New year !

Am not a kind who seek advice or make resolutions on the New Year. I look at a new year or any festival day as a just normal day. I never follow any custom or tradition if my heart doesn’t go with it. But end of 2010 was different. I made a resolution which I have given at end of this post.

I was doing moderate in trading by 2009 but did some major blunders in early 2010 and had some hectic experience. I was not in full rhythm and constantly making errors but I was consoling myself with the fake excuses with my MBA and the busy schedule when my second son was born.

Stopped trading Nifty by mid of 2010 and was analysing my trading mishaps for some time. Somehow I felt that nifty is not my comfort zone and started looking for other markets. Got a link to commodities and had a good friend who initially supported a lot to understand the commodity markets and movements. In the pause period after leaving nifty, I have back tested several systems which made me clear that trading discipline and approach is far more important than a system which I was actually looking far. Trading system is like a light house but the discipline and approach is like a swimsuit without which you can’t swim for long time to reach your goal.

I started my commodity trading in last November with a mere capital which was all I have after leaving nifty camp. Price movements were quick and theoretical back test results lured me to make some aggressive moves in commodities initially. Obviously, lost some money in the initial days but had a hope and more than that had a satisfaction as I was doing something on my own without depending anyone. This hope and satisfaction pushed me to arrange funds to pump fourth time in the markets.

Started the trades following a system and got some clean profits. But devil mind was not sleeping at all and peeped several times to do some intra trades or contrary trades against system. I was greedier when profits were pouring and got panicked when continuous whipsaws were happening due to highly volatile movements. These pushed me into wrong decisions such as early exit or late entry and sometimes did poor averaging. All these err was swinging my trading account up and down. I was able to only hang around my invested capital and couldn’t take any profits in my hands. I have missed out some superb mega rallies in crude oil and copper which would have doubled my capital in a blink of time but I couldn’t sat tight. Almost 5-6 months gone. I was watching yes only watching my profits but could not see them in my books in a big way. Kind of frustration was going on in my mind. I was so sure that system is generating profits.

Then, that trade took place on the 06^th May 2011 which I can’t forget in my life. I shorted Crude Oil around 4925 and within 2 days it tanked to 4450-4400 levels. I covered it for 40k profit. Neat 40k profit from margin of 25k. But the further furious fall lured me to reenter the shorts at lows around 4300. After my entry, it bounced sharply and made a mess by averaging it with another 2 shorts. By close to the end of the day I had to square-off all three three shorts with huge loss as bounce was more furious in the late hours. Lost about 60k in a single trading day.You can see the short form of contract note at left side bar under the title of “perfect failure”.I have framed it :)

This trade opened my eyes as how a interruption in a good trading system can spoil your smooth life. After this trade, I stopped all my stupid moves and strictly moved on with discipline. I was doing everything right after that trade except that I could not learn the art of sitting tight. Several crude oil and copper big movements were missed. Am still learning the art of sitting tight but I can say that I have improved.

For the last 4-5 months, I trade Crude oil, silver and sometimes with copper. I have laid some guidelines and rules. I do not bother about the gain or loss in the trade but am making sure that I am playing within the rules I have laid.

I have written the following resolution by end of 2010. I have made these lines with a hope that I can do well with commodities with a disciplined approach.

I should rock this year..

>Let profit runs. Cut the losses.

> Never ever hesitate to follow the signal from system whatsoever loss you are in.

> Remove fear.

> Develop patience.

Let this 2011 will be a historical turn in my trading life!

I can say now that I have almost followed everything of the above at least to my satisfied level. I can feel the peace for last 4-5 months and also see some cash in my account.

Having a great hope that will do better in the coming years!!

How much one can earn in the financial markets?

I used to face this question from my friends quite often. OK, how much one can earn from the markets?.

This is my concept from my own experience.

Let us consider 10 friends enters into market for investment. Most of us enter into markets from investment perspective and later switched to trading.

First round - In the first 1 or max 2 years, they lose all their 80-100% capital. 5 out of 10 friends do not return to markets again.

Second round - 5 friends return to markets with reloaded capital. Capital swings + /- 40-50% for next 1 or 2 year and finally almost 75-100% capital is lost. 4 friends take back the left out small capital and say goodbye and never return to markets.

