is it really worth it? - Commodities Futures Trading | futures io social day trading
futures io futures trading


is it really worth it?
Updated: Views / Replies:14,840 / 99
Created: by Silvester17 Attachments:3

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors Ė all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you donít need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 3  
 
Thread Tools Search this Thread
 

is it really worth it?

  #61 (permalink)
Elite Member
Berlin, Europe
 
Futures Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker/Data: Interactive Brokers
Favorite Futures: Keyboard
 
Fat Tails's Avatar
 
Posts: 9,651 since Mar 2010
Thanks: 4,226 given, 25,601 received
Forum Reputation: Legendary


Silvester17 View Post
now let me ask you this: how many speculators do you think have an interest in a physical delivery? my guess is less than 10%, to be very conservative. so I'm fairly certain the same problem would occur if the delivery place would be new york, london or on the moon.

but I do agree about the errors of regulators. they need to get rid of some speculators in order to have a healthy market again.

The so called speculators are mainly long only index fonds, as your own contribution clearly showed. Please notice that behind those funds are individual investors. For these it makes absolutely sense to invest in such funds:

-> irresponsible policies have led to an exponential increase in government debt, which for sure will first lead to inflation, then to higher interest rates, which are required to control inflation

-> given this perspective and the supply of liquidity a careful investor can neither invest into government bonds nor stocks, which will be negatively affected by higher interest rates

-> my home is heated with heating oil, my car uses gasoline, so I understand that many individual investors select to invest into commodities, because tomorrow they will have to buy their heating oil and gasoline at higher prices

Of course they do not want to take delivery. But they may want to hedge their own exposure to inflation via investment into a long only index fund. The high rolling cost induced by the Cushing Contango penalizes those individual investors. Just compare the return of the USO fund with the evolution of real prices of WTI.


Last edited by Fat Tails; April 8th, 2011 at 01:07 PM.
Reply With Quote
The following 2 users say Thank You to Fat Tails for this post:
 
  #62 (permalink)
Market Wizard
Columbus, OH
 
Futures Experience: None
Platform: NT 8, TOS
Favorite Futures: ES
 
Silvester17's Avatar
 
Posts: 3,332 since Aug 2009
Thanks: 4,579 given, 10,313 received


Fat Tails View Post
The so called speculators are mainly long only index fonds, as your own contribution clearly showed. Please notice that behind those funds are individual investors. For these it makes absolutely sense to invest in such funds:

-> irresponsible policies have led to an exponential increase in government debt, which for sure will first lead to inflation, then to higher interest rates, which are required to control inflation

-> given this perspective and the supply of liquidity a careful investor can neither invest into government bonds or stocks, which will be negatively affected by higher interest rates

-> my home is heated with heating oil, my car uses gasoline, so I understand that many individual investors select to invest into commodities, because tomorrow they will have to buy their heating oil and gasoline at higher prices

Of course they do not want to take delivery. But they may want to hedge their own exposure to inflation via investment into a long only index fund. The high rolling cost induced by the Cushing Contango penalizes those individual investors. Just compare the return of the USO fund with the evolution of real prices of WTI.

yes I do agree that the rollover issues are mainly caused by those funds. and I do understand the urge for some people to hedge the higher heating bill or the higher cost at the gas pump. but does it serve the purpose? not really, because you're trying to compensate your higher energy costs by buying (which will put more pressure on the underlying ) the exact same thing that is causing the problem in the first place.

and of course I understand that people want to invest in something resistant to inflation. but there are other ways to do that. you could always buy funds or stocks that are involved in the oil or gas industry. might be more work involved, but on the other hand you could eliminate some rather high management fees.

either way, I do believe the biggest part of the daily volume is created by "pure speculators" and not by funds.

Reply With Quote
 
  #63 (permalink)
Elite Member
Berlin, Europe
 
Futures Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker/Data: Interactive Brokers
Favorite Futures: Keyboard
 
Fat Tails's Avatar
 
Posts: 9,651 since Mar 2010
Thanks: 4,226 given, 25,601 received
Forum Reputation: Legendary



Silvester17 View Post
either way, I do believe the biggest part of the daily volume is created by "pure speculators" and not by funds.

Maybe, but those intraday speculators close out their long and short positions every day, so unlike long only index funds they are not causing any trouble, as they do not hold large positions, which they need to roll.

