Category: Trading Game

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Trading Game What Went Right/Wrong

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/

Categories
Cool Source of Information Trading Game

Week 6 -Cool Source Of Information

This week I came across these two websites as I was trying to look for more authoritative opinions:

  • US Wheat Associates (http://www.uswheat.org): I think this is a good place to acquire extensive knowledge about wheat as a commodity.
    • It provides information like quality, cash prices at export locations,  official reports about different classes of wheat (e.g. Hard Red Spring, Soft Red Winter, Durum); Although CBOT is trading Soft Red Winter wheat, it’s important to know about the movement of other classes wheat.
    • It  provides the schedule of important industrial meetings.   We should expect some particular price movements over the days of meetings as a result from the topics and discussions in them.
    • It  also provides summaries and analysis on important news in their Media Center which give a good up-to-date overview on the current wheat market.
  • National Corn Growers Association (http://www.ncga.com):  This is for corn and all about corn; its usage is similar to the above.  Besides, it has a section that covers different topics relevant to the corn market, such as Livestock, Ethanol, Farm Policy, etc.

 

If you are reading this, I hope this sources would be helpful for you too.

Cheers.

 

Categories
The Road Ahead Trading Game

Week 6 – The Road Ahead

We were talking about sustainability in FRE 515 this week. During the class, maybe one of our classmates raised concerns and questions about managing the study load and pressure during the crunch time with exams and ongoing course work.  Professor Ron mentioned about prioritizing which is a key in time management.  Priorities change as things come up and down. For example, these few weeks,  exam and presentation matters have come to the top of priorities, so the majority of my time, thoughts and emotions have been on them as well.   Another comment made by classmate Gabi during the class discussion has also stuck in my head, which is lack of sleep for consecutive days or a longer time period is not sustainable for a person.  Arise from the above comments, I want to be honest about the following:

  1. I haven’t been able to keep an eye on the commodity market these days; I haven’t been up to date with the relevant daily news which creates difficulty for myself to make decisions in trading.
  2. I realized that I was unfocused and careless after I found out a few mistakes I made in the trading this week;  One of them was a major mistake and it created a very panicky day for me.
I sincerely hope that after this week’s Midterm (our last midterm), I will be able to fully come back to the trading mode.
Anyhow, for the mistake I made in my price limit order last Friday (misplacing the number of contracts and price limit), I ended up holding 37 short Corn contracts (C2Z).  I am very worried about how to properly offset them.  I have placed the Stop Loss order and Price limit order to try to offset them on Monday. I basically don’t hope to lose (too much) over these contracts rather than make a big gain. (I’d really love your comment on this.)
C2Z:
  • My Existing Shorts:  Price-in: 739.75,  Current Price: 737.75  (gaining $100 on each contract)
  • My Pending Longs to offset the above:  Price Limit: 735 , Stop Loss: 740
On the other hand, I anticipate the prices of the crops to rise on Monday based on the following factors:
  • The crude futures went back up last Friday before the market closed after a two-week fall.  I anticipate some rise on corn and soybeans on Monday attributed to the spillover effect from the crude futures[1].
  • Asian currencies are strengthening[2] which would likely to stimulate more imports to the region.
  • Good harvest news on corn and soybeans in Canada[3]
  • Hurricane Sandy is coming to hit the northeast US (the graph below shows its strength and path).  Although it’s a Category 1 hurricane it’s predicted to become a worst hit to the area in 100 years[1].  The fear and the damage from this Hurricane would probably drive the prices up on Monday.  (drive up the cash prices, the basis, and the futures prices)
Hurricane Sandy Oct 28, 2012
Hurricane Sandy Oct 28, 2012
Source: wunderground.com[4]

I will keep an eye on the daily News to correct or help further predictions over the week.

 

References:

1. Shenk, Mark and Zhou, Moming. (2012, Oct 26). Crude Pares Second Weekly Loss as Hurricane Approaches. Retrieved from http://www.bloomberg.com/news/2012-10-26/oil-fluctuates-as-u-s-economy-grows-more-than-forecast.html

2. Teso,Yumi. (2012, Oct 26). Asian Currencies Strengthen in Week on Signs of China Recovery.Retrieved from http://www.bloomberg.com/news/2012-10-26/asian-currencies-strengthen-in-week-on-signs-of-china-recovery.html

3.   Shiells, Terryn . Service Canada. (2012, Oct 26).Ontario soybean/corn crops yielding better than expected. Retrieved from http://www.grainews.ca/news/ontario-soybean-corn-crops-yielding-better-than-expected/1001799451/

4. woundergroud.com. (2012, Oct 28). Hurricane Sandy. Retrieved from  http://www.wunderground.com/tropical/tracking/at201218_5day.html?MR=1

 

Categories
Trading Game

Week 5 Trading – a break from blogging

My account got reset on Monday with initial balance as $40,000.   I did some trading this week on wheat on Wednesday but I encountered various technical issues:

  1. TradeSim threw some errors when I tried to submit an order;  I should have taken screenshots of those error messages.  I will do that when I run into the problems again.
  2. The contracts I want weren’t available during some time period when the market was open. As a result, i could’t offset my contract to lock in profits.

