Just don’t make enough these days. My portfolio balance has dropped in the last two trading because I made some significant mistakes, though I take the positives from them. I have learnt to believe that prices are as unpredictable as anything no matter how well you think you understand them. Price movement follows a random walk. I just hope one day I would become a better broker from where i left off.

I was observing wheat, soybean and corn contracts simultaneously since Monday. I wanted to be able end my trading on a high note. So I did quite some research about the weather and some political news that i though were  going to have impact on the market. What did I find? There is good planting ongoing for winter wheat and smooth harvesting for soybean in the United States. So I expected that with this news there were going to be market reaction to speculative demand for wheat and soybean. Specifically, there would be lower prices for them in future because of anticipated good harvest.  So i went to offset my previously short soybean contracts.

How I wish I had done some more technical analysis stuff to back my prediction. My positions were delayed so i made losses. In all, I made about 1.57% losses and my portfolio balance stands at stands at $98,427.93

This weak trading has been a bit not too good in my opinion. I did do some gambles observing how the market prices were going. However, my predictions were far from correct.

Though there was declining pattern in wheat contract prices, at a point in time, this was beginning to revert back to an increasing trend so I longed. I observed the same pattern with Soybean contract and longed as well.  The reason why this was beginning to take an increasing pattern, in my opinion, could be due to the re-opening of US government because I felt that was some favourable news which could boots traders confidence. News about China increasing imports of soybean further consolidated my thinking that prices were going to shoot up. However, this did not seem to have an impact on commodity futures as prices continually dropped.

My portfolio balance dropped as prices further declined against my predictions. So I loss about 14 000 dollars on my general trading. My portfolio balance stands at $107, 534.78 and my return on investment stands at 7.53%, as against 23% returns last week.  I guess I still have some difficulty with the trading game because I wanted to buy corn contract as well but it wouldn’t just pick upon several trials though i saw that its trends were rising.

Friends, I must say that this was the week I actually understood what the whole trading was about. Earlier on, I knew that when you expected prices to increase, then you take a long position. Conversely, an anticipation that price might go down then you take a shot position. One big thing I didn’t know was how profits were made on each position. For example, I didn’t know that if you took a long position as a speculator because you anticipate a price increase, then you must resell your contract when price have gone up in order to make the profit.

So to me, I long when I anticipate a price increase and shot when I anticipate a price decrease. So all along, it didn’t make sense to me. That was pretty much it. The logic wasn’t just adding up. How can I just take a long position and sit down doing nothing and wake up one day to see profits on my portfolio. What happened and how did it happen? I was never sure and at a point felt that I still didn’t understand what I was doing.

You may wonder how I found out. I asked the Prof this week during our Futures Market lessons for further clarification. That was when I got to know that a long position must be shot again in order to make the profit just as a shot position must be longed to capture the profits.

I then asked myself, where were all the returns I made in the previous trades come from? Because I only took long positions without reselling. And when I expected price to go down, I took short positions without going to long again. I still wonder.

After the Prof’s explanations, I went to check my transaction records and realised that some of the contracts I had longed could be resold. Because I found out that wheat price had increased beyond what i bought. So i immediately resold my wheat contracts. Similarly, I resold my previously shot soybeans contracts because prices further declined. Though I had read in the news about USDA crop report, I was convinced the best way to making my money back was to resell/shot my previously contracts.

As at now, my portfolio balance stands at $123, 881.80 with 23.88% returns. In fact, this is the best I have ever gained.

This week’s trading was really one of the challenging I have faced. Because I had no priori outstanding market indicators as to how markets were going to move. The same old news of poor harvest in China, drought in United States and anticipation of its likely impacts guided my decisions.

I would like to acknowledge that though I watched and read the United States government shut-down news, I didn’t think this had a dramatic toll on the futures market. One thing I however saw was that the Agricultural Commodity Funds showed marginal changes and in some cases it declined. For example,  Teaucrium CORN declined by 0.12% . This suggested to me that the demand for futures contracts were going to respond in similar manner.

However, considering the currency market, the US dollar, the Great Britain Pound and the Canadian dollar all dropped in value. Metals fell as well. This suggested to me that the fears of government shut-down were beginning to decrease investor confidence.

I accordingly saw that Soybean contracts were declining on futures trade on the 2^nd of October. However, the cycles were showing much deeper loops. So I short it by noon. Unlike Soybean, wheat prices were increasing. So I bought 5 contracts of wheat. In all I made 8.39% returns and my portfolio value stands at $108, 192.88.