There hasn't been much easy scratch in my usual market neighborhood lately. Last year, I could take three bucks off the table by placing an order at 8 pm, putting the baby to bed and magically waking up at 3 am to close out my position. Nowadays, I am happy to grab a buck and a quarter. It's almost insulting.
I figured a change of scene would do me good, so I ventured last night into one of the more liquid grains markets.
Hmmmm. I shall merely observe that few experiences in the stock market can rival seeing 1 bid against 40,000 offered, with absolutely no way out. That's a limit-down grains market for you. By contrast, the stocks are miraculously liquid; limit-down is possible, but happens maybe only once in 20 years.
The bottom line is, I went to bed with a little profit on two contracts, determined to let my winnings run for once, only to check in at 10:30 a.m. to see a rather major loss happen in about 30 seconds.
I called a friend of mine who has a bit more experience in the grains markets -- a few decades more, to be precise -- and confided that I was learning an important lesson in commodities trading.
"Well, I have to hand it to you, trading in front of the June crops report."
Pause.
"Did you know there was a report?" he asked.
Well, shoot. In my market, reports are typically leaked and discounted. They're for fading, not trading. We don't need no stinking reports! It never occurred to me that a lousy government report could achieve an impact above 6 on the Richter scale.
"Just take your loss and forget about it," my friend counseled. "And take the grains off your monitor."
Yeah. As bad as the stocks are, grains are worse. Don't cry for me, Kansas City.
4 comments:
From the Spec List, I believe Larry Williams (and perhaps Anatoly Veltman) has the best insight into the COT Report, a must for long-term commodity traders.
Jeff, on the other hand, has the pit sense, and lot of experience in a very illiquid market.
Larry Williams said the Wheat was once the king of the market, but lost liquidity to the financials (S&P, etc) over the decades.
What a great post! Thanks for sharing this lesson. I'm not sure I'd go as far as taking them off the monitor. When I was 5, I was afraid of the sea and one day proclaimed "no more swimming in the sea until I know how to swim in the sea."
I've been taking a few bullets in the grain market myself lately - not in large doses mind you, being a mild-mannered ETF trader using ooh-so-scary two times leverage - but still awed enough to think "wow, look at that straight-down chart in (insert favourite grain market here)".
So Laurel, if your friend busts your chops a little on this, you can say "yeah I lost a few bucks in corn - test trade - but check out the crazy s__t this George guy is doing" :)
Cheers, (and I'll take a ten-lot of Sep wheat at 559 3/4 stop-buy)
:)
George
George,
Sold you 10 Sep at 9.6
Jeff
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