It was a winning week! I ended up with gains on my cotton, cocoa and coffee contracts. Even though I did not make a big profit due to the small contract size, I did learned lessons from my loss experience of shorting orange juice that staying in the market for too long in the hope of the commodity futures going even higher would consistently cause me losing money. It was better to close out the position sooner when a reasonable profit had already been made and opened another new position to lock the existing margins.
My holding decision onto the losing trade turned out to be right. The orange juice price dropped and my loss became smaller. I would put this position aside for a longer period since I only shorted 2 contracts, and as far as I was concerned, the cold weather and Florida frost would prolong orange juice rally. My best strategy at this time is to wait and cover this unsuccessful trade at a relatively lower price level.
Moreover, I plan to do some day trading in the coming week on two of the most fluctuated commodities, coffee and cocoa as I am seeking to make profits to make up my losing position on orange juice. In particular, I will leverage large contract quantities on these two commodities to take advantage of the small price movements. The latest coffee future price decline was attributed to ideas of, some rain relief for Brazil’s coffee and I will pay a close eye on the quotes on Bartchart.com and respond quickly to the daily price movements.
Good job at locking down your profits!