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-----Original Message-----
From: listmanager@xxxxxxxxxxxxxxx [mailto:listmanager@xxxxxxxxxxxxxxx]On
Behalf Of nwinski
Sent: Thursday, April 20, 2000 8:25 PM
To: eadamy@xxxxxxxxxx
Cc: realtraders@xxxxxxxxxxxxxxx
Subject: Re: [RT] Investing in commodities
Earl Adamy wrote:
> I share the same view regarding investment in commodities versus
> trading, however I'm finding that commodities are a much more
> challenging investment than are stocks and bonds. I started the year
> with a clear idea of how I would invest in commodities, however the rub
> comes in the details ... specifically the limited life of each contract
> and the contract premium which, like an option, decays over time. Buy
> the near contract and you have little premium and many rolls. Buy the
> far contract and you have fewer rolls and more premium. Currently, for
> example, the Dec00 W contract carries a 38 cent premium over the about
> the expire May contract and this represents a significant chunk of
> potential profit ... $2000 per contract.
>
> As a result, I've come to the view that one will do better trading
> within the longer term trend than attempting a buy and hold requiring
> the expenditure of large premiums or frequent rollovers. A buy and hold
> approach led me to give back some large profits in corn earlier this
> year, when it would have been far better to sell March corn and wait for
> the retracement to buy May corn. This is why, for example, I elected to
> sell my May sugar last Thursday & Friday near projected highs rather
> than roll into the July contract ... I expect that I will be able to
> purchase the July contract at lower prices when it retraces. If not,
> I'll find some other place to enter or trade something else. One other
> trading tool which seems to provide income to offset futures premium
> costs is to sell near term OOM calls at projected highs in the
> expectation that the calls will expire worthless during a retracement.
> This of course requires trading agility ... In the case of the
> aforementioned corn, I missed getting filled on my short call orders by
> 1 tick before the market retraced which of course meant I didn't collect
> the planned premium.
>
> Would certainly like to hear other practical approaches to the challenge
> of holding longer term commodity positions.
>
> Earl,
Hi. Sorry for the time warp delay in responding.. just back from my
Denmark speaking engagement.
My answer to your dilemma is multiple time frames and multiple targets. I do
everything "half assed".
I never want to be in a position where I have to make an all or nothing
decision. Here is how it works.
Lets say you went long 3 Sugar at 5.25 with a minimum primary target of
6.50.
You should also have a second primary target in case the market blows
through
6.50, i.e. if 1.618 = the first target you may want to also plan for the 2
or
2.618 harmonics. You should also have one or two secondary minor short term
targets where you are willing to eject maybe 1/4 - 1/3 of your position
based
on secondary technical or cyclical indications. This allows one your bet
based
on what your indicators say If a market is basing for a big move, it will
swing back and forth in a range, which you can use to trade
a small portion of your position and generate some cash to be used against
the
carry charges (futures premium). If the market takes off after you have sold
the short term part of your position, that's ok because you will make the
big
bucks on the rest of your position. If the market continues to oscillate,
that's good too because you can trade the swings for some nice money. For
example, I did this exact same thing in Soybeans last year, using the
Mercury
and Lunar Cycle to get me in and out for about
40 cents per swing on part of my position. This helped propel my track
record
be rated #1 for Grains by CTCR. Since then, I have kept my core long term
position and am waiting for either much higher or much lower prices to
either
reduce or increase my long term position on Soybeans. Whatya think?.
>
>
> ----- Original Message -----
> From: "Clyde Lee" <clydelee@xxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Thursday, April 13, 2000 7:58 AM
> Subject: [RT] Re: cotton
>
> > I have been working on LONGER term systems and indicators
> > which seem to indicate that "investments" in commodities may
> > in fact yield better profits than "trading" of commodities.
> >
> > The attached is a picture of some initial work on the system and
> > indicator for cotton.
> >
> > Although the system is LONG at the present time I would
> > suggest you compare the behavior in the two yellow circles
> > before you jump in feet first -- might be better to wait for
> > a breakout and a true reversal of this very, very, longterm
> > downtrend.
> >
> > Clyde
> >
> >
> > - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
> > Clyde Lee Chairman/CEO (Home of SwingMachine)
> > SYTECH Corporation email: <clydelee@xxxxxxx>
> > 7910 Westglen, Suite 105 Work: (713) 783-9540
> > Houston, TX 77063 Fax: (713) 783-1092
> > - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
> > - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
> > To subscribe / unsubscribe from SwingMachine list
> > http://www.egroups.com/list/swingmachine/
> >
> > After joining list the freeware SwingMachine program
> > (DOS Version) is available in the VAULT at:
> > http://www.egroups.com/list/swingmachine/
> > - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
> >
> > ----- Original Message -----
> > From: "Bob Hunt" <RHunt.066@xxxxxxxxxxxxxxxx>
> > To: <realtraders@xxxxxxxxxxxxxxx>
> > Sent: Thursday, April 13, 2000 08:03
> > Subject: [RT] Re: cotton
> >
> >
> > > I also have a number of Pattern Signals fired which suggest higher
> > > prices for cotton (attached .gif)
> > >
> > > The Wide Range Upside Reversal signal is activated when three
> > conditions
> > > have been satisfied: 1) the low of the day is the lowest low of the
> > last
> > > five, 2) the trading range of the day is the widest range of the
> last
> > > five, and 3) the close is within the top 25% of the day's range.
> This
> > > signal typically marks significant intermediate term turning points.
> > >
> > > The 90-10 High Continuation signal is fired when the day's trading
> > > closes within the top 10% of the day's range. It tells us that
> > > yesterday's late day move higher is likely to continue on into
> today.
> > >
> > > Bob Hunt
> > > The Pattern Trapper
> > > E-Mail: RHunt@xxxxxxxxxxxxxxxxxx
> > > Web Site: http://www.PatternTrapper.com
> > > Phone: 612-892-5550
> >
> >
> > ----------------------------------------------------------------------
> --
> > --------
> >
> >
> >
> >
> >
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