Month: October 2013

The last week! It seems that it is impossible for me to achieve the breakeven in last. But it is ok, what counts is the experience, rather than the profit. With our trading game coming to the closure, I believe it is time for me to do a summary note to recap what I have learned in 6 week’s trading. The graph below is the portfolio overview for these 6 weeks.

In this period of time, I focused on the soybean, corn and wheat trade. From the micro perspective, what effects the price most I think is the weather condition, and watching the weather forecasting is the most direct way to do the prediction. The rainfall/drought means the growth/drop of the production, which in turn leads to the higher/lower supply making the increase/decrease of the contract price. In addition, I believe monetary factor has a significant impact on price as well. For instance, price of soybean rose this week as the dollar slumped, improving the prospects for exports from the U.S…Also, in last, weak dollar sent the wheat futures price higher on Thursday and Friday. Basically, the supply and demand factors, such as production and consumption, import and export, are the key issues to decide whether I should go long or short for different kind of commodities. On the other hand, the macro factor like the recent stability of the economy, the political policies and events, these are also the cause of the change of price. However, in my trading game, I did not consider a lot about those parameters because I am not so familiar with the macro issues, which remains a lesson to be learn.

By the way, in terms of my ‘quick money’, I am not sure whether the professional traders use this kind of strategy. But I believe, if you have time and energy to implement it, you will make it. Although its small profits each time, the huge quantity of trades will bring you a considerable payoff. It is quite a pity for me that I cannot pay attention to the trading game every hours or even every day, therefore, I was not able to buy low sell high for so many times.

 

 

 

 

 

This is a quite busy week with only one trade. The investment outcome has been negative for five weeks ╮(╯﹏╰）╭ Here are my portfolio summary and overview for the 5 weeks’ trading.

I lost most on the wheat contract, which is now with a -7.63% return. I shorted it at 2 week before, and I am not willing to pull over due to my previous experience (always feel regret after pulling over). I am now wondering whether it is the time for stopping bleeding. The price of wheat keeps fluctuating this week, which dropped on Wednesday according to reports of increased competition from India and continued good weather for wheat planting in U.S… Also, higher-than-expected production from Australia and speculations that China’s actual imports of wheat could be lower than expected further dampened wheat. However, a threatened rail strike in Canada was seen supportive of wheat as it could push more export demand to U.S, therefore, the price of wheat futures rose today. In addition, the weaker dollar as well serves as a reason for the increasing price today. Since there is just a week left, 9next week I should focus more on the price and choose a relatively suitable price to stop bleeding. (The graph below shows the change of Dec. wheat price)

For other trades, I short a unit of soybean to open yesterday. After I placed the position, the price started to increase sharply due to the weak dollar. (GEE!!! I am total not a talent on prediction.) But the good news for me is that the price slipped this day afternoon because the weather forecast in the U.S. and South America is suitable for production and planting of soybean. However, the fall in soybean prices was limited on the better-than-expected monthly crush report and active buying from China. So I need to hold this contract until next also the last week. And my ‘quick money’ corn did not work quickly, it just kept a tiny loss every time when I check the open position. So I think my short-term-focused strategy is a time-consuming practice, which is more favorable for non-exam and non-assignment week. Whatever, if time permitted, I believe it will work. (The chart below is the price trend of soybean on Thu and Fri)

 

 

 

THANKS FOR READING AND GOOD LUCK NEXT WEEK!

SANG SHENG

2013/10/18

This is a busy week with the still negative portfolio return on my trading game. Here are my portfolio summary and 4weeks’ account overview.

My ‘Quick Money’ strategy seems not as powerful as last week. I deal with a long position of a unit of corn at a relatively low price, and waited for the increase of the price. It did grew a little after a short time, but I was not willing to sell it because of tiny profit. After then the price began dropping, and I suffered a loss on this transaction. What I realize from it is the main idea for my quick money strategy is Quick Reaction for small income, however, greed totally ruins it by increasing my opportunity cost. If I just sell it to close even with a small profit, I will have time and energy to focus on another trading. So I make modify the rule for this strategy, I will make sure to increase quantity of trades to guarantee the amount of profit. (The chart below shows my trading details.)

What I learned from my short-term strategy is also applicable for my long-term trading. I cover the remained unit of soybean immediately when I found that the soybean began to make a profit. Because USDA is away, it is hard for me to have a reference on my expectation, such as outlook of a specific agriculture commodity, world agricultural production Data, and the estimated report. So, I think I had better cover to close in such an unpredictable condition.

As for the wheat I shorted two weeks ago, the price shows a continuous rising trend due to positive export potential. Renewed concerns over a smaller Argentina wheat plantation, which could push more exports to Brazil from the United States and Canada, which leads to the growth of price. Till now, I have experienced a -5.69% return on it, but I don’t want to pull out since there are still one month and half to make the delivery. So I just keep the contract here.

So, what’s my plan for next week? Continue to implement my ‘Quick Money’, keep the new rule in mind. Hope I can do a lot of trades with profits through it next week.

My portfolio return remains negative in the 3^rd week. Here are my week’s trading summary and portfolio overview for these three weeks:

 

 

 

 

 

 

 

 

 

 

 

 

Seasonal harvest pressure along with USDA’s Grain Stocks report of better than expected soybean yields give a negative tone to the soybean market at the beginning of this week. Then I covered the one unit of soybean I shorted last week. If I were patient enough, I would earned more in this sharp drop instead of suffering a big loss in last week. The story was that last week I shorted three units of soybean, but I was so impulsive to deal with an immediate cover when the price showed a slight growing tendency (impulse is the devil!!). But I believes it was never too late to learn about this, and I will keep patient when facing the fluctuation of the price. Further, according to weather forecasting, the increasing rainfall on Wednesday till weekend is going to slow down the harvest of soybean, especially in the Midwest and the northwest of the US, which caused the price increasing for these days. Another lesson I learned here is that pay more attention on the weather condition, because the weather forecast serves as a vane of the future price. (The graph below show the fluctuation of the price of soybean this week.)

 

 

 

 

 

There remained a short position of wheat with a negative payoff. Since the price kept higher than the price I shorted ($6.55), this week I did not have any movement on it. The current continuous growth of wheat price reached at the peak since the middle of July on speculation that the United States may be in better export demand. Lower planted area in Ukraine, possible new demand from Brazil and China and short-covering by investors all supported wheat. In addition, the UNFAO lower the yield of wheat on 2013/14 from 709.8 to 7.046 million metric tons, and also lower the estimated production in South American. So, all the reports and new I read indicated the increase of the price of wheat futures. But I kept still to wait for the expected export report released by USDA. Unfortunately, Due to the lapse in federal government funding, this website is not available. It just liked sand in the gear on my trading!! As a result, I decided to keep it even though I was bleeding, because the price will definitely drop to $6.55 again.

 

 

 

 

 

By the way, I started my plan B on the trading game. It is a time-consuming strategy but it really worked (I earned about $200 on quick covering corn, also it would help me earn it a lot on soybean if had not sold it accidently!!). I call it Quick Money. What we should do is just make a quick deal based on the most possible direction and simple keep eyes on the change of price then just cover or sell your commodities to close if you can earn a little more than the transaction cost. By this means, I used to get a little of profit in the stock, and I hope it still works in the future on trading futures!

 

 

 

 

Thanks for reading,

Sang Sheng