I'm still on it but pretty nervous. 5 units long now at average price of 2167 on my 'retirement' account (restricted spending until I'm 55yo or harsh tax treatment in Australia) and 4 units long in my everyday account at an average of 2203 - didn't take exactly the same trades due to other positions. It's got pull back written all over it but the signals are pretty bullish on the chart so I'm gambling there won't be a large 10% one day drop. More like a 5% one day drop if that occurs. I would have been more comfortable if we have already seen a couple of down days in consolidation after the break of the 200 day moving average but it's starting to look a little bit like that move in orange juice down 10 sessions in a row followed by sharp correction. At the moment I'm stuck in between knowing it's come a long way quickly and I should be taking some of my profits off the table versus my experience with holding on to losing trades waiting for the mean reversion and that the market typically goes further than I expect. This is probably the part of trading I've always had the most difficulty with. Deciding when to take profits, so talking through my own problem then the obvious solution would be to take partial profit on 50 or 60% of the position and then let the rest run. I've just been working on being more mechanical adding to trades, so this is a good test case.
That's what I do. I close 50 % if I reach my initial target . I keep the rest if I see potential. But be aware the CC curve has dramatically changed today. Sep/Mar went ballistic. I would say now we are in bull market mode...Perhaps there will be a correction but it is certainly not the end.
Is this is the Geman book? Have not heard of the Courtney Smith book either so will give that a read. Trading spreads is a another knowledge gap for me. I really liked the Kub book on grain markets, was pretty comprehensive break down of the practical process from farm gate to delivery and associated costs. filled in a lot of gaps for me.
Cocoa continues higher, how long before we get a pullback? This very bullish run continues from cocoa with a huge positive signal on the charts although the speed of the rise concerns me a little. I don't know whether the price action has tripped off a series of by signals from the machines or mechanical accounts but all of a sudden there has been a material rush to get long cocoa. The news headlines seem to reflect concerns about the Ivory Coast crop although whether there is any follow through on this news is another matter. That means if the fears subside then there could be a very sharp large correction of 5% or more in a single session. The term structure from cash out to the first two contracts shows a backwardation which is a positive sign of short-term demand. That gives me some encouragement that there might be a shortage and prices could be expected to continue higher. I would have liked to see some sort of consolidation or minor correction between the 13th of February when it seemed to confirm the break of the 200 day moving average and the current elevated levels. That would give me some comfort it was a steady move with real legs rather than a volatile move higher. Unfortunately I don't get that choice so for now I'm just sitting on the position and watching the candle posted each day closely. The biggest question I really face at the moment is not so much do I stay on the trade but more how much do I leave on, because obviously their trend is in my favour and the price action is very encouraging. I've being adding to the position steadily since my initial decision to put the first unit on. So whilst on paper it is currently an outsized result for my account adverse move could also wipe out a lot of those paper profits. I will be looking to take the Middle Road and cash in some of my paper profits whilst leaving roughly half the position to run in the event that prices continue higher and I get serious FOMO.
Long Lumber May @ 484.5. - May has plunged more than other expiries -Renewed trade wars with Canada -Daily hammer candlestick
Out Cotton @ 81.85. Everybody should take the other side of my outright trades...LOL Yes. That's the Geman's book.