Hello Everyone

Another week of busy trading and studying. This week I decided to mainly use two simple strategies in oder to avoid risk, one being diversifying my portfolio and the other one being maintaining a relatively stable percentage of my futures investing.

Keeping in mind that “never put all you eggs in one basket”, I made a series of long and short positions for oats, soybeans, coffee and orange juice futures. So my portfolio became more diversified and in that way, I can allocate risk into different products. However, this will require you to put extra efforts into research and analysis for different kinds of commodities.

Meanwhile, I only made 2-3 trading contracts for every commodity aiming to keep my futures investing a relatively stable 25 – 30% of my portfolio. In that case, even if a market shock occurs, I will still have enough cash to take corresponding actions rather than being passive in the market. But the downside about it is that I will also miss the opportunity of making a greater profit only if I have a larger number contracts of the commodity that is generating money.

Overall, this week’s future market has been quite volatile and it did show us how powerful its high leverage effects can be in both making enormous profits as well as devastating losses. I was not lucky to be in the first situation but fortunately enough to not being in the second scenario due to my simple little strategies.

Future is always full of excitement!

Good Luck Everyone

W.X

Hello Everyone

This is the second week of future trading game and I have to admit that I am already addicted to it. However,addiction usually comes with a cost! I suffered a lost during this week and below are some mistakes I made.

1. Did not stick to my plan and kept changing my mind…a lot. As I have mentioned last week, my prejudgement for Corn future was that it has a declining long term trend based on the USDA September report and the stagnate world economy especially the low oil price. However, concerns of a shortage in the short term had drove December Corn Future price to a weekly high of $399/bushel. That led to a great loss for my first week’s contracts and a turnover of my market prediction. I switched my mind and decided to go long for December Corn. Soon after that, the “fantasy” was destroyed by lower than market anticipated exporting data and a huge decline in the ethanol price. I ended badly by the end of the second week due to a lack of unswerving stance.
2. Did not act fast and forgot to use stop loss order. Friday the 9th was a game changing day for most commodity as the USDA released their reports on crop production and world supply and demand estimates. For the U.S domestic crop production, USDA did adjustments as market previously expected. But for the world supply estimates, wheat supply was adjusted to a record high level. The market reacted immediately by a dramatic drop in the Wheat Future price. Together with previous technical selling, Wheat future price had declined from weekly highest of $531/bushel to as low as $504/bushel. Unfortunately, I did not act fast enough to catch up with the market change and most importantly, a stop loss order was not in place when the loss occurred. It is always hard to admit you made a mistake, but when you do, you better admit it.

Above are what I want to share with everyone this week and hope I will learn from them and do better in the Future.

Good Luck, everyone!

W.X 

Hello Everyone

I started to trade futures on the last day of week 1 and the commodities that I chose to trade were corn and wheat.

I did not perform a solid research on those two commodities as the time I had was limited. Even though, based on the release of USDA September 2015’s crop production report. It estimated that for the year of  2015, corn production in the U.S. would reach third highest record while corn yield would reach the second highest record in the history. Under consideration of the world slowing down economy growth as well as the low oil price which has a strong impact on the price of corn, I predicted that the corn price in the long run would decrease so I went short for corn Dec 15 contracts. On the contrast, I went long for wheat as the USDA report adjusted a lower production forecast of wheat for this year than previous reported. I would expect that the wheat Dec 15 future contract price to go up.

For the following weeks of trading, I am hoping to learn more ways of gathering comprehensive market information as well as developing future trading strategies for a specific commodity.

Good Luck, everyone!

W.X