January Soymeal Futures Trade

January Trading Report Part 5

New position taken in Soymeal

Date	Future	Qty	Position	Price	Exit
15-Jan	SMH14	5	short	420	419

gross profit before commissions -  $100.00 x 5 = $500.00

Technically speaking im flat on the trade. The commisisons on entry and exit negate the money earned.  Usually the Soy group moves in quick step in unison. However as I initiated my short trade and after 4 sessions observed a widening of price action creeping to the upside, I felt it was necessary to abort this mission completely.

a widening of the days trading range could become a pivotal point in the market psyche, and there was not time to pause and reflect either. professional Soy traders are notorious for a clear out before the weekend and so i decided to exit prior to the usual stampede for the exit.

Chart action can be utilized as a back up tool when a pivotal point is reached but if I were to use charts I would fall back upon Japanese candlestick charts to give me a clue into the psyche, and plain jane moving averages, but as much as I can, like the pit traders, i work with numbers in the present.

And thats January done.

January Soybeans Futures Trade

January Trading Report Part 4

New position taken in Soybeans

Date	Future	Qty	Position	Price	Exit
15-Jan	SH14	5	short	1285	1275

gross profit before commissions - $500.00 x 5 = $2,500.00

This time I initiated a short trade. Knowing that the soybeans markets can be really choppy I expected a rough ride down keeping my mental stops just above each day's previous high.

Usually I find that in analyzing technical data watching RSI MACD and all other kinds of indictators, that the signals they generate often lag behind the reality of the action. Example the days action could be hovering on the 50 day moving average and hen break 2 or 3 ticks down over a space of 5 minutes. that is the kind of critical moment when technicians will always lag behind the action for although technical charts may summarize the sum total of the market psychology of the past and the expectation of future prices, it does not explain the present where all thins can be and equally within 5 minutes prices can shoot for the moon or descend in a crash and burn. For the day trader this is where instinct comes in for he or she that reacts fastest has the greater chances of success than he or she that pauses. In this case I pulled out with a modest $500 gain on each contract because the last days price action was greater than the previous 3 days trading range. This for me in the heat of the action, just bearing in mind numbers and not even the charts, seeing that todays high and low represented a greater price action than the previous 3 days, was a clear signal that market option was now in a tussle between further downward pressure and upward momentum. so what does one do in the heat of the battle between the Goliaths?  Step aside and take your profits. Live to fight another trade!

The lesson - Trade the present; do not dwell too long upon the past nor dream the future.

January Live Cattle Futures Trade

January Trading Report - Part 3

New position taken in Live Cattle

Date	Future	Qty	Position	Price	Exit
15-Jan	LCJ14	7	long	138.7	141.8

gross profit before commissions - $1,240.00 x 7 = $8,680.00

Again on the same day with the meats bundle I piled into live cattle future trades.  My instincts were correct, I spotted the big fund buying and I jumped on the band wagon but notice how i jumped off very fast. indeed as the steam ran out as predicted, the market slid into a sideways channel drift. This is the usually hallmark of the markets these days. To spot the trends you really need to turn to weekly charts and notice how the daily volatility range can really sap the strength out of the small trader who doesn't have the equity to ride the reversals. its true that since the 1990's the commodities markets have vastly changed with the advent of technology and information delivery systems, so much so that the pool of participants has considerably widened, hence the huge volatility as market opinion can neither settle within a long term trend now sustain the losses on market reversals. "The trend is your friend"  was my early cornerstone in my early career; now, you need to have huge deep pockets if you like to pursue the trend, and that my friends is what the teachers have failed to mention, in that following the trend, you need substantially more capital to ride the whip-saws than say 20 years ago!

Again keeping it simple, pure market numbers and simple chart recognition may suffice to assist your decision making than all the quagmire of indicators that may bog you down with hours of analysis and increase your chances of indecision. When the greyhound has bolted from the door, dont just stand there and compute in the face of a cloud of dust!

In and out, a change of tactics trading to your strength and knowing thyself is what will sustain your commodity experiences. Cutting edge technology and widgets doesnt help the trader on the pit floor. Mental manipulation of numbers and instinct does.

January Lean Hogs Futures Long Trade

January Trading Report - Part 2

New position taken in Lean Hogs

Date	Future	Qty	Position	Price	Exit
15-Jan	LHJ14	7	long	91.7	92.9

gross profit before commissions - $480.00 x 7  = $3,360.00

As with the feeder cattle futures and the live cattle futures I took a long play on the basis of a funds push. the volatility in the means market for January and December was not for the faint hearted. However any seasoned trader can always learn the patterns that I hope to teach my readers in the months to come. as you may notice with the chart on the left I only provide the pure raw O-H-L-C charts.

