More Commodity Trading

[SSI]

Im currently on an 18 month (540 day) journey to become a fulltime trader, this culminates with the sale of my successful convenience store business in July of 2008... 18 months is a long time but not that long, when your going after your dream.....

Im breaking the journey into segments.......... Each segment has goals that i want to get accomplished, all leading to my ultimate goal.......

Im only 10 days into the 540 day plan, so i feel a need to slow down.. Ive made 4 real trades and managed to make around a $300 profit clear, this includes paying 7 commissions...... 3 of the 4 trades have been spread trades, not exactly what i had written up in my plans........

Yesterday i exited all open trades and come into today Flat.........

So today its back to my original plan, which includes...

Trading less, while still in the intoductory segment........ More chart and price reading......... Working trades more slowly, trusting my work....... In fact here are 6 rules that im now going by.....

1. Know the trend of the market and do not position trade against it.

2. Trade mechanically........

3. Have a game plan each day and do not deviate from it, never.. trust your numbers 100% of the time..

4. Trade using your indicators......

5. only hold 1 position for every $2500 in trading account..

6. Make an Outside day beat you......

these are just my written rules, that im trading by, during this segment..

On to trading.........

Is today the day to finally buy grains........ Gaps are still not filled in the markets, however we are going to open above yesterdays high in corn and all the grains were up overnight........ Could be a good buying opportunity, risking under yesterdays lows....... If the grains really want to go up, yesterdays lows will remain intact...... if they come out, the gaps below will be targeted........ remember we have uptrending markets, that have been consoilidating, while moving sideways to lower.....

March corn: currently 405, overnight low 402, yesterdays low 397, yesterdays high 404, next target high 411.....

March beans: currently 719, yesterdays high 720, overnight high 722, yesterdays low 712, next upside target 728......

March wheat: currently 470, yesterdays low 463, yesterdays high 474, target high 481......

these are just some numbers in my notes,,,,,,,,, notice for a good upmove, we need yesterdays lows to hold........

market opens in an hour, if i get into anything, ill try and explain it slowly here........ I still want this segment to be more about the learning process (myself included) and less about the trading....... there is plenty of time for that......... as im clearing alot of other financial things up now, as well..

For whats its worth, its nice to know, exactly what you want to do with the rest of your life.......

 

[SSI]

about 30 minutes until grains open, i just did a quick read of all the charts..

looks like today could be really crucial for near term direction........... im still on the sidelines, if yesterdays lows come out, i may become a seller.. we either move up from here or we are going to drop quite a bit, enough to make some money......... charts do not look that good, they look toppy... doesnt mean that we cant break out to the upside but there is definatly room underneath.......

20 minutes to kickoff now, im intensely watching yesterdays lows...

other markets that im watching...

sugar, continues to struggle for a bounce...

emini sp, should be bought if we drop back to the 1438 area, currently we sit at 1444...

april hogs, definately a buyer on any pullbacks, preferably to the 6580 area..

april cattle,,,,,, another big battle setting up here,,,,, the 92.30 low is crucial, as is the area near 9370.......... interesting to watch this today...

back to markets........

 

[Iceman]

I think I asked something similar yesterday and not 100% sure you answered it but is what you do called "chart" reading or something like that. Excuse me for ths dumb question just trying to figure out what method you use and I am not up to date with the correct terminology.

Is that how you base most of your decision based on charts, if so you should look into trader Tony Oz as this is his method. Is this how alot of traders make/base their decisions?

If I am understanding this correctly (and I am sure it is much more complicated than this but just trying to get the hang of it) you are saying that when the price hits its high or very close to it (resistance) than it is time to expect it to drop (the price) and when it comes close to its support (its low) over a certain time peorid than you see value and buy. Kind of expect prices to flucuate based on previous movements inside the normal "price range". Am I at all close to understanding this?

 

[SSI]

just sold a march soybean 714.25, stoploss placed at 721...

yesterdays lows and highs have now been broken, this is an outside day already, near term direction may be determined today...

my total risk on the trade is $337.50........ hoping for a drop........ im done until this trade is complete, as i just want to work one trade at a time, in this segment.........

 

[SSI]

yes Ice, that is the jist of it, but its not that simple, there are other things involved.......... bollinger bands, gaps, the longterm trend, the short term trend........

i just sold that march soybean, based on pricing and chart reading... thats what i using.......... Pricing and Charts............ we broke yesterdays lows and highs in march beans...... this is called an outside day, there are also gaps underneath that should get filled sometime...........

notice my risk is very small on this trade, as its sort of counter the overall trend.... but if you read the chart......... and i use charts at TFC Free Commodity Charts.......... this market is looking like its turning down..

now we could rally and break out to the upside and if we do, ill get stopped out with a small loss........... if we drop, ill make some good money..

 

[SSI]

Ice, pick you out some markets and start to follow them...... you can get quotes and charts free at TFC Free Commodity Charts..... there is also a learning center there as well......

my markets are now becoming solely the Grains, Meats and the Emini.. all chicago based markets........

