I’m looking for advice/opinion from any experienced long term commodity futures about risk and markets.
I’ve traded successfully for a few years but know looking to expand into the commodities futures like Corn, Wheat, Natural Gas etc, I have developed a simple system that backtests very well and im backtesting it on every liquid market I can find, ive also kept it non correlated were if I have a signal in Nymex Crude Oil then I wont take a signal in the Brent Market and vice versa, the same with other markets that trade very similar or the same product on different exchanges, Wheat for example.
My dilemma is with the amount of risk capital I have I either go with a low risk on each trade and trade a large basket of markets (about 30) but with different contracts having vastly different contract sizes im only going to be able to take about half the signals generated on the smaller contract sized markets or the low money risk trades on larger markets until or if I can build the account and if things get volatile im trading only a few signals, or I go for a smaller portfolio of markets, say 8 across all sectors, e.g. 1 grain, 1 soft,1 energy, 1 financial, 1 meat, 1 currency, 1 Metals, 1 Index and trade a higher risk and so take almost or all the signals generated, if I take this route then I could take the best performing markets in each sector but then for example I look at my results on testing and in Wheat ive had years its fantastic like 2000 and 2001 but then it went 5 years without having a profitable year and 2005 was very bad but then it had a massive year in 2007 were my system was long for a good part of a bull market so had huge profits, then went short as the market fell back down in 2008, then 2009 was a bad year but the system so far this year has been going long, so doing well, I then compare it to Soybean markets and Corn in the same sector were it has much higher profits but both Corn and the various Soybean markets (Bean, Meal, Oil) have far more steady returns.
I’ve looked at only trading the smaller contract sized markets and in some sectors that’s fine but in something like energy for example all the markets are big contracts, there are minis in some that may be ok like Crude and possibly Natural gas although even then the mini is still large but for say Heating Oil the mini is hardly traded, another idea was just to trade 1 sector but often its in back testing that in any given year most profits come from 1 particular sector, so far this year its financials like bonds and recently Grains have been moving so I would prefer to spread my bets as it were across all sectors as you never know which is next to make a decent move long or short so any suggestion or advise would be appreciated.
I’ve traded successfully for a few years but know looking to expand into the commodities futures like Corn, Wheat, Natural Gas etc, I have developed a simple system that backtests very well and im backtesting it on every liquid market I can find, ive also kept it non correlated were if I have a signal in Nymex Crude Oil then I wont take a signal in the Brent Market and vice versa, the same with other markets that trade very similar or the same product on different exchanges, Wheat for example.
My dilemma is with the amount of risk capital I have I either go with a low risk on each trade and trade a large basket of markets (about 30) but with different contracts having vastly different contract sizes im only going to be able to take about half the signals generated on the smaller contract sized markets or the low money risk trades on larger markets until or if I can build the account and if things get volatile im trading only a few signals, or I go for a smaller portfolio of markets, say 8 across all sectors, e.g. 1 grain, 1 soft,1 energy, 1 financial, 1 meat, 1 currency, 1 Metals, 1 Index and trade a higher risk and so take almost or all the signals generated, if I take this route then I could take the best performing markets in each sector but then for example I look at my results on testing and in Wheat ive had years its fantastic like 2000 and 2001 but then it went 5 years without having a profitable year and 2005 was very bad but then it had a massive year in 2007 were my system was long for a good part of a bull market so had huge profits, then went short as the market fell back down in 2008, then 2009 was a bad year but the system so far this year has been going long, so doing well, I then compare it to Soybean markets and Corn in the same sector were it has much higher profits but both Corn and the various Soybean markets (Bean, Meal, Oil) have far more steady returns.
I’ve looked at only trading the smaller contract sized markets and in some sectors that’s fine but in something like energy for example all the markets are big contracts, there are minis in some that may be ok like Crude and possibly Natural gas although even then the mini is still large but for say Heating Oil the mini is hardly traded, another idea was just to trade 1 sector but often its in back testing that in any given year most profits come from 1 particular sector, so far this year its financials like bonds and recently Grains have been moving so I would prefer to spread my bets as it were across all sectors as you never know which is next to make a decent move long or short so any suggestion or advise would be appreciated.