In all, I didn’t do much partly due to the aforementioned issues.  Therefore, I am taking a break from writing the formal blogs this week.  I will resume on regular blogging next week. Cheers.

Categories
Cool Source of Information Trading Game

Cool Source of Information – charts and dictionary

There are 2 websites I would like to suggest:

  • Equity Clock website: it has information related to the stock markets.  It has daily news update of US economic events.  It also has commodity futures seasonality charts (representing the past 20 years till 2009) http://www.equityclock.com/charts/  Although it is not the same every year, it is probably beneficial to learn about the general movement of the futures prices in the past.
  • Investopedia:  It’s a good place to go when you are not too sure about some terms related to trading and you want some quick help,  http://www.investopedia.com.  For example, when I read the news articles, I encountered the term “backwardation”. It’s taught in the class but I wasn’t too sure about it.   It’s available here with examples: http://www.investopedia.com/articles/07/contango_backwardation.asp , so it’s pretty handy for a quick look up.

 

Cheers!

 

 

Categories
The Road Ahead Trading Game

The Road Ahead – retreat?

The combination of factors suggest me I should take a “retreat” attitude this week; However, there’s quite a bit of information suggests that there will be further price drop in corn, soybeans and wheat futures. First of all, US dollar is strengthening [1]; US economy is  improving and expecting a good recovery. Secondly, the oil price has dropped due to a forecast of reduced global demand by International Energy Agency[2]Thirdly, according to the news gathered below, yet, not exhaustively, it does seem that the futures prices tend to drop this week.

Corn:

  • Argentina’s revamped corn export policy[3] (-)

Soybeans:

  • More export sales (+)
  • Higher production/ good supplies from South America (e.g. Brazil, Argentina )[4] (-)
  • Cut in palm oil export tax next year in Malaysia leading to the drop of palm oil price [5] (-)
  •  Good opportunity of open market access and predictable trade access in the Asia-Pacific region with Canada entering Trans-Pacific Partnership [6] (-)

Wheat:

  • Unexpected drop in exports [7] (-)
  • Reduced projected production in Russia and Australia (+)
  • Argentina’s revamped wheat export policy which leads to immediate increasing wheat planting [3] (-)

 

 

 

References:

1.RTTNEWS. (2012, Oct 15).  U.S. Dollar Strengthens Against Majors. Retreat from http://www.rttnews.com/1982877/u-s-dollar-strengthens-against-majors.aspx?type=cm&utm_source=google&utm_campaign=sitemap

2. Kwiatkowski, Alexander. (2012, Oct 14).  TOP Oil Market News: Crude Falls After Iran Offers Nuclear Talks. Retrieved from http://www.bloomberg.com/news/2012-10-15/top-oil-market-news-crude-falls-after-iran-offers-nuclear-talks.html

3.  Ahad , Abdul (2012, Oct 13). New Argentine corn, wheat rules help farmers sales.   Retrieved from http://www.brecorder.com/markets/commodities/america/85668-new-argentine-corn-wheat-rules-help-farmer-sales-.html

4.  McFerron, Whitney. (2012, Oct 12).  Soybeans Drop as Supply Concerns Ease After USDA Report. Retreived from http://www.bloomberg.com/news/2012-10-12/corn-trims-weekly-advance-on-speculation-rally-may-cut-demand.html

5. Ahad, Abdul. (2012, Oct 13).   Palm oil down in export cut news. Retrieved from http://www.brecorder.com/markets/commodities/europe/85652-palm-oil-down-on-export-cut-news-.html

6. The Crop Site. (2012, Oct 11). Trans-Pacific Partnership Entry Good News for Canola. Retrieved from http://www.thecropsite.com/news/12166/transpacific-partnership-entry-good-news-for-canola

7. McKiernan, Patrick. (2012, Oct 12).  Wheat Futures Fall as U.S. Exports Decline: Commodities at Close. Retrieved from http://www.bloomberg.com/news/2012-10-12/wheat-futures-fall-as-u-s-exports-decline-commodities-at-close.html

 

Categories
Trading Game What Went Right/Wrong

Week 4 – What Went Wrong: Accident

I started this week with lots of hope. I was planning and hoping to make a strong comeback on Thursday as the USDA report was being released.  However, something happened.  No only my hope went dashed, I am left with a negative balance in my trading account now.

