Okay another newbie question. I am slowly getting my head around commodities but I am not quite there yet. Any help is most appreciated. In order for me to understand the contracts and profits/losses I have been looking a past contract price data and trying to understand how the process would have played out. So picking a year out of a hat I looked at the data for the DEC 1990 WTI Contract found here: http://www.quandl.com/OFDP-Open-Fin...Crude-Oil-Futures-December-1990-CLZ1990-NYMEX So am I understanding it correctly that if I had a crystal ball back then I could have bought the CLZ1990 contract(s) at a low of $18.38 per barrel on July 6 and then sold it on Sept 28th at $38.31 before delivery and made a profit of approximately $19 per barrel on that contract? I think where things are a little hazy for me still are understanding the contract lengths and specifications. The language of the specifications listed on CME are little bit vague for a person who has never traded in commodities. TIA Sean
1) Hypothetically, you could have made the $19/barrel per contract. In reality, it would be highly unlikely. 2) A line chart doesn't show price extremes that could have stopped or spooked you out of a position beforehand. 3) The time period you're referring to was right after Iraq invaded Kuwait. Crude oil became very trendy AND volatile afterwards. :eek: 4) To trade the December-1990 contract, in July-1990, would have been "tricky". Deferred futures contracts for crude oil were less liquid back then than they are today. You could expect "large" slippage on entries AND exits back then. 5) The contract you're referring to had large retracements that you cannot dismissively ignore. If you had been stopped out "early", would you realistically be able to get "long" again?
Thank you for the replies. I will have to do a little more reading and learning I guess as "slippage" and "retracements" are terms I need to understand and do not... yet. Thank you for the concepts to explore. Sean
Ahh lol man I am a newbie. Looked up retracement and slippage and I see what you mean. As I said in my example "If I had a crystal ball" the point of the thought process was so that I could understand the transaction process. For the most part it sounds like I understand the process outside of liquidity issues back. Your point is well taken the retracement on that contract in September was a $5 drop which would I am sure make most people (myself included) seriously consider selling during that perceived reversal. Thanks again for your helpful reply.
Is 20 dollars alot on 100? no.. My size is small so "big" is relative.. That will come in time as many of us with a small account work towards.. Whats the difference to you? Is my statement less legit if i'm not swinging 7 figures?