Update: Coffee, 3/23/15

Long
Entry: 143.20
Exit: 139.80
PL%: -2.37%

This trade never got going and got stopped out today. Looking back, the pattern wasn’t very established yet, considering it was less than a month since it formed. Will make sure that the pattern time is longer for future trades. I still see Coffee bound within the channel and will see how it develops over the next few days and weeks.

I’ve gotten burned on my last few trades, but my long Silver position which is still open has been doing very well. Caught the huge move on Friday 3/20, have moved the stop up to 16.50 and will be keeping a close eye on it.

Weekly Recap for 3/15/15 – 3/20/15

3/15: *$107,304.98
3/20: *$106,955.64
PL%: -0.33%

Took a beating earlier in the week before recovering towards the end. I gave up a lot of unrealized profits off my Platinum and Corn trades after they rallied up off the Fed announcement on Wednesday. Like I mentioned on each of these trades, that’s all part of the system and expected, as you have to give the stops some slack to let them trend. Sometimes they trend, sometimes they whip back and you give back what you gained. I know there will be more opportunities in the future.

The one trade that did exceptionally well was my long on Silver, which I entered Thursday night and caught the big move up on Friday. I currently still have that position as well as a long on Coffee. I may enter a few more positions tomorrow night going into the trading week.

Currently -0.27% for March and +11.29% YTD.

*Numbers based off adjusted starting capital amount of $100,000

Book: The Futures by Emily Lambert

“The Futures” gives an inside look into the origins and growth of the Chicago futures exchanges, told through the eyes and the experiences of the traders, brokers, and executives that made it all happen.

I believe that history is very important to study and understand as it provides context to what’s going on today, why things are the way they are, and point to what may happen in the future. This not going goes for the price charts of individual contracts, it goes for the entire financial institution that supports these contracts. It’s a shame as I believe many traders and professional fund managers simply don’t bother studying this history, take the trading structures and platforms for granted, and thus end up trading with lower awareness in the markets.

By organizing each chapter into a specific product such as “Grain” or “Options”, Lambert presents an entertaining, yet informative chronological account of how the CBOT, CME, and CBOE came about. I feel like I can relate a lot to the pit traders – guys who came from immigrant parents, with little to no background in finance, who through a family relative or friend got introduced to the futures trading business and jumped into the pits. These traders were cowboys in the wild wild west, who took on risk and went through incredible ups and downs. Many of these traders were rejected elsewhere, yet were able to find acceptance and success in the pits. The exchange executives as well faced ridicule when they approached New York bankers and regulators about new ideas, written off as small time operations, trading obscure, laughable products like pork bellies and cattle. Yet, the exchange executives battled on and eventually had the last laugh.

The documentary “Floored” which came out in 2009 gives a great look into life in the pits.

As markets have started going electronic, a lot of the pit trading has slowly died out. It’s a shame as I would like to see it in action, but as with everything else in the financial markets and in history, change is the only constant and it’s survival of the fittest.

Coffee, 3/20/15

KC[K5], Long, Support/Resistance
Entry: 143.20
Stop: 139.80
Target: 150
Risk/Reward Ratio: 2.00

Entered this trade earlier on Friday morning. Half month consolidation channel which broke yesterday. Frustrating that Coffee didn’t rally up while nearly every futures contract did today, but will hold tight on the position and let it develop next week.

Update: Corn, 3/20/15

Short
Entry: 379
Exit: 385
PL%: -1.58%

Got stopped out today after it made a huge move up today. Like my Platinum trade from earlier this week, this trade started off very well but then whipped back. While I did give back a lot of unrealized profits, and ended up on the losing end of this trade, it’s all part of the system, as you need to give stops sufficient room to trend and you can’t close out positions, possibly prematurely, just to lock in profits.

Silver, 3/19/15

SI[K5], Long, Descending Triangle
Entry: 16.13
Stop: 15.9
Target: 16.6
Risk/Reward Ratio: 2.04

1.5-month descending triangle pattern, definitively closed above today. Silver tends to be extremely volatile so I will be keeping a close eye on this trade.

 

Update: Platinum and Soybean Meal, 3/19/15

Platinum, Short
Entry: 1130.10
Exit: 1126
PL%: 0.36

Soybean Meal, Short
Entry: 317.90
Exit: 326
PL%: -2.55%

After the Fed announcement yesterday, got stopped out of both positions as they both rallied off the announcement. While I did give back a lot of unrealized profits off the Platinum trade, I wouldn’t have done anything different, as you need to give the stops some slack to allow the trades to trend. If you get scared and move stops too tight too often (which I myself do from time to time), then you’re really trading to lose. This is part of the system, there will be more opportunities to trade in the future.

Soybean Meal, 3/17/15

ZM[K5], Short, Support/Resistance
Entry: 317.90
Stop: 326
Target: 300
Risk/Reward Ratio: 2.20

1.5-month support line, has had some downward pressure the last few days and broke through today. With this trade, building some positions short across ags, as my corn position started off nicely today. Still holding on to my short platinum position as well which is doing nicely.

In today’s distorted, free money, central bank driven world, the Fed’s comments will be sure to cause overreactions in the markets. When talking heads are arguing over how “dropping ‘patience'” from the Fed’s comments will affect market perception on when rates will rise, when the markets actually rebounded up last week when weak data came out as people expect easy money to continue, you know we’re living in strange times.

Site Updates: Strategy in Brief; My Philosophy and My Advantages; Books

Added three new Pages under the “About” tab. I hope these shine a light into how I think about the markets, my trading style, and motivations.

Strategy in Brief

My Philosophy and My Advantages

Books

Corn, 3/16/15

ZC[K5], Short, Descending Triangle
Entry: 379
Stop: 385
Target: 366
Risk/Reward Ratio: 2.17

1-month descending triangle pattern. Actually could have used last Friday’s close below 383 to justify entering a short position using this pattern but wanted to wait one more day to get stronger confirmation. Looking for the downtrend which started end December 2014 to continue. Looking at an initial target of 366 with a secondary target of 353.