trendie
Legendary member
- Messages
- 6,875
- Likes
- 1,433
Hi Jimbo,
I think it may be lack of knowledge.
We tend to gravitate towards things we feel familiar with.
( FTSE and Dow always on the news, currencies on the news etc ).
I have learnt a lot about intra-day trading through Chartmans postings, and there are excellent threads describing what you need to know in order to trade indices, currencies etc.
I have also learnt a lot about options from here.
Why dont you put together a "101 for Commodities" ?
I think it may be lack of knowledge.
We tend to gravitate towards things we feel familiar with.
( FTSE and Dow always on the news, currencies on the news etc ).
I have learnt a lot about intra-day trading through Chartmans postings, and there are excellent threads describing what you need to know in order to trade indices, currencies etc.
I have also learnt a lot about options from here.
Why dont you put together a "101 for Commodities" ?
F
ford
Interesting question Jimbo. Could it not be that most of the commodities are mainly pit traded futures and the ones that are electronic are illiquid in comparison to the index futures?
From what I can see on qcharts, the comex gold contract is open for less hours 'officially' than the index futures and is thinly traded. The volatility does't look any considerably better than the index futures too. What is the incentive to trade it, apart from it being a highly specialised niche for example?
I had a look at the LME a while back, and some of the metals such as aluminium have good liquidity. Have you traded these before, what's your opinion of them if you have?
Please tell us more, I'm interested to hear what you have to say.
From what I can see on qcharts, the comex gold contract is open for less hours 'officially' than the index futures and is thinly traded. The volatility does't look any considerably better than the index futures too. What is the incentive to trade it, apart from it being a highly specialised niche for example?
I had a look at the LME a while back, and some of the metals such as aluminium have good liquidity. Have you traded these before, what's your opinion of them if you have?
Please tell us more, I'm interested to hear what you have to say.
TheBramble
Legendary member
- Messages
- 8,394
- Likes
- 1,170
I cut my trading teeth many years ago on Wheat and Silver after doing the Ken Roberts course (whom I still hold in high regard. Taught me all the chart basics...).
However, I think the above comments on comparative liquidity and trading hours, not to mention recent and not so recent scandals on fixing in the commodity pits tends to keep the majority away.
Plus, it's a little too close to reality.
However, I think the above comments on comparative liquidity and trading hours, not to mention recent and not so recent scandals on fixing in the commodity pits tends to keep the majority away.
Plus, it's a little too close to reality.
Hello Jimbo -
I am interested in trading commodities and agree that discussion can be sparse. There are a few regular posters (like me) who give good insight and analysis to these markets.
Commodities have had an initial boom phase since 2002, (as evidenced by the CRB Index chart); indeed artices and commentary I have read recently suggest that the 'commodities bull' may have only just begun. They spent most of the 90's in a bear phase, and once the tide turns, the overall cyclical trend could last several years.
I think possibly one dominant factor which keeps many traders out of these markets is that, often, the most effective way to trade them is long-term (ie., postion trades lasting weeks or months).
But look at the returns that could have been harvested within the last 12 months by holding SOYBEANS, COPPER,COTTON, SILVER, etc. These markets have boomed and busted, and others could follow.
My personal methodology with commodities is a breakout strategy. I am looking for those markets which have held in a close, tight range for an extended period, then break desicively up (or down) indicating the start of a sustained trend relative to the peiod of consolidation.
In these instances I am looking to hit has hard as I can.
A classic example of this was WHEAT in 2002. Future examples could be COFFEE or COCOA.
So in a word, the major culprit is SHORT-TERMISM,.( IMHO).
I am interested in trading commodities and agree that discussion can be sparse. There are a few regular posters (like me) who give good insight and analysis to these markets.
Commodities have had an initial boom phase since 2002, (as evidenced by the CRB Index chart); indeed artices and commentary I have read recently suggest that the 'commodities bull' may have only just begun. They spent most of the 90's in a bear phase, and once the tide turns, the overall cyclical trend could last several years.
I think possibly one dominant factor which keeps many traders out of these markets is that, often, the most effective way to trade them is long-term (ie., postion trades lasting weeks or months).
