Cotton trading

Discussion in 'Ag Futures' started by SideShowBob, Oct 18, 2006.

  1. Aside from "don't let those bastards in the pit rob you blind" does anyone have any suggestions for trading Cotton #2 in the NYBOT pits? I made my first trade today, a sell stop market at 4849 that was filled at 4820. I know stop markets are literally handing your wallet to the scum in the pits, but I can't watch the trading and a stop limit wouldn't have been executed since it gapped down from 4865 at 10:32 AM (EST) to 4830 at 10:45 (why I was filled at 4820 is an item for another day).

    Is there any other way I can trade cotton, even on another exchange overseas?

  2. Why do you want to trade cotton?

    You could try contacting cotton wholesalers to take physical ownership. If storage pays you may have less overall slippage that with futures.

    A quick google search yielded the White Gold Association.

    Cottons ease of storage means that it could be forgiving to trade.
  3. I'm trading cotton as part of a futures diversification strategy (where I try to lose money in as many different markets as possible :p). I guess I'll just eat the slippage, not much I can do....
  4. You could (1) explore trading approaches which use Limit orders to enter and exit, rather than stop orders; (2) increase the amount of slippage in your backtest simulations and reoptimize your system parameters for this more-brutal environment; (3) experiment with the idea that if one of your system's Stop orders is triggered on Tuesday, you don't actually perform the entry or exit until Wednesday's open (i.e. trade only at "market on the open"). MOO orders often have less slippage than Stop orders, AND often times, the next day's open is a more favorable price than your Stop price.

    Or you could just discard Cotton, toss it out of your portfolio completely, and replace it with another market less notorious for slippage. I recommend White Sugar #5 traded at the LIFFE exchange in London. Good trends, electronic trading, great fills. For those Yanks who get a bit anxious about "trading with foreigners," perhaps Englishmen are not the most frightening foreigners you could possibly imagine. All the major US futures brokerages let you trade LIFFE products.
  5. Side show Bob is hardly afraid of Englishmen, in fact he can sing the entire score from the "HMS Pinafore"

  6. Bart, I'll send you to heaven before I send you to hell......