Wednesday, March 31, 2004
Nothing quite like a limit move when it's in your favor! Cotton fell right throrugh my long term support line drawn in on my dailies at 63.40. I should have reversed the cocoa but I've never been good at that.
Covered the May cocoa at 1535 and out. Just in a nick of time as it turns out. The cotton short from 64.50 is performing well.
That's why I didn't trust cocoa as it gapped open at 1506. Now I'll wait until it bumps into resistance and short it again. Then again it could start to look like sugar but I see a lot of resistance overhead.
Tuesday, March 30, 2004
Going to hold onto the cotton short overnight even though it's a touch offside from my short at 64.50. I'm just lovin' the double top today and also on the 60 minute as it has set up beautifully. If the floor is not covering now into the close with planting intentions due tomorrow, it's a keeper. If the planting intentions report is bearish then we'll see a break of that very strong 64 level perhaps. I want to be there for that. Of course if the report is bullish I'll have to bail in the first 15 minutes in the morning...always dangerous to do in New York. Didn't take the wheat long today pending the report. I have a gut feeling I should have gotten in!
There you have it. With the May cocoa closing at 1498 (settlement might be different) and my original stop having been at 1495, the trading rule I've had the most difficult time accepting came into play. When you make the committment and take a position, it's really tough to accept being wrong. But this is a game of being wrong more than right. Embracing that is a tough lesson to learn. I've been doing my level best to accept the premise that when the market is stalled it's the same as going against me. My timing is off so take the position off. It's hard to swallow because ego gets in the way. I mean, hell, all that research and study of the chart...that 'feeling' for the ebb and flow from support to resistance...out the window on either no follow-through or movement against. So when it stalls and doesn't move the way we saw it should, why not get out to try again later. Treating a stall as poor timing for entry is proving to be profitable for me and teaching me to admit being wrong early, therefore saving both capital and energy for another move. It's rewarding emotionally as well.
Just covered the CC at 1487. It's stalling and knowing cocoa it's just as likely to leap through resistance and tag me. Getting long the KC at 72.70 as it lookks like it's found it's support and will rally off this level towards closing the gap of last week.
I see in both the overnight action and this morning that the Bonds are rallying slightly just as I expected. I honestly believe we've seen the highs and we'll thrash around up here for months perhaps. I will be a scalpers market with a half point here, and a point there. We'll be building a downside bais until after the Presidential election in November. Of course when interest rates begin to rise we need to be short and stay short. It could be a great run given my memory of the early 80's when here we went from 8,9 and 10% to a high of 22% in a matter of two years. This could be the campaign of my lifetime seeing as I've missed so many other big ones, most recently the beans to date. Copper too for that matter, but I rarely ever trade copper anyway. With the beans I just wasn't paying attention. On the matter of paying attention, after the look of yesterdays buying off support in the Wheat, it's looking like the time to get long, perhaps for a long hall. That was a very bullish day, at least in the front month. Maybe I'll pick up something just over yestarday's high. Still short the cocoa from 1490, but it doesn't look like for much longer. It doesn't seem to want to die and is trading at 1485 right now.
Monday, March 29, 2004
Covered the 30 yr. just now at 113.11 as I see it basing after three good days down. Quite pleased. It may drop through support around 113.09 but I think we'll see a rally first off these levels. Sitting through the cotton short despite the rally this morning. Man, it's spikey. Cocoa on side but not worth counting as a good trade yet.
Friday, March 26, 2004
Towards the end of the day I saw that the cotton didn't continue it's rally so I shorted it again at 64.50. A quick little rally right near the close pushed me offside but I think it's ok to run this with a stop just over today's high. It looked good tonight on the weekly chart. As a matter of fact everything I've got left over this week looks good on the weekly. I still can't get over just how close the bond trade came to stopping me out. One tick. That's 1/32nd. I just love it. Now, the smile would be on the other side of my face if it had taken me out by one tick and then spent the rest of the week falling like it did. That's the other side of that coin. So I'd better not gloat. There will be lots of times as there have been where that one tick get's me out and I watch it go the way I'd bet.
