Suffer A Loss But Learn A Lot
I start my trading venture on Tuesday afternoon. To be totally honest I have no idea how to deal with the trading game, since it is my first time doing it. So, After a quick viewing the price trend line, I believed that the price of soybean was almost at the bottom for these month. Therefore, I placed my first order of buying 10 units of soybean (buy to open).
(Source: http://www.cmegroup.com/popup/mdq2.html?code=ZCZ3&title=December_2013_Corn&type=p#link=daily)
However, Mark told me 10 units was too many!!! Because the contract size was 5,000 bushels (~136 metric tons), which means you would be responsible for buying those quantities of soybean at the amount around 650 thousands (we merely had 100 thousands dollar). I was astonished by such a big deal I have made because I am definitely not a risk lover!!! Fortunately, the trade I made is not successfully processed, because any trade made after 4.00 p.m. ET would be processed next day (excellent!!). Absolutely, I canceled it and reordered a new trade of buying 1 unit of soybean. On Wednesday, after checking my account, I was regret to know the price sharply went down (can’t imagine the tremendous loss if I made a deal of 10 units). But I think I will hold it or buy one more unit next week , as the trend line shows its price is already at the lowest , and then short to close at a slight increase.
(My current account status)
Up to now, the price of soybean is still falling. I read some reports about the reason for the decrease of current soybean price and did a brief summary as follow:
1. The pressure on soybean harvest in this season
2. Position squaring of funds due to the rainfall on middle west
3. The slowdown in demand of international market
4. The announced increasing cultivated area of soybean in 2014 and 2015
By the way, in order to have a well-rounded understanding of the future trading and to be a wise investor, I think I am supposed to do some readings about the basic knowledge of trading game such as the terms and the skill of forecasting and pay more attention on the agricultural policy which is likely to have a great impact on the price of the commodities.
Finally, share a few useful websites:
http://www.wikinvest.com/wiki/Futures
http://www.reuters.com/finance/commodities
http://www.bloomberg.com/markets/commodities/futures/agriculture/
http://finance.sina.com.cn/futuremarket/ (in Chinese)
Reference:
http://www.agri-pulse.com/Corn-soybean-prices-projected-to-increase-USDA-says-08122013.asp
http://www.cmegroup.com/popup/mdq2.html?code=ZCZ3&title=December_2013_Corn&type=p#link=daily
Thanks for reading
Sang Sheng
09/20/2013
