Month: October 2013

Reading through your blogs, I find that you guys have different interpretations for a same piece of news, some predict price would go up, some on the very contrary. So it is interesting to see how trading being a zero-sum game applies in real life just on us.

It seems in the last week, almost everyone is reflecting on their trading experience, gains and losses, lesson learned and so forth, I am no difference.

No trading for this week, it seems that trading is something apart from me for a long time, a familiar friend whom we haven’t got time to talk because of the midterm. Once separated, the mixed feeling of calling back the relationship is accompanied with the reluctant of changing of a new status.

The relatively amount of gain is really associated with how much effort paid in the game, and the quality of the blog is how we treated it and the amount of time we devoted.

I would probably continue trading, and the process can be either more exciting or a bit boring: Exciting in that I can invest in a larger variety of commodities, focus more on the area that interest me most, though I might, as before, won’t really get the time for that, this prospect is especially reinforced after receiving a tight schedule on Tuesday. Boring in that our lively atmosphere of doing things TOGETHER-trading, discussing would probably left only in memory. I will miss this time at the same time cheering for a bit relieve.

Goodbye, blog..

It seems that in the mid term week for 501, less attention is put in trading, but still there are something happened need us to take a look:

Wheat:

Wheat analysts are the most bearish since July on speculation the grain’s biggest premium to corn in three years will curb demand after farmers reaped a record crop.

The grain tumbled as much as 33 percent from a four-year high in July 2012 as drought eased in the U.S. The grain rallied 10 percent since reaching a 14-month low in August on speculation that crop damage in Russia and Argentina would boost demand for U.S. supply.

“Demand news may not live up to the expectations built into the recent rally”

The USDA raised its estimate for global wheat output to 708.9 million tons on Sept. 12. That compares with its August projection of 705.4 million tons and 655.2 million tons last year. Major exporting nations outside the U.S. will harvest 211.9 million tons compared with 208.37 million tons forecast in August and 10 percent more than 192.33 million tons last year.

Canadian farmers may harvest a record 33 million tons, 22 percent more than a year earlier, Statistics Canada said Oct. 4. Prices will drop to $6.50 in three months, 7.4 percent less than now.

Brazil and China buying to restock inventories spurred a 3.7 percent gain in prices last month, the most since April. U.S. sales since June 1 jumped 38 percent from last year as of Sept. 19 and export licenses issued by the European Union climbed 71 percent, government data show. U.S. wheat reserves as of June 1 may fall to 544 million bushels.

Cattle:

Cattle futures rose, extending a rally that began in May, on mounting speculation that improved demand for U.S. beef is tightening animal supplies.  Strong demand is pushing all protein up.

U.S. Department of Agriculture price and slaughter data have been halted by the government shutdown since Oct. 1.

In the end, this is my open positions, good to see green colours..

 

 

 

Here is my open position and portfolio summary for Week 4.

 

This week, I covered my short position on corn for fear it may rise again, and  without any patience with soybean, I finally put a sell stop, given my observation that the soybean price may drop further.

After hearing the Technical Analysis that Andrew gave us on Tuesday, I feel excited and could not wait to give it a try, I will use some of the basic technical analysis tools to analysis the past trend and predict the future!

First, just to familiar yourself with the structure of candlestick

First to show my simple application: Using Inverted Hammer

Here is the description of this pattern:

Indication:This pattern occurs after an extended rally and indicates that the trend is weakening and a possible reversal may be at hand.

What does the candle tell us about the psychology of the traders in this stock? The long wick indicates that the sellers stepped in and dumped a considerable position into the market, most likely because they are taking profits off the table.

We can see from the candle chart, that

In history: as shown in the left red pane, there is a obvious downward trend followed the inverse hammer.

My prediction: as shown in the right red pane, we see a surprisingly similar pattern with the left one, which hints a possible similar downward trend in the soybean price. This signal, coupled with recent news about the increased harvest in soybean gives me more confidence in the prediction.

However, the signals derived from candlestick charts cannot be used on their own, volume is also an important component of the analysis. High volume shown below gives me further confirmation that a top can be put on this candle.