A excellent trader/friend of mine sent me an except from a newsletter this week and I'm going to publish it here. Credit needs to be given to the author Chris Mercer. I re-post it here for your benefit because I think it will help you re-think your approach to your trading and increase your profitability. Excerpts are below for your benefit.
Chris wrote, "Traders are always looking forward. The trading world is about going ful speed ahead, finding the next trade and trying not to thinkabout anything that didn't pan out. "
"What's odd to me is that if something doesn't appear to be working, people tend to think that the solution is in finding more complicated indicators to use for trade entry. It's almost as if they think that filling their trading desktops with more wavey lines and colorful indicators is going to help them out. The attitude basically comes down to 'just keep pushing forward and learnning more and more mathematical extrapolations on the market, and eventually you'll find the magic one.' But overly complicated technical reads on the market don't really help make anyone a better traders That's the fallacy."
"and then there's reality. Trading isn't about how complex one makes it, because most of the time the answers the trader is looking for are in the past, not the present. And yes, everyone needs to understand charting, get some experience entering and exciting trades, and learning how to deal with the psychological aspects of trading. But no, to be successful, traders do not need an extra 5000 pixels on their desktops to squeeze in six extra indicators."
The author continues to discuss his ideas of the trader's full spectrum of a successful trader's ability to trade the markets. He concludes with "along the spectrum is the person who learns to win more trades than they lose but still keeps relatively tight stops and therefore doesn't end up stuck in anything that takes back a big piece of the year's gains. This is the sweet spot of trading"
Over the now 20 years of trading I've sometimes enjoyed, I have been very quilty of dropping one method when 'it stopped working' , heading back into the books, learning and studying more and then applying that new-found knowledge to my trading. I have come to realize and hopefully will help shorten your growth curve, that path does not lead to successful trading. There is also NO 'holy grail', secret sign in the stars or Mr. Spock hand signal you might suddenly fall upon to reverse your trading fortunes. The market is made up of winners and losers and no amount of information overload will change that. YOU cannot change that. Choose as your trading partner the diligent study how the market internals, price, volume and the support and resistance levls created through buying and selling within the market. Stop relying on an indicator superimposed after-the-fact. Start to learn from your mistakes and see through your trading log how you could have better managed your trades. When your understanding improves you'll be invited to the dance with the knowledge that you'll actually strike out more often than you'll hit a home run. That's ok because that's the reall way to play the game.
Pulled the cotton stop way down as it bounced off support at 64 even again. I didn't like the set up in this rally so the stop at 64.70 being hit is fine with me. Bonds are moving with me again and I decided to let the cocoa sit short over the weekend.
Thursday, March 25, 2004
Bloodbath is what we got. I went long again at 73.40 on the re-open. Had a tight stop but when the dust settled I was filled 40 ticks away from the stop at 72.10> that was the first time through and it slid very fast. Then we got a rebound and I was starting to think I'd been had as is so often the case with New York. But the selling just kept up all day. I'm sure the commercials are loving this huge selloff giving them an opportunity to get long at such a lower level.
What else did I accomplish today. Oh yeah...hung onto the 30 yr. and cotton as it drifted lower again. Also shorted the cocoa. We'll see how that baby opens tomorrow. Off to bed...I'm beat.
That cup of coffee just burnt when it spilled all over my account at the open. The old adage applies about grabbing profits when they're there. We are trading in a wedge so I should have gragged something a couple of days ago.I sort of expected this opening after yesterday's bad close. It will now be interesting see where they re-open it and clean up the mess. I'm putting in a buy order at 73.40 which is where I was stopped out. They'll give us a hectic half hour and then we may see a close of the gap up to yesterday's close . Then again it could be a bloodbath at the java bar today. Still nicely alive in the Bonds however athough we could be setting up a double bottom this early.