If you want to discuss the issue seriously you need to have a look at the COT figures as well. The

The last COT report from March 22 shows the following positions for Light Sweet Crude

Commercials: Long 193,560 - Short 429,057
Swap Dealers: Long 219,886 - Short 288,349 - Spreading 242,571
Managed Money: Long 281,134 - Short 28,916 - Spreading 167,819
Other Reportables: Long 101,606 - Short 100,096 - 190,251
Non-Reportables: Long 106,807 - Short 56,555

Let us have a look, who is net long and who is net short:

The commercials are net short 235,497 contracts.
The swap dealers are net short 68,463 contracts.
Managed money is net long 252,218 contracts.
Small traders are net long 50,252 contracts.

This is a typical situation. Producers are structurally short, as they need speculators to take the opposite side of their trade. I do not know, why the swap dealers are short, this would require further analysis.

Oil prices are quite high now, so the producers are happy to sell forward, which explains their short position. Producers behave anticyclical, they dampen price swings. Managed money traditional uses trend following strategies. So their are currently long. Prices will only drop, when they rush to the extis. So far this is nothing unusual. To further interpret the figures, we need to know, whether the current positions of the four groups are currently different from their relative average.

The COT reports were recently changed, they now include figures for swap dealers and managed money. which makes it difficult to compare the current COT reports to the old format.

The COT report can be found here:

CFTC Commitments of Traders Long Report - Petroleum (Futures Only)

Reply With Quote
 
  #64 (permalink)
Market Wizard
Columbus, OH
 
Futures Experience: None
Platform: NT 8, TOS
Favorite Futures: ES
 
Silvester17's Avatar
 
Posts: 3,332 since Aug 2009
Thanks: 4,579 given, 10,313 received


Fat Tails View Post
Maybe, but those intraday speculators close out their long and short positions every day, so unlike long only index funds they are not causing any trouble, as they do not hold large positions, which they need to roll.

yes like I said in my previous post, the rollover issues are probably caused by those funds. and yes, intraday speculators are not creating any rollover problems.

btw by "pure speculators", I didn't mean only intraday traders.

and thanks for the cot report. I actually do look at them regularly. well maybe not crude, but the financials.

Reply With Quote
The following user says Thank You to Silvester17 for this post:
 
  #65 (permalink)
Trading Apprentice
Los Angeles, California
 
Futures Experience: None
Platform: Ninja Trader
Favorite Futures: oil, gold
 
Posts: 34 since Mar 2011
Thanks: 0 given, 6 received


Silvester17 View Post
From an oil shortage can therefore be no question at all. Why then the price rises to new highs every day?

Speculators like myself are to blame. When the news of the Libyan civil war broke I immediately bought oil. Many others did the same. The 2.2% figure is really not that high and not really worth the $15 premium. But with so many traders out there blindly trading the contracts what's one to do?

Reply With Quote
 
  #66 (permalink)
Market Wizard
Columbus, OH
 
Futures Experience: None
Platform: NT 8, TOS
Favorite Futures: ES
 
Silvester17's Avatar
 
Posts: 3,332 since Aug 2009
Thanks: 4,579 given, 10,313 received

so here's my proposal to the U.S. Government. but should add, it wouldn't be the first time they don't listen to me.

start shorting crude oil. a good price target would be around $70.00 a barrel. since crude has little or nothing to do with fundamentals, that should be doable without any major issues. and then below $70.00 you start covering your shorts and above $70.00 you sell again.

not only would we see lower prices for everything that needs oil, it would also take off a lot of pressure on inflation in general. and not to forget a significant reduce of the U.S. debts.

and everybody would live happily ever after

Reply With Quote
 
  #67 (permalink)
Elite Member
Berlin, Europe
 
Futures Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker/Data: Interactive Brokers
Favorite Futures: Keyboard
 
Fat Tails's Avatar
 
Posts: 9,651 since Mar 2010
Thanks: 4,226 given, 25,601 received
Forum Reputation: Legendary


Silvester17 View Post
so here's my proposal to the U.S. Government. but should add, it wouldn't be the first time they don't listen to me.

start shorting crude oil. a good price target would be around $70.00 a barrel. since crude has little or nothing to do with fundamentals, that should be doable without any major issues. and then below $70.00 you start covering your shorts and above $70.00 you sell again.

not only would we see lower prices for everything that needs oil, it would also take off a lot of pressure on inflation in general. and not to forget a significant reduce of the U.S. debts.

and everybody would live happily ever after

If the US government starts shorting crude this will increase the exposure of the US to crude price fluctuation. When crude prices rise this will have a negative impact on the US trade balance and - taking into account the short position - the federal budget as well. So it increases dependency from crude prices.

