Multiple Commodity Strategy

Discussion in 'Financial Futures' started by ElectricSavant, Aug 23, 2003.

  1. I recently have become interested in a diversified approach to commodity trading. Up to now, my only experience lies in trading the SP, ES, ND, NQ, YM and Forex.

    I want to start cycle trading the lower margined grains like sugar, soybeans and corn.

    I have found a service named :

    Does anybody have any experience with them or cycle trading?

    Does anybody have any advice for a newbie to this sort of trading....(not to trading) ?

    Michael B.
  2. Funster



    Take a leaf out of my book. I used to think, lovely, trend follow the commodities over a long term time frame (weeks to months).

    Which is fine except for the following:

    1. Pits screw you. I used to wait sometimes hours for a fill. Anything NY is particularly bad for this. And if a 9/11 happens they will chuck all their trading cards on the floor, whether filled or not. This happened to me. Moral: Trade electronic only.

    2. Sadly there are very few truly diversified US based commodities. Basically the stock market is heavily related to bonds, currencies, metals and even oil complex products sometimes. This basically leaves grains and meats. These are both seasonally affected so you could say they have some correlation with each other.

    In short I would love to have 10 or 20 LIQUID non-correlated markets to trade. However this is not the way it works. Liquid is the key word. Find another market that trades a few hundred thousand contracts a day apart from the stock indicies & bonds and you will probably have a truly risk adjusted winner.

    All IMHO of course!
  3. Thank you for sharing your discoveries.

    I trade the ES and the NQ mainly.....what electronic indexes could be non correlating and be a complement to my current trading?

    Michael B.
  4. Funster



    I haven't tried these but perhaps, if you are daytrading, Hong Kong or Nikkei futures traded AT their home exchanges traded overnight (only to us).

    You might say Europe, but the problem is that it overlaps the US morning, so they just trade together most of the time. Logically if you want to stay in stock indicies surely it has to be at a time that most Americans are asleep?

    Me, I am waiting for the liquidity to pick up on the Nymex eminys. Also last time I checked the grains in Chicago were electronic for the overnight session only. This will eventually change.
    Gold eminis maybe worth a look, again when liquidity picks up. However that still has a correlation to stocks.
  5. Thank you again, I will probably wait to trade commodities and study this more closely.

    Michael B.
  6. jessie


    In my experience, New York is bad, but if you are doing size, you can get access to a pit brokers headset, and get fills back in seconds, even there. As for Chicago, if you are waiting more than a minute for a fill report on an executable order, you need to change brokers. If it is executable, I just hang on the phone and wait for my confirmation. Virtually every broker in the pits in Chicago (at least at the CBOT) now uses handhelds to endorse their fills, so they are reported and confirmed in seconds. As for gold eminis, there is a DPM who is obligated to keep spreads tight, so the low volume is deceptive. You can get free real-time quotes including bid & ask (right now 362.60 X 362.70) from the CBOT
  7. Any idea which brokers?
  8. Is there a way I can buy a diversified group of commodities without using futures?
  9. ES... time to follow the weather!
    #10     Sep 5, 2003