What happened?  Accidentally, not according to my will, 23 short corn contracts (C2Z) got in my trading account and were executed on Wednesday; I was totally shocked and I was also happy for a moment because they were making profits on Wednesday as the corn futures (C2Z) price fell that day.  I soon got scared as I anticipated a price jump on corn futures on Thursday with the release of the USDA report.  It’s based on the information and analysis from a few sources before Thursday:

  • speculation about USDA would lower its forecasts on global supplies: dry weather damaged crops from Russia to Australia; Russia cut its forecast for grain export, Australia last month reduced its harvest projection [1]
  • on average, analysts expected the corn production would below the USDA September estimate due to the reduction in harvested acres[2].
Source: The Crop Site [2].
  • Also, there’s a corn futures contracts continuous chart for the past 20 years indicating the rise in October.
Source: Equity Clock [3]

Therefore, I placed an order to offset all those short contracts on Wednesday night.  I did something similar once before where I placed an order at night and the order got processed the next day once the market opened with the open price. I basically trusted that TradeSim would treat my offset with as open order and gave them the open price.  The prices did go up on Thursday by quite a lot.  However, the offset didn’t happen in time as I expected and those 23 short corn contracts got offset at a much higher price.  I lost  $1463.50 per contract which lead to a total loss of $33660.5; together with the losing long wheat and soybeans contracts I have been holding since 2 weeks ago purchased at the peak prices, my equity was down to about $100 at the end of Thursday.

I did order to offset the long wheat and soybeans contracts on Thursday, yet with price limits which was not hit.  On Friday, all the crop futures prices went back down and my long contracts once again suffered further loss which lead my balance down at about -$2000.

It’s a dramatic and traumatic week.  Although the 23 contracts got in by mistake/ accident, I could have not lost that much by making a stop loss order to offset or just keep them till Friday.  This is a big lesson to me.

Thanks VW for encouraging me to write this blog and helping me recover from the trauma.

 

References:
1.  McFerron, Whitney  and Dreibus, Tony C.   (2012, Oct 09). Wheat Climbs as U.S. May Cut Supply Estimates; Soy, Corn Gain. Bloomberg. Retrieved from http://www.bloomberg.com/news/2012-10-09/wheat-climbs-on-speculation-u-s-to-cut-global-supply-estimates.html

2. Meyer, Steve  and Steiner, Len. (2012, Oct 09).  CME: Harvest Pressure Pushes Corn, Soy Futures Lower. The Crop Site.  Retrieved From http://www.thecropsite.com/news/12158/cme-harvest-pressure-pushes-corn-soy-futures-lower

3.  Equity Clock. (n.d.).  CORN FUTURES (C) SEASONAL CHART. Retrieved from http://charts.equityclock.com/corn-futures-c-seasonal-chart

Categories
Cool Source of Information Trading Game

Cool Source of Information

I have come across 2 cool websites this week and extended use in one of the previous ones:

New:

  • Weather Underground:  I like the way they allow you to select the types of map (eg. temperature, precipitation, snow depth, etc.) you want, as well as the regions of map (e.g. entire US, US midwest,etc) you want. http://www.wunderground.com/US/Region/US/2xTemperature.html. This website comes handy if you want to get a quick idea of how the weather condition is in the area of crop production.
  • Farm Business Communications Grainew.ca:  This is a Canadian website and it publishes crop news with a focus on the crop situations in the US and Canada.  It also publishes news of other categories to do with agricultural such as livestock, the market, general, etc. This website is easy to navigate and it could be a cool site to find relevant news from different aspects.   http://www.grainews.ca/issues/search.aspx?qt=ts&tid=111&topic=Crops
Extend Use:
  • Bloomberg – Exchange Rate:  Reminded by Professor Vercammen, exchange rate is also an important aspect to look at when we handle our trades.  I think this could be a place to go for global news about exchange rate. http://topics.bloomberg.com/exchange-rate/

 

Enjoy!

Categories
The Road Ahead Trading Game

The Road Ahead – Sit and Behold

As mentioned in the previous post, I got my long contracts on wheat and soybeans last Monday at their high prices and their prices went through a big dive during the week leaving me an unrealized loss of about $4000.  I am keeping the contracts to wait for their prices to go up to a point where I believe I could minimize my loss as much as possible (reducing the loss and risks induced by new uncertainties, etc) .

I certainly don’t like my trading game to turn into a loss minimizing game.  This “damage control” has become my overhead and a good reminder of me to stay on top of my tradings.  I will make new purchases as I find my justifications along the way with the daily news.

