Yearly Archives: 2013

Last Friday, I made an awful decision which made me depressed for a whole week. The decision was SHORT MORE SOYBEAN, which cost me more than $10000 in a week and sent me to the bottom five of the trading game at the final round. Soybean really broke my heart. Suffering from anger and pain, I made another decision today: Kiss Soybean Goodbye!

My relationship with soybean was a long story. I shorted soybean from the first day of this trading game and since then he had never disappointed me. Unlike Corn and Wheat, which were always naughtily jumping up and down, and abandoned me during hard times, Soybean had always been so kind and loyal to me all the time. I shorted to open at the price of $13.19. From mid-September to last week, the price had kept dropping to $12.65 on Oct.15. So I decided that soybean could be the one to trust and the price would keep dropping forever. Thus, when the price of soybean was going up a bit last Friday, I shorted a huge amount of soybeans, hoping that he would bring me a fortune at the final round and we could have a happy ending.

Well, things never turn out the way you want and tragedy is always more impressive. Soybean future price jumped from $12.81 (when I shorted) to $13.09 within a week! Now it’s time to say goodbye and learn from the pain.

In the future market aspect, there are two reasons for the increasing price of soybean. Firstly, since the expired date of Soybean November contract is getting closer, speculators with a short position were currently covering soybean to offset, which pushed the price up. This can be proved by the volume data. In contrast to previous weeks, when volumes fluctuated a lot, the volume has become constantly larger since last week, around 120000. As more and more speculators covered to offset, future price will increase until the profit of offsetting equals zero.

The second reason is that spot price drives future price up. According to LOP, at the expired date, future price will equal cash price. But the basis (f-p) of soybeans has always been negative and the cash price is increasing recently, which together push the future price up. These two reasons combined have led to a dramatic jump of soybean price this week.

In the supply and demand aspect, recent news has a complicated impact on the future price: Demand boosted the market while supply descends the price. According to a USDA report early this week, the soybean export demand is increased compared to last year. During this active harvest and delivery season, foreign buyers, such as China and Russia, keep importing huge amount of soybeans since last week, which boost the spot market and pull up the future. On the supply side, dry weather ensures a good harvest weekend, which will lead to a rapid harvest progression and better- than-expected yields. As a result, the future price was first increased and then decreased.

Wow! I have been talking so much about soybean. It’s my hate and love. Burned my fortune in future market but produced my favorite soy sauce and tofu. What else can I say.

Trading game is coming to an end. The end of the game, the start of my real future!

Ciao!

Since nobody will judge my blog this week, please allow me to take a break from the trading blog.

When I put the final exams on my schedule this week, I suddenly realize that it is already the end of October. How time fly! In less than two months, we will complete our first semester of the mfre program!

I have lived here for three months. Although I am always busy with so many assignments, projects and the coming exams, having no time to think about life, I do feel that life is so good here. And there are two things that keep surprising me since I came here. I just can’t help to think that mfre is such an amazing program and Vancouver is such an amazing city.

Besides all the interesting courses and friendly professors, I think the most amazing thing about mfre is gathering together all of us so that we could meet friends from different parts of the world and share our ideas and stories. Everyone is like a book. Every time I talk with you guys, I feel like reading novels. And every page is so surprising that I just can’t stop reading. I really appreciate mfre for bringing us so many lovely friends.

Another thing that amazes me is the beauty of Vancouver.

Summer is the season of splendid sunshine. The blue sea, the golden beach, the emerald leaves and everyone’s laughing white teeth, all glittering in the gorgeous sunshine.

Autumn is the season of dream. Trees and leaves became colorful overnight, like a magic show in The Imaginarium of Doctor Parnassus. Lonely yacht sitting peacefully in the quiet seashore, like the floating boat in the Life of Pi. Moist forest with suffusing fog, like the secret vampires’ home in Twilight. Everyday I feel like living in the movie scene.

Ok, I should stop dreaming and get back to work.

Good luck everyone with the midterms. Enjoy Life!

We are speculators, and speculators live on information and news.

Since there isn’t many news about the market this week, it seems we should take a week off and enjoy our mountains of assignments and midterms! And the coming Thanksgiving! 😀

Or, we could act like a cool forecaster, using technical tools to analyse the charts.

These two charts respectively show the prices of soybean in one year  and two years. They remind me of the trend forecasting models in 585. In spite of some fluctuation over months, the diagrams both show a downward trend of price. Although the price is unpredictable in short term, but I am pretty sure that the price will continue to go down in the rest of the year. And the price is quite volatile recently, there is still a chance to make a last bucket of money in the following two weeks.

The graphs of corn is more straightforward. There were some summits Jun, early Jul and late Aug. But after that, the price just keeps falling, like a snowball rolling down the mountain. And recently the price becomes flatter than before. Maybe it has come to the prairie and want to calm down a bit. Unlike Soybean, it is difficult to make lot of money in corn market in short period.

Anyway,my strategy is short for soybean and stay away from the corn. Back to my portfolio, I was stuck in a negative situation for four days. Fortunately, Friday brings me some luck so that I could happily enjoy the long weekend lol!

Have fun guys!

I was Bungee Jumping in the future market this week. Monday, I was on the mountain top. Tuesday, I was suspended in the valley, waiting for the lifeguard. 🙁

I lost more than $10000 in one day because I made some silly mistakes on Monday. When waiting anxiously for the USDA grain stocks report, I mistakenly “stop buy” the corn instead of “stop sell”. When I suddenly realized the mistake in the afternoon, it was already too late! $0.1 dropped, and my $10000 gone with the wind.

