
  • Corn: Its prices haven’t changed much recently. More investigation is needed.

Cheers.

 

Reference:

1.   Janssen, Cory, Langager, Chad and Murphy, Casey. (n.d.). Technical Analysis: the importance of volume.  Investopia. Retrieved from  http://www.investopedia.com/university/technical/techanalysis5.asp#axzz2By6bPZeP

 

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Cool Source of Information Trading Game

Week 8 – Cool Source of Information : arts on charts

For the rest of the weeks, we will be shifting focus to technical analysis. The following 2 websites should be helpful for that.

  •  Investopia (http://www.investopedia.com/university/technical): Andrew’s workshop on Technical analysis on the past Wednesday was enlightening. I seem to remember most of the names of the patterns, but not exactly how to make use of them. I found this site that offers a tutorial on technical analysis. As you go through the tutorial, you will get to learn about the philosophy behind Technical analysis, comparison between fundamental and technical analysis, price support and resistance, importance of volume and the price movement patterns, etc.
  • TradingCharts (http://futures.tradingcharts.com/):  The charts here are rather interactive, you can click on the candlestick or the bar, etc of each day and the overview (volume., open interest, high price, low price, etc) of each trade day will be displayed. The charts also show the MADC (moving average divergence convergence) , RSI (Relative Strength Index), and Volume for further technical analysis. What’s more, it actually provides daily analysis (implications drawn from each indicator) underneath the charts. It’s good to learn from other’s analysis, learning from examples.  However, down the road, it’s important to do our own analysis instead of relying on others’ despite the convenience (there’s not too much explanation anyways, more on conclusions).

 

Happy trading with Technical Analysis or the combination of both Technical and fundamental analysis.

Cheers!

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Cool Source of Information Trading Game

Week 7 – Cool Source of Information

This week I came across 2 cool websites that focus on trading, provide knowledge and different tools for trading.

  • Commodityhq.com (http://commodityhq.com): It has in depth analysis in the worldwide commodity industry (eg. American commodity industry, Canadian commodity industry,etc.); is has commodities database divided into different sectors (e.g. Agricultural)  providing ways to invest in the commodity futures markets with news, articles and analyses.  It also provides extensive knowledge about the trading platforms and trading in futures. Lastly, it has up-to-date heatmap keeping track of the movements of the commodity markets. (i.e. price changes in percentage per week, month, etc).
  • Barchart.com (http://www.barchart.com/): This site has a lot to offer to help you get an extensive look into the trading markets.  It has an auto-refresh screen to display the prices of the markets. What’s more,  it aggregates the commodities of the same category with their latest contracts listed.  This saves you time in browsing around for their prices.  On the other hand, you will be able to find a lot of commentators sharing their ideas and thoughts about the markets on a daily basis.  Their commentaries are useful for forming trading strategies.
Source: Barchart.com

 

Cheers.

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The Road Ahead Trading Game

Week 7 – The Road Ahead : with if’s

There are 2 major things that should most likely to make a notable impact on the futures market this week. First, Tuesday, Nov 6 is the US presidential election day. Second, USDA will be releasing their monthly crop estimation on Friday Nov 9.

Some commentary mentioned that if Romney won the election, he would end the ethanol mandate put in place by Obama which would affect the ethanol price, as a result,  hit the corn market as well[1].  Under the ethanol mandate, about  15  percent  of  global  corn  production  is converted  into  ethanol  for  fuel  use[2]. This has largely driven up the corn prices. Therefore, if the ethanol mandate would be lifted off by any chance (if Romney got elected), we should anticipate the corn prices to fall.

On the other hand, analysts suggested that the US 2012 soybean and corn harvests were larger than what the USDA projected in October[3]. Therefore, if the report corrected the estimation with higher crop production, the futures prices of corn and soybeans should go down for the day trade on Friday.

As for the wheat market, I anticipate it to be bullish under the tight supply and increasing demand in the world market.

Cheers.

 

References:

1. Cummans, Jared. (2012, Oct 13). 4 Investing Opportunites From the Inside Commodities Conference. Retrieved from http://commodityhq.com/2012/4-investing-opportunites-from-the-inside-commodities-conference/

2. Carter, Coin. (2012). The Effect of  the U.S. Ethanol Mandat on Corn Prices. Retrieved from  google doc (for short).

3. Reuters Africa. (2012, Nov 2). GRAINS-Corn, soy fall on private US crop estimates, firm dollar.  Retrieved from http://af.reuters.com/article/commoditiesNews/idAFL3E8M261J20121102

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Trading Game What Went Right/Wrong

Week 7 -What Went Wrong .. and Right

This week, I lost $9749.5 in offsetting 37 short corn contracts.  On the other hand, I gained $1543 on buying and selling 2 wheat contracts.  Here’s a recap and highlight of what happened.

Since I got myself into the situation of holding a large number of contracts again, I was looking for ways to offset them not only timely but also very carefully this time.  At first, I tried to use Price Limit and Stop Loss orders to do that.  However, the futures prices of corn didn’t change much on Monday and didn’t hit my price limit or stop loss price.  Although, the prices of corn on Monday went down in my favor,  I did anticipate that the prices would rise and rise quite rapidly in the next few days due to the damage done by the hurricane Sandy. When I was contemplating what to do, I got a message from Yijeong and she suggested that I could use Time Limit order to offset my short corn contracts at the open price (ie. setting the time: 9:30am) when I was still making profits.  I did so.  However, it turned out that when TradeSim processed more than 1 contract, there would be delay even though it’s a time limit order.  The corn prices rose on Tuesday and my 37 short corn contracts were offset with a major loss.

37 shorts on C2Z:  price in: 739.75, price out: 745.00  (this price was actually higher than the day’s highest price which is still puzzling me), realized loss: $9749.5

On Wednesday, I got up early and started to look at the news.  It appeared to me that the wheat price would rise that day based on the following and  news.

  • The prices of wheat were rising shown on CME electronic trading page.
  • Australian wheat export plunging[1]
  • Australian wheat showing lower protein, and Asian importers might be seeking more North American wheat[2]
  • Asian currencies are strengthening[3]

I went long on 2 wheat contracts, W2Z.   The wheat futures prices went up on Wednesday, as well as Thursday. I placed a Price Limit order on Wednesday night to offset these contracts to lock in profits.  Both contracts were offset on Thursday.

2 longs on W2Z: price in: 869.00,  price out: 883.25, realized gain: $1543

Overall, I lost $8206.5.  Although I lost much more than I gained.  I think I have improved on strategies and analysis, so I am happy. =]

 

References:

1.  Javier, Luzi Ann and Sedgman, Phoebe. (2012, Oct 31). Australian Wheat Exports Plunging Most in Six Years: Commodities. Retrieved from http://www.bloomberg.com/news/2012-10-30/australian-wheat-exports-plunging-most-in-six-years-commodities.html

2.  Packham, Colin  and Naveen. (2012, Oct 31). Australia’s early wheat harvest shows lower protein. Retrieved from http://www.grainews.ca/news/australias-early-wheat-harvest-shows-lower-protein/1001809854/

3.   Karunungan, Lilian  and Teso,Yumi . (2012, Oct 31).   Asian Currencies Rise for Fifth Month on Recovery Optimism .Retrieved from  http://www.bloomberg.com/news/2012-10-31/asian-currencies-set-for-fifth-monthly-gain-on-recovery-optimism.html

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