So far, I have got news about soybeans[1] which indicate there might be increases in the soybeans futures prices:

  • export sales jumped to a three-month high last week
  • oilseed demand is renewed by the price drop
On the other hand, USDA is going to release a crop report this coming Thursday(Oct 11) with the supply and demand estimates[2].  That will mostly likely become Thursday’s price indicator if not as much as causing the price spikes again.   For making a profitable trade or for practice,  it would be worthwhile making effort to come up with an “estimation”/rough guess about the situation before the report comes out. It’s good to take advantage of limit order as well.

 

 

References:

1. Plume, Karl. (2012, Oct 5). U.S. corn eases on harvest pressure, soybeans level . Retrieved from http://www.grainews.ca/news/u-s-corn-eases-on-harvest-pressure-soybeans-level/1001747419/

2. USDA. (2011, Dec. 19). Schedule of 2012 release dates of cotton reports issued by the U. S. Department of Agriculture. Retrieved from http://usda.mannlib.cornell.edu/usda/ams/CNAASRD.pdf

 

Categories
Trading Game What Went Right/Wrong

Week 3 – What Went Wrong: negative return came from little effort

This week, I have learned quite a few lessons:

  1. Don’t expect you can gain anything while not putting in any or much effort (at least a certainly No for me);
  2. Don’t make any hasty decision (while you haven’t really thought it through);
  3. Please don’t make any major move because you are desperate.

The corn, wheat, soybeans futures went high up last Friday after the release of the USDA quarterly Grain Stocks report.  I expected that wheat and soybeans prices would at least go up for another day (ie. Monday), simply based on the lower than expected stocks reported and the fact that a few of corn futures went limit up while wheat and soybeans futures didn’t.  I was not 100% sure about my expectation/intuition but I still went ahead and placed orders to offset all my soybeans contracts (1 short on Nov 2012, 1 long on May 2013) and ordered 1 long on Nov 2012 soybeans and 1 long on May 2012 (at a lower price than the price-in of the long contract I just offset).  I also ordered 1 long on Dec 2012 wheat.  I placed the orders over the weekend so they got in when the market opened again on Monday.

I didn’t get to pay attention to the news or prices until late on Monday, only to find out all wheat and soybeans futures prices fell that day, corn futures continued to rise. It turned out to be totally opposite to my expectation.   From my prices in, there was about 7 cents fall for the Dec 2012 wheat, 13 cents fall for the Nov 2012 soybeans and 10 cents fall for the May 2013 soybeans. I lost about $1500 on Monday.  I saw on the news that the slow export demand and rain forecast in the drought areas expected to boost the winter wheat seeding which were probably the reasons driving down the wheat futures prices. As for soybeans, it seems that the soybeans futures prices (became weak) went down with the downward prices of palm oil (substitute to soybean oil)[1] . I didn’t think much and just kept my contracts there.  Their prices continued to fall on Tuesday and fell to quite low points which increased my loss to about $5000. I know the news was still about the rain and it’s possible the prices would still go down. However, I really don’t want to offset my contracts and realize such a big loss.  I decided to keep my long contracts and, on the other hand, ordered 2 short contracts on Jan 2013 soybeans, in the hope of gaining something back (in a short term: 1-2 days) while waiting for the overall prices to go back up (in a long term).

I initially wanted to place 20 short contracts on Jan 2013 instead of 2 to “compensate for the loss” (with a big IF, if the price would continue to fall).  I am glad I didn’t do that because the soybeans futures prices actually went up a bit on Wednesday and went up quite a bit on Thursday due to unexpected low yield of Canada’s canola crop (substitute)[2].   I regretted my decision and placed to offset the 2 short soybeans contracts which came through on Friday with a realized loss of $2151.  I think I really need to regroup and straighten out my thoughts before I make any future moves. Therefore, I am still keeping the long contracts: 1 long on Dec 2012 wheat, 1 long on Nov 2012 soybeans and 1 long on May 2013 soybeans with an unrealized loss of about $4000.

My conclusion is no more hasty decision or neglection is allowed!

 

 

References:
1. Naeem, Asad. (2012, Oct. 1). EU wheat follows falling US futures after sharp rally.  Retrieved from http://www.brecorder.com/markets/commodities/america/82883-eu-wheat-follows-falling-us-futures-after-sharp-rally-.html

2. Plume, Karl and Arasu, K.T.  (2012, Oct. 4). U.S. soybeans rally on damage to canola crop. Retrieved from http://www.grainews.ca/news/u-s-soybeans-rally-on-damage-to-canola-crop/1001744212/

 

 

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