Start to record the opens, the lows, the highs, the closes....... each day.. this is pricing... this is good to use for day to day trades,,,,,,,,,,, sort of a closer look (smaller time frame)....... then look at the daily charts.. this will show you areas of supp and resistance in the markets............ this is what i use........ by using these things and knowing my markets, i can become good at determining direction and turning points....

buying on supp and selling on resistance is a good strategy as well,,, you simply place a stoploss and then only a breakout can stop you out with a loss.......

 

[SSI]

well beans and the grains did as i expected...... sold off early today, corn tested the lows of yesterday but wanted no part of them..... Corn for now is the leader in the grains, where it goes, the other 2 will follow........ for the most part..

i took a small 3 cent profit on the bean trade (+$150) and exited at 711.25, this was done by following the lead of corn.....

its dangerous being short the grains at the moment.......

i then proceded to buy a march bean.........

so now im Long 1 march bean from 712.25.......... stoploss is in at 705.25, so i have a 7 cent risk or $350.........

not much happening really, everyone is waiting on the big grain move UP, lets hope it happens now......

 

[TheFalls]

SSI, on the TFC chart for Soybeans, what is the difference in the charting of "RSI" and "MACD?"

Also, please explain volume and OI. Do large funds control these markets?

 

[SSI]

Large funds control the markets, for the most part, or they can influence it greatly.......... especially during quiet times in the market.... however when fundamental news comes out or technical triggers are reached, they lose control...... at those times, they can definatley push the market on....

open interest: simply the number of open contracts, unliqudated purchases or sales but not their combined totals...

volume: a simple addition of successive futures transactions, a transaction consists of a matching purchase and sale........ bigger moves are often time made on heavy volume.......... light volume moves are sometime fake moves.....

MACD and RSI are both technical indicators........... MACD is much the better of the two...... its good for showing and predicting tops and bottoms as well as turns in the market.. RSI show the relative strength of the market and moves....... sorry but thats about as good as i can explain it........

 

[heart222]

RSI is an oscillator that measures the strength of the market in relationship to its price movement over a period of time. that means if a stock or commodity has a range of lets say 20-40 and finishes at 36 the RSI would be 90 for a 1 day RSI, Since that would cause to much flopping around RSI is smoothed out by taking the last say 10 day closes and getting an average of that in relationship to the range. example 5 days at 36 5 days close at 34 so average is 35 and RSI is 87. ok?
MACD is a system that basically takes the differance between 2 moving averages of the close. they use a 14 day and a 26 day average and basiclly when one crosses the other they go long or short. there is a 3rd part tothisbut i an not prepared to explain but it creates a 3rd line and then when the 14 crossesthis it triggers a buy or sell depending on direction. both of the above are used by technical traders which SSI is. one thing to remember you are alwasy behind the curve as you are waiting for the averages to do something.
Volume and open interest. Volume is the number of contracts traded during the day. Open interest is the number of contracts carried over night.. there is a relationship between the 2. one of the original trading systems was as follows. if the underlying was up and the volume was up and the open interest expanded that was positive s it meant people were putting money into the market. if underlying was up and volume and open interest were down from previous day that is a negitive as people weregetting out of the rally. same works in reverseon the downside. in effect if a market is going up you want to see more people in there and more not just day trading. on the down side underlyingdown open interest up and volume up positivefor the bearish positions. underlyind down volume lower open interest lower its a sign thebears aregetting out and youcango long(up). Hope I answered some of your questions. regards heart222

 

[SSI]

thx bobk, are the grains ready to go..... or do we continue to twist downward...........

long from 712.25 SBHO7.......... stoploss in at 705.25...........

 

[WCJW]

SSI,
In one of these threads you mentioned you were also going to look at trading spreads. Are you still going to do this? Any by spreads I mean spreads with futures not options spreads. Have you had any luck with these in the past. The tendency for seasonal spreads to work year after year has really interested me and I am looking to get into this but would love to hear your thoughts.
Thanks

 

[SSI]

absolutely, ive already been in 3 spreads.......

Long march corn/short march wheat........ got in at 70 cents, got out at 64, as i was trailing my stoploss........ made 300 on this...
lost a little on hog spread, made a little on cattle spread........

i plan on spread trading ---- making up about 20% of my trading........

i kinda like to keep one working........

 

[TheFalls]

I understood volume and OI, but I did not understand the difference in numbers.

Volume had been at 30000, but OI was near 200000......does this mean that there are 200000 orders waiting to be filled? That is a large discrepency.

 

[heart222]

no particular relationship to volume and open interest. letssay open interest is 20 contract. that means there are 20 people carrying positions overnight. during the day the contract traded 40 times but the open interest remained at 20. so the 40 contreacts could have been all ay traders. i traded the mini dow 3 times went home with no position and came in this a.m. with no position. so im part of volume but not open interest. as iexplained earlier it is good to see both open interest(more people looking for a muti day move) and also volume increasing on an up day. hope this makes it clearer. heart222

 

[heart222]

somebody asked about spread trding. there are several books that have historical basis for spreadtrading. traderspress.com has terrific selection. many of them are based on harvest in the grains. the petroleum patch also has spreads both same future and say heating oil/gasoline. i think it near the time to go long gasoline and short heating oil asthe refiners have to start switching over to producing more gasoline and there is a fear that there wont be enough. spmewhere in mid summer the trade reverses. this is high risk dangerous spread but worth watching. regards heart222