Styem to trade

Discussion in 'Commodity Futures' started by horryclutch, Apr 3, 2007.

  1. Hello to the guys and gals at et. I am new to trading and still snow plowing down the bunny slopes.

    I have an Etrade account which i buy and sell stocks and mutual funds. I want to get into commodity trading and have just downloaded and waiting for my min 10k to get to the futures trading account at etrade. I will not make any trades until i feel that i am competent enough to make smart decisions.

    I am an ag business major at cal poly san luis obispo and will get into trading full time when i graduate in less then 6 months. Ok here is my idea tell me what u think.

    I will make some kind of a questionnaire and pass them around to the faculty at the agriculture department. On this questionnaire I will ask questions on where and why they feel the prices will be going for all the ag commodities traded. these professors are experts in thier respective fields. then i will compile all the data and see if there is any smart futures trades. I know that this probably will not work as a means of making money but i do feel it will get my brain working in the right direction on forecasting prices. This is my first attempt at this strategy so i would like some input on questions or just about anything related to this thread. If its a crappy idea tell me. thank you.
  2. It's an interesting idea, but "experts in their fields" won't provide any data that the market doesn't already have. The Ag industry already spends millions on private analysts to study every facet of yields, spot markets, costs, etc. to predict the movement of price.

    More importantly, you have to be right on time. I think soybeans is overpriced here--even with the reduced crop size, we STILL will have a bunch of beans at the end of the harvest. That doesn't mean now is the right time to sell.

    Try putting together some fundamental spreadsheets using simple linear regression. In some markets (corn, in particular) you can get an R^2 in the 90%+ range. That's better (and cheaper) than an expert opinion. :)

    Where I find expert insight valuable is when they do private research. For example, the floor was widely expecting 6M fewer acres of soy. Allendale was expecting 9M fewer acres through their own private surveys. I believed Allendale more than the floor.
  3. One other suggestion--try starting with a few markets and learn everything you can about them.

    For example, wheat, soy, corn are all relatively similar in terms of supply, demand, global competition, etc. Read WASDE reports, read the CRB Yearbook about them, put together some spreadsheets.

    Trying to understand lumber, copper, sugar, and oats all at the same time may set you up for massive frustration. Each has some very peculiar issues. :)