Wednesday, March 24, 2004
You've heard me say how ticked I get when the floor runs stops but sometimes it'll pay you back. I wanted to short the May beans again today and gave the broker the order to sell at 10.50 even. I didn't get it and the price started to sag. Well it didn't take long to find support and rally back to 10.52. I thought, here we go again with another rally. For the next hour or so the chart just stalled and then it just looked perfect for another try lower. Corn was already selling off. I wasn't fast enough to get back in until 10.47 but within 10 minutes all hell broke loose as they got into the stops below yesterday's low. I moved over to a 5 minute chart and just watched the bars dump down racing through the gap set up three days ago. I didn't wait long with a gift like that and by the time I was filled covering the short I was out at 10.21 with no complaints. Soon we'll have some support and resistance from which to trade. In other news, I still can't believe that one teenie weenie tick seperated me from getting stopped out of the 30 yr. I'd set my stop just above the double hit of resistance at 116.12. I fgured if it took it out by even a tick, it would be gone to the upside. I just couldn't believe my eyes when it backed off from 116.11 and kept me alive this morning.
The coffee close made me really unhappy. I have a nice ascending trendline draw up from the 70.50 low of Feb. 28th, across March 9 at 72.90, March 10 at 73.00. Today was the worst close in the campaign closing nearly at the low tick at 75.05 and below my nice little red support line. I actually expect a gap lower tomorrow which will tag me. That is unless the luck of the Bonds holds sway! Cotton rebounded which makes sense. Still lots of equity but frankly if today's low can't be taken out tomorrow, I'll bank what's left.
Quite the start to the morning. My stop in the June 30 yr. is 116.12 and the high is 116.11 with it now selling off a little. Can't get much closer than that. I'm keeping my coffee stop at 74.40 until I see how the chart shapes up this morning. We're currently at 75.80. If it can attract some buying here I'll suck up that stop, otherwise I'll just cancel and replace to take off the long today.
Tuesday, March 23, 2004
The overnight session is running the Bonds up at 116 even and the Beans are up 8 and a half. Just proves a bull market knows no resistance and a bear market knows no support. Wheat is shaping up again and we should be able to see some intra-day technicals show up. I've decided after seeing my coffee equity drop the last two days that I'll have to leave tomorrow if this support fails. I don't want the slide in equity to turn into a real loss. There's a good chance it'll dive. I like the way the chart is set up but if no buying materializes it could get ugly. I left a lot of money on the table but I don't want to tolerate digging into my actual pocket to support the position. That could get messy in a hurry.
A fun if not sweaty day. Coffee played back and forth but really looks 'normal' as it bounces between the upper reaches and back down into its support zones. I didn't like the weak close so tomorrow might be the morning to take the trade off the table. If they can't rally it with some volume I'll have to wait for support to but from. I won't short it but just stand aside while it drifts. It won't be long. It's going to break out either way and the chart is actually one of the best looking right now. Funny...for coffee, it's the easiest to read for me at least. Could change in a heart beat tho'.
The cotton trade is pounding equity into the account. Which is a good thing because I saw the opportunity to short the beans and immediately gave it up with a loss. My timing was off totally. It just reversed off yesterday's lows. Took it for another short later in the morning at 1051. It rallied off support so I took it off at 1048 for a triple. Of course a short trade here is top picking. The top which will occur sometime. When the profit taking materializes it's going to be a bloodbath so that's my plan. You can't hang around in a bull market so when the rally started back up I just covered. I mean, after all, the Bonds were against me all morning. I've kept the short and the failure at today's highs makes me feel positive for the 'morrow. Sure got sweaty though as every little stall was then met with new buying over about a 5 to 8 minute time frame. Then it would peter out again. Still, the drift up is unpleasant. Sugar and corn continue to amaze me. Hard to trade with no pullback. That's not to say if I'd gotten long through proper analysis way back when I should have, they wouldn't be hard to trade at all, would they. Charts like those keep the dream alive.
Monday, March 22, 2004
Well, early Monday morning came and went and as you know we were gapped out at the open in the May Cocoa. Held the coffee through the sell off. I don'y like the close but this support keeps holding so you have to stay with the long. Let's see, where else did I go wrong. Oh yeah...getting stopped out Friday in my corn left me holding my breath today as it gapped up and stayed up with wheat and the bean outpacing. It is tough to see these moves and not be able to just bite the bullet and buy. At least with the coffee it gives us the opportunity to get long each time it tests support. These grains are on fire. It makes the entire idea of not chasing a market just burn a hole in my stomach when you I see what I'm missing but I can't see any retracement allowing me to buy. You know as well as I do that these rockets turn on a dime right after you go long. So I continue to stay away. Keeps me frustrated but safe.
