I closed out at 1.35 this morning for a small gain...then proceeded to lose all my gain x2 trading the outright....not a great morning. Hope you did better
Good quick trade for you. I am still watching it, I'm still expecting it to drop off quite a bit if only for a short time because of the way it has been trending for the last several months (up and down and up and down and up and down). I don't think I am overly optimistic that oil will just explode back up and help this trade out, but I do think that the proverbial dead horse has been beaten quite excessively. Longs can only make so much money the same way shorts can only make so much money. Cattle spread dropped down to -0.60 ish, bought some now up to half original position size. Decided to get some more because I figured if it was weak enough it would have dropped back down to its -2ish levels by now, which it hasn't. Wheat is starting to drop off, might hold it a little big longer than I planned since it managed to weaken up in the face of that large rip. Bought a couple hundred Talisman shares (TLM) on the buyout rumor. Barely enough to make a dent in portfolio variance, I just like the novelty of the trade.
Finally seeing the type of behavior I was looking for in the Jun/Dec. Oil is still dropping but now its starting to revert towards backwardation. Oil several dollars lower around 60.50 and spread is sitting around 1.45 when before it was at 63.50 to be at 1.45ish, so the relative movements for the calendar to get pushed down even as oil pushes down is looking a lot more the way I want it to. This is the chart I am looking at... see it looks nice and squirmy, I am just trying to play the squirms.
Here is an overview and summary of my cattle position. Having it break out from here would be a nice treat.
Yeah I entered back in this morning at $1.52 on that spread. I started off really well on CL outright and then got slapped in the face by a quick move against me. Oh well, done with my stupid outright attempts. If oil will stabilize a little, I think we might be able to pull a little out of this spread. Are you doing anything with natgas also or just CL? Seems like natgas might have some upside potential. I haven't really dug into the spreads or anything fundamental yet though
Sometimes the best analysis is no analysis. Haha. After you pull the trigger the only control you have is to get more, or close your position. Kinda funny when you think about it. Annnd changed my mind. I am going to offer out my cattle at -0.1750. I will buy back in for the same size I currently hold if it drops again. I just want to clear up some margin just in case.
Well, I was away from screen for majority of the day doing work stuff. This Jun/Dec certainly hasn't gone the way I wanted it to; although it hasn't moved a heck of a lot, I ended up sizing up a lot larger than I should have. This is one of my problems I am really trying to correct, I am getting too aggressive when I shouldnt. In fact, the size was so large it has wiped out nearly every good trade I have made so far. When will I learn not to do this, or how? I will look for it to pull back and then use it as an exit, considering it a failed trade. I am obviously wrong about thinking it wouldn't just keep drifting upwards.
So, I got lucky in the fact I was going to add to my position last night, but actually closed it out so I could use that margin towards a volatility trade...I closed out for a small loss entered at 1.52 exited at 1.54. I like the trade, but the way oil keeps having these big down days, I am just not comfortable holding it really. But so I have the same problem on position sizing. I used to always bet too big right off the bat and then would have nothing left to average in with or adjust and that really hurt me a lot. I still feel like I go too big at times and make stupid moves (that CL outright position I mentioned wiped out all my profit for the past month plus more). I also tend to have a weak hand, it is weird, I will hold a position through a level that I feel most would shake out at...then it never fails price will drop more and I will bail and that always seems to be the bottom, I will sit there watching price go all the way back to my entry point and turn profitable. I think enough painful losses helped me do better about position sizing, but it is still a weakness of mine. I try to remember how bad it hurts to see all those good gains disappear so quickly and that helps a little. Also, I have a friend that I bounce ideas off of and he typically serves as a voice of reason when I am about to size up too much on a position. Anyways, I am not necessarily in a position to give advice on this as I still struggle with it, BUT with that being said lately I have tried following a little more strict rules where I account for the max reasonable loss and adjust my position sizing accordingly so I can prevent a blowup. Been doing well with that on spreads, but the single outright position screwed me. Good luck to you sir!
I certainly feel that talking with friends (or blogging in this case) is an excellent way to stay in touch with reality in terms of position sizing and stop loss limits. The easiest person to trick/lie to is yourself so having others to talk things through with is nice for accountability. I'm a bit of a gambler myself and I often know after the fact when I have talked myself out of doing the right thing in order to do the riskier thing... I've also personally found that there are two kinds of people; those that have an increasing risk tolerance the more they are up (on the day, week, year ,whatever), and those that have a decreasing risk tolerance and lock up wins. I'd say neither is a good idea because it means that you're making a trade for the wrong fundamental reasons, but it's still good to know which camp your in to avoid the particular pitfalls.