Then, have a look at all these turning points 

It is amazingly clear that almost all of the turning points can be found within one of the patterns shown below:

Here I want to say more about the engulfing patter:

Engulfing pattern is a major reversal sign that is composed of two opposite color real bodies. The basis of this pattern is that the current bars’ real body engulfs the prior bars real body, not necessarily the shadows. The bullish engulfing occurs after a sharp move down while the bearish engulfing occurs after a sharp move higher.

Bullish engulfing formations are most powerful when they are combined with previous support levels. and the larger the candles, the more reliable the signal is. Basically, a rule of thumb is that you can set your stop loss below the lowest low of the two candles involved; a move below this level would negate this pattern.

However, take a closer look, it does not always applies:

As shown above is a beautiful hammer pattern which predict a downward trend, however the price actually soared.

So, technical analysis has weakness:

1.Bias: Just as with fundamental analysis, technical analysis is subjective and our personal biases can be reflected in the analysis. It is important to be aware of these biases when analyzing a chart.

2.Too late: It has been criticized that by the time the trend is identified, a substantial portion of the move has already taken place.

3.Not all technical signals and patterns work: When start to study technical analysis, you will come across an array of patterns and indicators with rules to match. That’s why I was excited at first and when I move further I got frustrated and lost in the numerous choices available and each choice gives a different answer.

Therefore, there is always something happening beyond our prediction, we can never get one-hundred percent for sure of where the future goes, but the tools would help us get closer to the possibilities.

PS.

Thanksgiving is around the corner, “thank god” that I can stay in such a beautiful place in such a nice weather with such colorful leaves out there, but never have chance to enjoy and my plan to hike up the Grouse Mountains has been indefinitely postponed… As for me now, all I want are quite simple:

1, see beautiful scenery

2, meet good people

3, try out fine foods

Hope I can fulfil some of these wishes after the mid-term.

Enjoy your long weekend!

My portfolio summary for Week 3

 

Nothing expect wheat received positive return.

My feelings: Terrible. Because I actually fall behind for the whole week ( not the ranking but how much I really “learned”), let alone my goal of getting more insight into trading!  I did some impulse trading based on the recent news hoping to gain from the short trend. But everything turned out to be quite messy. I knew from the Monday morning that I should short corn but I did something else, too lazy to catch the chance at the right time.

Just have a brief overview of my week 3 trading before moving on to the lessons learned:

1.About my darling cattle

I strongly recommend Airlie’s blog “Just an Udder Trading Week” for live cattle, Interesting and insightful, looking through her blog made me feel that any word from me would just be some minor repetition but much less attractive 😛

2. Milk, what did I do?

I made a stupid some mistake again… see what did I bought, a futures contract of September 13^th?  That’s what I got from a whole night’s sleeplessness…

So do not attempt to make important decisions without a good night’s sleep. ==

3. Corn, painfully say goodbye

Finally I decided to close my position even though I belive the price would bounce back sometime later. I wanted to short it on that day and probably buy it back the next day—just to win a small margin, but the fact is: I forgot about everything the next day, so I lost the chance, and now even more loss.

Feeling reluctant to say anything more about other commodities, I thought about buying more diversities every time I see some positive signals in new area. However, I did refrain myself doing so.  Now I just think– why not?

What I harvest:  First try in short, stop and limit.

Something besides trading:

1.It seems that what we’ve learned in 585 applies well into futures trading: 

a. Good decision don’t always get good outcome, something out of our control is always happening.

b.Prediction is based on historical information, but it never gets to the right result.

2. What I learned from my fellow peers:

G: Get valuable information on Monday morning and make wise decision.

V: A tiny mistake at the beginning may grows to be fatal, searching for help and suggestions from wise peers and keep a positive attitude, nothing can prevent us from getting lessons and learning new things even if we were in the worst position.

A: Passion, insight…. Orz

3. Lazy kills me. 

4. Balance my life. Sometimes I find the simple reason that I did not achieve the goal I set is simply because I did not balance my leisure and work well. It is more than just study, but about how to live a life.

5. One harvest what he sowed. I simply did not pay enough effort on the trading this week, and my decision was too impulse and non logical, my loss in trading and now painful feeling of writing this blog are the result.

I decide to work hard, and as Jim said, put unnecessary things on hold. The future “me” will be thankful to a hardworking “me” at present. Same to everyone.

Good luck!