Another thing that shocked me was the shut down of the US federal government. I didn’t know that a government could shut down in this way and the country could still keep running well. So what is the point of the existence of this government? Is it just a decoration?

Living under the control of the powerful government for twenty years, I regarded government as the pillar of a country. They are like the boss of a company and can manipulate everything and even everyone. Sounds pretty scary. We workers are so panic all the time but there is nothing we could do except working hard and avoiding mistakes. However, the government in the US is more like a manager, strong but not dominant. Citizens are the real boss. Government can quit its job while citizens can still live a peaceful life. What an amazing country.

What is more, it seems there is barely any impact of the government shut down on the agricultural commodities price. Despite the shut down of USDA and all the relevant webpages, prices of the three main commodities grew steadily in the following days of the big news, even more smooth than last week. I have two guesses about this situation. The first is that the agricultural commodities prices are quite independent of the government policies. The major factors that affect the prices are nature and market, such as weather, production, stock, supply and demand. The second is that most people are holding a “wait and see” attitude towards the shut down and are taking a break from the future trading, finally brings some peaceful atmosphere to the future market.

PS. There is shut down effect on livestock and dairy markets already. Maybe the effect on corn, soybean and wheat will come soon.

This is my portfolio of this week. Bleeding. T.T Hope to gain back next week!

Thanks!

This is a busy week! Busy making money in the future game and catching the tail of the gorgeous summer! Well, it starts raining this morning, and I finally grab the chance to stay at home and take a break. And it’s blog time!

Here is my open position:

I started trading on Tuesday morning this week, when I suddenly found that the price of wheat is growing crazy, like climbing Grouse Mountain. I immediately bought in some wheat, hoping to get on this crazy roaring bus! And it turned out that I was pretty lucky. Here I am, smiling at the top of Grouse. 🙂

I didn’t change much about my portfolio of corn and soybean since these two guys were quite boring this week. Price of corn is fluctuating between 4.48 and 4.59, with no clue to predict which direction it is heading for. Price of soybean is even more stable, hovering around 13.17, losing its direction. Guess this is the human nature. When there is no information, people will just gamble on the commodity future, which leads to a zero-sum game of all.

Here are some important lessons I learned in this happy week:

1. Get up early, watch the news and trade.
2. Pay attention to the weather report around the world.
3. Always set a limit or stop price instead of the market price.

It seems the price of agriculture commodities depends a lot on the weather, which has a strong impact on yield in this harvest season. If you get up early to check out the weather report and sign some contracts before anyone else does, then there will be a great chance to make some money in the rest of the day. This is the law of information spread, right?

PS:

We know that recent frosts in Argentina have caused a crazy increase in wheat price this week. But it is also reported that “Argentina expects a large crop of wheat next November despite recent frosts”. And the USDA will release Quarterly grain stocks figures on Monday. I am sure next week will be much more exciting!

Have a nice weekend!

The beauty of future is that it is unpredictable, which gives us a lot of surprising and depressing moments. Like sitting in a roller coaster, we never know what will happen in the next 0.1 second. Our future trading game is the same.

Instead of being a rational trader, concerning about every single movement of the market price and every update of the international news, I choose to be an emotional player, letting my feelings lead the way and enjoying the excitement of the game, rather than worrying when the next fall will come.

In this sense, I start my first venture, longing for corn and shorting for soybeans. I make this decision simply because I treat the graph as a roller coaster trip. When price is hitting the ground, it will bounce anyway. It seems the price of corn is almost at its lowest, so I bet it will go up in the coming week.

The graph for soybeans tells another story. It seems that the soybeans’ roller coaster has more fun. The price has gone through some peaks and troughs in the past few months, and it is now at an unstable and relatively high situation. So I bet it will go down and take a breath in the coming week.

Besides the excitement of going up and down, roller coaster can also bring us different views of the park. So I start to look around and see what happen in the corn and soybeans fields.

Firstly, the forecasts of the size of the 2013 corn and soybean crops come into my eyes. It is said that the average corn yield is 155.3 bushels per acre, larger than the August forecast. Another harvest report indicated that despite the late planting and recent drought weather, the corn in the southern area of the US is growing healthily, contributing to a four times larger yield than last year, which is even more than the forecast. However, good weather will not last for long. The coming fall freeze is predicted to threat the maturity of the remaining crop. It is reported that the corn crop will experience freeze-related yield loss in some parts of the Corn Belt. Given the harvested acreage and demand of corn unchanged, the price of corn will suffer some droughts recently, but still has a chance to surge in the coming autumn. Plus, the supply of corn in Argentina has dropped in this season, which gives me more motivation to hold the corn for long.

The situation of soybeans is quite opposite to the corn. The September forecasts reported a decrease in the average soybean yield, compared to the August one. While USDA said that the soybeans will yield slightly larger than last year. Anyway, rain has started to save the soybean fields recently, giving some hope to the soybeans yield. South America has also reported an increase in the record of soybean area. Wish it will make some contribution to the supply of the soybeans market.

After all these views, it seems that I should insist on my first choice. And I am going to find out the story of wheat next week.

This is my journey of the first week. Thank you for watching!

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