It also means the end of free markets, if governments try to manipulate them.

There is also a risk that speculators will drive prices up, until the US government finally abandons their short position. If their is one big trader trying to corner the market, the vultures are watching and waiting until that big traders has to liquidate. This is what killed LTCM and Amaranth, as the exits were already crowded when they had to liquidate.

Inflation is not a result of rising oil prices, but of

- overconsumption
- recklessness and selfishness
- failed monetary policies that have flooded the whole world with US dollars

The government just needs to stop printing money, and the oil price will decline.

Reply With Quote
 
  #68 (permalink)
Market Wizard
Columbus, OH
 
Futures Experience: None
Platform: NT 8, TOS
Favorite Futures: ES
 
Silvester17's Avatar
 
Posts: 3,332 since Aug 2009
Thanks: 4,579 given, 10,313 received


Fat Tails View Post
If the US government starts shorting crude this will increase the exposure of the US to crude price fluctuation. When crude prices rise this will have a negative impact on the US trade balance and - taking into account the short position - the federal budget as well. So it increases dependency from crude prices.

It also means the end of free markets, if governments try to manipulate them.

There is also a risk that speculators will drive prices up, until the US government finally abandons their short position. If their is one big trader trying to corner the market, the vultures are watching and waiting until that big traders has to liquidate. This is what killed LTCM and Amaranth, as the exits were already crowded when they had to liquidate.

Inflation is not a result of rising oil prices, but of

- overconsumption
- recklessness and selfishness
- failed monetary policies that have flooded the whole world with US dollars

The government just needs to stop printing money, and the oil price will decline.

- governments intervene in currency markets.

- rising oil prices have a big impact on inflation. simple example is the higher cost of bread and milk.

- the U.S. Government should be able to hold the breath longer than a LTCM. and the more speculators try to drive prices up with no success, the faster it will come down because at one point they'll have to close their long positions (they can't print money like others).

Reply With Quote
 
  #69 (permalink)
Elite Member
Berlin, Europe
 
Futures Experience: Advanced
Platform: NinjaTrader, MultiCharts
Broker/Data: Interactive Brokers
Favorite Futures: Keyboard
 
Fat Tails's Avatar
 
Posts: 9,651 since Mar 2010
Thanks: 4,226 given, 25,601 received
Forum Reputation: Legendary


Silvester17 View Post
- governments intervene in currency markets.

Yeah, I remember that intervention from the Bank of England, and the other one from the Thai Central Bank, or whatever it is called.


Silvester17 View Post
- rising oil prices have a big impact on inflation. simple example is the higher cost of bread and milk.

But what caused the oil price to rise?


Silvester17 View Post
- the U.S. Government should be able to hold the breath longer than a LTCM.

I am not sure about this. If the U.S government prints more money, oil prices will further rise and this will hurt the short crude position.

Reply With Quote
 
  #70 (permalink)
Market Wizard
Columbus, OH
 
Futures Experience: None
Platform: NT 8, TOS
Favorite Futures: ES
 
Silvester17's Avatar
 
Posts: 3,332 since Aug 2009
Thanks: 4,579 given, 10,313 received



Fat Tails View Post
But what caused the oil price to rise?



now we're back to the speculators.

Reply With Quote

Reply



futures io > > > > is it really worth it?

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Linda Bradford Raschke: Reading The Tape

Elite only

Adam Grimes: TBA

Elite only

NinjaTrader: TBA

January

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Cory's VolumeStopV3 (and now V4) - Worth A Look! HJay NinjaTrader 438 August 2nd, 2017 12:38 PM
CFDs - not worth trading? Twiddle The Elite Circle 22 August 25th, 2011 10:21 AM
"ease" of Easy Language isn't worth the limitations RM99 TradeStation 5 July 9th, 2011 01:58 AM
Looking for several years worth of reliable and free Forex tick data? Here you go. Trankuility The Elite Circle 13 March 19th, 2011 11:45 PM
Is an Ivy League Diploma Still Worth the Price of Admission? Quick Summary News and Current Events 0 March 2nd, 2011 07:30 PM


All times are GMT -4. The time now is 05:55 PM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-12 in 0.18 seconds with 20 queries on phoenix via your IP 54.167.44.32