Sold May cotton when it failed at resistance. Set the objective tonight at roughly 63.40 after studying my dailies. Also shorted the bonds and I'm holding overnight. I wasn't real happy with the close but I'd selected 115.28 as resistance I'd tolerate. It stalled all day and only rallied in the last five minutes so I'm holding. With all the bullshit today in the Middle East I could get hurt tonight but frankly I'm thinking that now the 'flight to quality' money is going into gold and not the Bonds anymore. Hell, maybe it's fleeing to Soybeans...they could be the 'Gold' of this summer. Wow.
Friday, March 19, 2004
Tucked up my stop in the May corn and my broker just phoned to tell me I got tagged on the close at 312 1/4. Grabbed a little from my entry at 309 but next week will tell the tale won't it. I was watching it hover around the 314 resistance and wanted to take the trade off, but then how many times have we all grabbed the profit only to see the thing streak off. My CC and KC are both onside so I'm holding them over the weekend. Early Monday morning will be very interesting.
Thursday, March 18, 2004
Having shorted the May corn again and gotten myself in a jam dealing with this serious bull market, I've closed my shorts and gone long. Ironically this usually signals a reversal. Don't you sometimes just feel they're waiting for YOU...the last hold out. But seriously, during this phase I've had to re-learn this is a business of taking losses and I am still not good at that. I wached intra day as cocoa tested resistance and shorted one at 1462 just minutes before going long the May KC at 75.70. I was quite late getting into the coffee when it bounced nicely off support. That bugger gyrates around like a jumping bean.
Having some fun in the 30 yr. Bond market. My gut tells me we're setting up for a fall but of course, everytime they hold or lower interest rates as Greenspan did on Tuesday, we get a rally. I participated in that up-swing quite nicely but I've actually been playing them mostly to the downside. This is counter-trend trading and dangerous. What we're seeing here I believe is profit taking following this incredible and unstoppable run up. It's fun just to pull out a partial point each day as the longs bank they're profits. This phase of a market is called distribution. When they break to the downside after all the small longs have done their final buying from the professionals, we'll see a violent sell off. My goal is to be there so these small daily positions are just getting me ready. Got myself whipsawed out of the coffee yesterday twice. I hate those days. Got clipped in the bonds today when they announced cornering a 'individual of high value'. CNN is reporting the opposition is 'fighting like hell' in Pakistan so this will be interesting. Might just stay flat tomorrow, being Friday and who knows who might get captured or killed. That'll screw up the markets for an hour or so. Wouldn't want to be on the wrong side of that one.
Thursday, March 04, 2004
Busy little beaver the last couple of days. Closed the beans only to short them again along with corn. They're just too strong so even after a downer day I covered both. I think I could have hel overnight but I was just anticipating a rally into the close and we got it. So my 9.5 points in the beans more than made up for the 3/4 point loss in the corn. I was uncomfortable right after adding the corn. It's just been lock step with the beans and when they wouldn't break hard, it was time to go. Timed it perfectly at roughly 11:05 just ahead of a 10 minute rally into the close. Caught a nice move down in Cocoa over three days. Covered today at support found at 1475. It actually sank to 65 soon after but bounced like a scalded cat so I'm not displeased. 65 was my goal but we can't be too choosey can we. Watched May coffee all moring and got into the rally a little late at 73.90. I should have been quicker but I had my head falling asleep in the bean patch. Nice close in the KC so we'll see what the morning brings. I'm thinking we're going to try and close that gap just above. If it won't hold up there I won't hold it over the weekend.
Tuesday, March 02, 2004
Well that's a little more like it. God, after 10 straight losing trades I was beginning to have my doubts. Not really but those slupms are certainly no fun. Several more quick give-a-ways in corn and a couple of Forex mistakes, then followed by getting stopped out is Silver only to see it tear away gives a guy the blues. So today's successful entries short first into cocoa and then into the May beans for a 25 cent ride down feel great. Missed the cotton move over tha past week while I poured money into the corn market. I shouldn't ignore signs of support...especially when they bounce off three times over four days. The 30 minute chart was screaming buy and I was selling. I deserve everything I got (lost).