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Do u take seasonality into your trades? Would u go short live cattle? Another trade could be a longer term lean hog long but a quick short on lean hogs just for a few weeks since it's run up so much....Thoughts??
This journal has really helped me hone my trading process and writing my review every weekend ensures I keep approaching my trading consistently so the journal is mostly for myself. I'm glad some other people may find it useful also.
Seasonality is something I am beginning to incorporate into my trading process for some markets such as the ags and livestock as an additional filter to support trend direction but it is not something that will ever affect my buy and sell decisions.
I would go short live cattle if there is evidence of a change in trend to the downside but I see no evidence to support a short position at this stage. I would need to see prices below the 200 SMA at a minimum before contemplating a short position.
Operating both long term and short term strategies is something many trend following CTA's do whether it be a short term trend following strategy, short term mean reversion strategy or simply taking the opposite side of their long term positions given that more trades lose than win in a long term trend following strategy. I don't have the capital to operate two strategies at the moment so I'm only focused on taking trades that fit within my long term trend following strategy.
Personally, I don't like the idea of taking a short trade just because a market has been going up for a while. Once there is momentum behind some of these markets they can keep going in the same direction for longer than most people think and I don't have the skill set to predict when or where a short term dip might take place in the overall trend.
I have found similar to what you state that its very difficult to predict the actual turn and as you rightly stated some of these commodities could go in one direction for days.
I have found combining a longer term strategy which could be a option spread.. so even if we are wrong .. might eventually become a winner a good way to take advantage of seasonality... otherwise most times i just daytrade on short term direction
so this long/short idea could be implemented with option spreads in different months .. the issue is with the premium.. to avoid that i usually do ATM spreads at support/resistance .. so 1:1 risk/reward.. .. looking forward to chat more
Yeah options and spreads are something that I need to learn but haven't found the time to study properly yet. They do open up a lot of other opportunities.
Day trading isn't an option for me unfortunately with the time zone.
Below are my comments on my open positions for the week.
ZN – 10 Year Note
Trade: Short 2 contracts of March 10 Year Notes
Entry Price: 124 4.5/32
Stop: 127 22.5/32 risking $0
Target: 122 14/32
Weekly Comment: The Notes continued higher early in the week surpassing the 61.8% retracement of the recent range but ran into resistance at the recent highs and falling back to the 61.8% retracement level.
HG – Copper
Trade: Long 1 contract of March Copper
Entry Price: $1.6380
Stop: $1.6380 risking $0
Target: Short term $2.95, Long term $3.70
Weekly Comment: Copper regained the ground above the 61.8% retracement level early in the week and rallied strongly on Friday posting a bullish full bodied candle and closing at new highs for the move on reports of a strike at the world’s largest copper mine in Chile. Given the rise is based on a short term supply issue I will now be treating this trade as a swing trade and I’ll be looking to take profits at the 161.8% extension.
ZW – Wheat
Trade: Long 1 contract of July Wheat
Entry Price: $4.5525
Stop: $4.5525 risking $0
Target: $4.75
Weekly Comment: Wheat fell back below the 61.8% retracement level on Monday but quickly regained the ground above this level on Tuesday and then rallied strongly on Thursday and Friday after the USDA lowered global carryout figures. The target of this trade would usually be the 61.8% retracement level at $5 but the 200 SMA has the potential to provide strong resistance so I will be looking to exit this trade if prices start to fall from here.
Below are my comments on other opportunities I am watching.
CT – Cotton
Cotton traded lower on Monday and Tuesday but didn’t get low enough for an entry before bouncing to finish the week only slightly lower.
ZC – Corn (New Crop)
Corn was higher this week closing just above the 61.8% retracement level on Friday. If prices can continue higher next week I may look at entering a long position.
SB – Sugar
Sugar fell this week trading back down to the 200 SMA. If prices break down through the 200 SMA it may offer a good short trade.
HE – Lean Hogs
Hogs surpassed the 61.8 % retracement level on Monday and continued higher on Tuesday before falling back sharply on Thursday. If prices trade back down to re-test the 61.8% retracement level I may look at entering a long trade.
Crude Oil fell sharply early in the week before bouncing from 200 SMA and rallying strongly for the remainder of the week to finish the week only slightly lower.
GC – Gold
Gold continued higher on Monday trading up to the 100 SMA and struggled around this level for the rest of the week.
DX – US Dollar Index
The US Dollar held above the 100 SMA this week moving higher back up towards the falling medium term averages.
ES – S&P 500
The S&P 500 continued higher on Thursday and Friday and the target at the 261.8% extension level at 2,433 is starting to appear more likely.
- Added to my long position in Wheat
- Entered a long position in Corn
Below are my comments on my open positions for the week.
ZN – 10 Year Note
Trade 1: Short 2 contracts of March 10 Year Notes
Entry Price: 124 4.5/32
Stop: 127 22.5/32 risking $0
Target: 122 14/32
Weekly Comment: The Notes continued lower early in the week after strong economic data before rallying strongly to finish the week only slightly lower.
HG – Copper
Trade: Long 1 contract of March Copper
Entry Price: $1.6380
Stop: $1.5980 risking $1,000
Target: Short term $2.95, Long term $3.70
Weekly Comment: Copper opened the week higher before reversing strongly and trading back down through the recent highs. Prices held the 20 SMA and finished the week with an indecisive doji candle suggesting that the move may only be corrective.
ZW – Wheat
Trade 1: Long 1 contract of July Wheat
Entry Price: $4.5525
Stop: $4.6775 risking $0
Target: $5
Trade 2: Long 2 contracts of July Wheat Average Entry Price: $4.75
Stop: $4.6775 risking $725
Target: $5.64
Reasons for entering the trade:
Technical: Prices surpassed the 200 SMA after a long downtrend.
Weekly Comment: Wheat broke through the 200 SMA on Monday. I added another contract to the position on Tuesday when prices re-tested the 200 SMA and moved my stop on the original position using the 200 SMA. Prices moved higher again on Wednesday and I entered an order below the market during the overnight session on Thursday but when prices rallied I forgot to remove the order going into the day session and the order got triggered near the close when prices reversed sharply. Prices continued lower down through the 200 SMA on Friday closing just below support but not low enough to trigger my stop.
ZC – Corn
Trade: Long 1 contract of December Corn
Entry Price: $3.9975
Stop: $3.8975 risking $500
Target: $4.625
Reasons for entering the trade:
Technical: Prices surpassed the 61.8% retracement of the recent range after recently surpassing the 200 SMA after a long downtrend.
Fundamental: Corn supplies worldwide are plentiful but demand for US corn from both foreign buyers and local ethanol output has been strong recently.
Weekly Comment: Corn held above the 61.8% retracement level on Monday and Tuesday and rallied strongly on Wednesday to consolidate the break above this level. I entered an order below the market during the overnight session on Thursday but when prices rallied I forgot to remove the order going into the day session and the order got triggered near the close when prices reversed sharply. Prices continued lower on Friday trading down through the 61.8% retracement level back to the 20 SMA.
