After the lesson learned from the first week, this time I took a closer look at the 7 days pricing on NASDAQ rather than the general 3-month pricing trend. Even though the time span was shorter and fluctuations might be large, I found it is more precise to predict future prices this way, helpful for capturing the quick profit margins while doing more trades at the same time. I closed my long position on oat and ended up with a $525 loss. I was regretting my decision on this that I should wait for a few more days even though there was a consistent drop in oats price. Since the drops were not very dramatic and the contract was expired in Dec, I should close my position whenever it got a positive gain. I was so easy to lose my patient and gut reactions deviated me from my primary chosen strategy. Now I learned that in trading games, it is important not to allow self to be ruled by emotion and the persistence is key.
I covered my short position on wheat as well and ended up with a $225 gain. Besides, I went long on one coffee contract and went short on 2 orange juice contracts. My logic behind is that considering the coffee price is consistently keeping rising lately, I am expecting the trend will continue. However, since the coffee price is normally volatile and I already missed the lowest point, I am taking the conservative approach by taking on only one contract position. But coffee is undoubtedly one of the commodities that I will always keep an eye on that it always fluctuates sharply and thus gives high profit margin. As for the orange juice, my intention is to try out a different commodity that people don’t often buy. This time I checked out the technical views on Barchart.com and went with what most professional traders did. I went short on 2 orange juice contracts and it seemed that my position was losing during these days. Nevertheless, I will keep the position open and see how it goes, as I want to learn the thinking behind the majority of professionals’ opinions. On the other hand, I realized that this trail and error approach may cause my to lose profits, but it is worth to learn and understand the rules behind first.
Remember high volatility can mean high potential profits but also high potential losses. Using stop losses are a great way of minimizing the risk of a big loss. Good job!