But look at the returns that could have been harvested within the last 12 months by holding SOYBEANS, COPPER,COTTON, SILVER, etc. These markets have boomed and busted, and others could follow.
My personal methodology with commodities is a breakout strategy. I am looking for those markets which have held in a close, tight range for an extended period, then break desicively up (or down) indicating the start of a sustained trend relative to the peiod of consolidation.
In these instances I am looking to hit has hard as I can.
A classic example of this was WHEAT in 2002. Future examples could be COFFEE or COCOA.
So in a word, the major culprit is SHORT-TERMISM,.( IMHO).
jmreeve
Well-known member
- Messages
- 432
- Likes
- 13
Jimbo57
I use position trading strategies using breakouts and your trading style sounds quite similar.
However, I mostly trade equity sector indices and have not traded oil due to lack of knowledge
and familiarlity with this market . I am always wary of markets I have not traded before as there is always a learing curve where you find out how it trades and what is, and is not important.
I would certainly be intrested in learning more and I am sure there are others on this site that would aswell.
Why not start a thread on oil trading and share some of your detailed knowledge of this market?
I use position trading strategies using breakouts and your trading style sounds quite similar.
However, I mostly trade equity sector indices and have not traded oil due to lack of knowledge
and familiarlity with this market . I am always wary of markets I have not traded before as there is always a learing curve where you find out how it trades and what is, and is not important.
I would certainly be intrested in learning more and I am sure there are others on this site that would aswell.
Why not start a thread on oil trading and share some of your detailed knowledge of this market?
From a personal perspective, there are 2 negatives :
1) In the main, they are not electronically traded
2) Daily limit moves are inevitable at some stage, nullifying stops.
In time, once 1) is resolved, maybe 2) will become less frequent.
rog1111
1) In the main, they are not electronically traded
2) Daily limit moves are inevitable at some stage, nullifying stops.
In time, once 1) is resolved, maybe 2) will become less frequent.
rog1111
TheBramble
Legendary member
- Messages
- 8,394
- Likes
- 1,170
There are always going to be those who will blame unexpected (always adverse to their position!) price moves on 'fixing' or pit manipulation, but I was referring to the documented cases where charges have been brought. You're right - the possibility of an uneven playing field is way down the list, but it's still on the list.jimbo57 said:
What I meant was that it was obvious (to me at that time) to place greater weight on socio-economic, supply/demand and related 'real world' causal effects on 'real life' commodities such as Wheat and Silver than to work with Technical Analysis charts and patterns. To decide to take into account weather forecasts for the primary growing regions and global grain distribution factors in making a decision on a position. To wonder at the possible reduction in usage of Silver in the photographic industry with the move to digital photography (apparently, contrary to my basic logic, there is little impact) seemed a sensible thing to do.jimbo57 said:
My personal take then was that commodity trading was rather more biased toward fundamental than technical analysis. And at that time, I felt Technical Analysis was far superior. There will be howls from many that there's room for both (and from a very few, for neither!), but I'm talking about the time at the very beginning of my trading when I knew everything...
The decision on Fundamental or Technical in itself is neither here nor there, just a matter of personal preference. But more of a hindrance (for me anyway) was the second-guessing of my chart analyses based on news events that I felt might impact my commodity positions. I know this could happen with any instrument, but it just seemed a more logical thing to do with a saleable, real life commodity rather than a stock, index or FX pair.
As I say, this was way back and I still hold a soft spot for commodities. I'm glad this thread has rekindled interest on the subject on these boards and second suggestions from others for you to develop the Oil thread. I'm sure it'll prove interesting for many - for both those with and with no experience of commodities.
Minx -
Orange Juice is certainly a value play at the moment, (and there are fundamental grounds for long-term recovery),but it does not meet my criteria for a breakout within my particular methodology.
It would have to trade sideways in, say, a 5-10 cent range for many weeks/months, then break up out of that range.
Having said that, OJ does not historically hold in a close sideways pattern too often....