Why? because in 20 years of futures trading i have not come across any scientific basis for proving that the entire spectrum of technical tools from RSI to Fibonacci can actually enhance a traders long run performance. And for the pure novice, who knows not whether to read moving averages or stochastics, the entire internet has become a colossal source of amplified market noise. Do i turn left, do I turn right? Indecision kills. That is why all the charts i will present merely reflect the days numbers, and indeed any seasoned trader can store the numbers in his head and wouldn't even have need for a chart to refer to when trading. How do you think the scalpers and the locals in the pits in Chicago survive? The don't have the time to refer to a chart when the market is surging and everyone's pushing and shoving. yet they survive and they will be there tomorrow and day after, but for many bright eyed traders referring to their arsenal of technical tools, they don't quite make it beyond 2, maybe 3 years at most before a catastrophic loss.

Cut the market noise out of your head and learn to read the number only and listen and smell the market and follow and hone your instincts.

That is how people like I and the locals and scalpers make it thru the decades.

for those who like to get back to basics here is where you can get back to basics -

http://en.wikipedia.org/wiki/Open-high-low-close_chart

Enjoy!

January Feeder Cattle Futures Long Trade

January Trading Report -  Part1

New position taken in feeder cattle

Date	Future	Qty	Position	Price	Exit
15-Jan	FCH14	7	long	168	170.9

gross profit before commission - $1,450.00 x 7 = $10,150.00

This trade FCH14 was based upon a momentum    "putsch" that I had spotted by large fund speculators and so I joined in the band-wagon following in their wake and i exited the trade rapidly as small speculators started to pile in. The rationale for this trade is to follow in the footsteps of the Goliaths and then to get out fast as they pull out of the momentum drive. I added trailing stops overnight and closed my stops on opening market session. This is a hard manner to trade because it requires focus and discipline to maintain mental stops to quit when the mental signal is triggered. trading on mental stops is not to be advised. another combination of this trade would have been to take a put option to offset as a contingency, but i left this trade as an open run based upon experience of watching how fund managers buy big lots and push and burn a market. I just got out in the nick of time too.

The meats are always volatile markets and volatility always presents price opportunity for the experienced trader and dangerous whip-saws for the inexperienced trader.

Trading Size Matters - Know Thyself

Too much of anything large can hurt; and in the world of trading, too much of one thing can indeed become your undoing.

Size does matter because in gaining weight and dimension one often sacrifices speed and agility; a quality of paramount importance in the world of trading.

Let us look at an example in terms of Military History. As my blog evolves the one thing my readers will often notice is that I will draw upon several examples within the context of warfare since I liken the arena of trading very much to that of a battlefield! And we may choose to learn the basics of the fog of war or perish through our own undoing of lack of preparation.

In ancient Rome on 2 August 216 B, two mighty civilizations came to head with a clash that was looming with the growth of the worlds of Rome and Carthage. On the fields of Cannae

http://en.wikipedia.org/wiki/Battle_of_Cannae

86,000 Roman soldiers came face to face with the oncoming Hannibal marching at the head of a mere 50,000 troops. Not that this was a mismatch as much as a fight between a monkey an a gorilla, but Hannibal's infantry was as much as one half of the size of the Roman force. The result was probably one of the most stunning victories for Hannibal and one of the greatest battle in ancient history, for a Carthaginian force of half the opponents size, had manoeuvred to surround the entire Roman force of 8 legions strength.

http://en.wikipedia.org/wiki/Battle_of_Cannae

Conclusion - The Roman forces were so bound together that the sheer force of their numbers worked against them as they sacrificed mobility for choice of packed strength. And the Carthaginian force carried the day through the choice of speed and dexterity in feigning a formation to invite the Roman bulky center to meet it head on and allow itself thus to be outflanked!

For our purposes in the world of trading, if your account is at 100,000 USD strength, why are you trying to position yourself upon the field of battle with 10 soybeans futures contracts, with a possible initial margin of 20,000 USD when the possibilities of a change in wind and a retreat and rout are very realistic in a market notorious for rapid changes in sentiment?

Size does matter.

Opt for dexterity and not bulk and choose to move your positions as the winds of change spell out danger.

Do not be tempted like the Roman army to move in center with a strong headwind trend with the bulk of your forces. Keep your reserves strong and be prepared to use options on your flanks to defend your chosen position. Above all plan to retreat before you plan to march into the enemy, so that if ever a retreat becomes necessary, then you will do so in an organized fashion.

The heat of a battle can quickly turn out of your favor.

In the darkest hour Know Thyself!

Welcome

Welcome to my world of trading and road map to success

The information you are about to read arises from crushing lessons and humility that can only define whether one should rise or fall.

The art of trading and speculation that you will experience with me on this road map has been gathered from 2 decades of personal victories, disasters and more victories.

so walk with me my friends whilst i demonstrate to you the experience that i should aptly label as the Campaign of 2014!

Once again Welcome