Monthly Archives: October 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!