In general with commodites:
To follow The Bramble's philosophy of real-world events having greater significance in trading desicions with commodities, I would ideally like to see:
1) An extended trending move FOLLOWED BY A CLOSE SIDEWAYS HOLDING PATTERN
2) A reversal breakout of the consolidation WITH A FUNDAMENTAL 'SPARK' that shocks the market into action. (ie weather issue or other supply scare)
3) Percieved potential Supply/Demand imbalance until threat is disproved or balance is restored. (ie supply is guaranteed or demand is rationed)
Orange Juice is certainly a value play at the moment, (and there are fundamental grounds for long-term recovery),but it does not meet my criteria for a breakout within my particular methodology.
It would have to trade sideways in, say, a 5-10 cent range for many weeks/months, then break up out of that range.
Having said that, OJ does not historically hold in a close sideways pattern too often....
In general with commodites:
To follow The Bramble's philosophy of real-world events having greater significance in trading desicions with commodities, I would ideally like to see:
1) An extended trending move FOLLOWED BY A CLOSE SIDEWAYS HOLDING PATTERN
2) A reversal breakout of the consolidation WITH A FUNDAMENTAL 'SPARK' that shocks the market into action. (ie weather issue or other supply scare)
3) Percieved potential Supply/Demand imbalance until threat is disproved or balance is restored. (ie supply is guaranteed or demand is rationed)
Yes I agree, it's the combination of a gap and limit day together that would be scary, effectively disallowing any exit trade. I haven't looked at the common commodities since 1999, so I guess that quite a lot has changed since, although I wasn't aware that full size NYMEX contracts were traded electronically in normal hours ? Possibly time for a review.
rog1111
rog1111
jimbo57 said:
Jimbo -
You asked in your original post if there was a great commodities BB.
Try David Duty (CTA) (US-based) and his student forum at :
www.commonsensecommodities.com
Also, he has just developed a site called 'David's ChartBook' in which he regularly updates his Technical Analysis for each of the main commodities and currencies. Daily, Weekly and Monthly Analysis is inclued for most markets.
www.cscchartbook.com
You asked in your original post if there was a great commodities BB.
Try David Duty (CTA) (US-based) and his student forum at :
www.commonsensecommodities.com
Also, he has just developed a site called 'David's ChartBook' in which he regularly updates his Technical Analysis for each of the main commodities and currencies. Daily, Weekly and Monthly Analysis is inclued for most markets.
www.cscchartbook.com
Great to see the various responses on Jimbo57 thread. Very encouraging.
I hope for all our sake that you all will also post ideas, charts, observations, questions so we can all improve our trading performance and general education in commodities trading.
I, for one, am really diggging into spreads and seasonal trading and would enjoy sharing ideas.
This BB will only get more widely used if traders/analysts post ideas which are of general interest.
May of you will start new commodity oriented trading threads. (and pls keep it concise!!)
I hope for all our sake that you all will also post ideas, charts, observations, questions so we can all improve our trading performance and general education in commodities trading.
I, for one, am really diggging into spreads and seasonal trading and would enjoy sharing ideas.
This BB will only get more widely used if traders/analysts post ideas which are of general interest.
May of you will start new commodity oriented trading threads. (and pls keep it concise!!)
JumpOff
1
- Messages
- 702
- Likes
- 14
I dabbled in commodities back the early 80's, when some of my family was farming. (Bramble - it was Ken Roberts who got me started too). I remember at the time being in cotton, and pretty ignorant of all trading theory. A broker named Nell at Lind-Waldock introduced to me to the concept of leaving the stop loss in the original position (Cut my losses short? I could even consider going with the market in the other direction? What a novel idea ..) But the interesting thing was the fear that gripped my gut when I saw beans go limit up several days in a row (I had been considering a short position).
At the time I didn't understand about purchasing an slightly out of the money option as an inexpensive hedge to 'an event'. Or selling a further out of the money option in the same direction as my contract holding to offset some of the spread and commissions.
I think risk management in commodities is just enough different from stocks that it takes a some effort to learn about it. I'm pretty sure I still don't quite understand it.
I expect there will be a growing interest in commodities (including the index futures and currencies) because of the pattern day trading rules that keep small traders from doing stocks. (Don't get me started on how unfair this is!)
JO