Third round - Only one remaining person stops trading for a while after 2-3 loss making years. He analyses his past trading carrier and decides about future. He lay plans and enters with additional capital (mostly borrowed) for the final innings. He always remember his past wounds and accidents freshly in mind and plans his travel very cautiously. Very rarely people go wrong in the third round of trading.

If someone who cannot survive in the market even in the third round, trading is not for him and he misconceived that his passion lies in the markets which is wrong. He should stay away from the markets.

If a person can survive at least for a year in the third round, then he is capable to stay in the market for long time.

Ok, how much he can earn. After passing 3-4 years i.e, surviving after all the three rounds, one must be having a rule book of his own to approach markets. This rule book is obviously from his good and bad experiences. This will help him for sure in any kind of circumstances. If he has a discipline to follow his own rule book, he can earn peacefully at least 50-100% returns per year.

Yes. This is possible for sure. If a trader is in the market for more than 3-4 years and if he can't still make 50-100% returns in a year, then he should stop trading and think proactively to change his approach.

Steep travel!

More than the loss, missed profit disturbs me always ! Booked out completely though system was clearly in long.

I don't know how many days it'll take for me to forget this.

Can you make fortune by doing nothing but simply sitting tight?

How many times we heard or read this in our trading life?.. “Sitting tight”.

Let me also give my experience through my recent trades.

Copper :

Had given few whipsaw trades around 400 price levels and had a break-out at 403. Gone long and closed it at 406 itself as it shown some weakness. It further moved all the way up to 423 and given a sell there. I was cursing myself for not following a system but made a self decision to exit that long trade. I didn’t go for a SELL since I missed a buy and wanted to wait expecting sideways movement again.

Yes, it showed 3 whipsaw trades around 420 and I was glad for skipping the trade.. and then the climax chapter.. final sell was at 417 and I didn’t follow this too as somehow I lost my charm towards copper and concentrating on Oil.. this might have been because of the itch in my mind due to missing the good long trade from 403 to 423..

Once it gave a sell at 417, it was slowly moving down and every day at open it was breaking low levels in top gear.. Finally the FOMC announcement helped it to freeze quite a few time at lower circuits.. It finally showed the low of 343 yesterday before the bounce. This is the dream run and it never gave buy since 417.. Simply a sell and hold would have generated profit of 300% if the trade was taken.. the best part is, 417 entry was given on 15th sep and the 343 low was made on 26th sep. Just 9 trading days would have added 300% returns to your portfolio.

Silver :

Started trading it from last week and first 3 trades ended with 15% loss. Fourth trade was a SELL@64500 on the 21st Sep. On the 23rd, it was falling like “no world tomorrow”. When it was trading closer to its second lower circuit of the day, booked profits and made exit from the trade.. got 100% profit apart from compensating earlier 15% loss. After booking the profit, felt like flying.. but the climax is different..

Market immediately made another lower circuit at 12% and by end of the day it closed all the way down at 52300. i.e, 15% lost from previous close. I realised that I have not even booked in the midpoint of the day but way above the midpoint of the day :). Worst part is , it made another two low circuits next day morning to show the low of 45700.. Almost 11500points down from my exit. Holding the shorts would have given me total of 300% returns..

In total, out of 600% returns, I could pocket only 100% returns though I got the entry very right.

Moral of the story :

1. Be a slave to your system. If it asks you to sit, JUST SIT TIGHT! You can make money just not doing anything but just sitting tight with your system.

2. If you are in and capture full profit of these kind of trades, then you don’t need to bother at all about the whipsaws in SAR trading. These mega profits will take care of your entire year’s whipsaw losses.

3. And very important is that, missed mega profit from the right entry is equivalent to unexpressed love. You can recover from love failure. But unexpressed love will kill you for a long time. Same applies to trading. Loss from trade can be recovered in no time. But these kind of " missed- one life time opportunity" will make you asleep for long time.

Wherd do we stand?!

What we are witnessing in Indian equities are like "gully cricket"!! Real cracking matches are going on at commodity markets. Just look at this table.



I have just given each one counter from energy, base metal and precious metal just to show how the commodities are making a deep cut.. Above are MCX prices. What is more interesting is that, we had a biggest single day drop of USD-INR yesterday in last 15 years .. Despite that, every commodities had fallen this much. If USD-INR was stable, then the cut would have been more.

Copper, Silver and many counters have frozen at second lower circuits today..

Every fat finger across globe are winding their sacks!!!

What else is in store??!! million dollar question!!

Dream day - if you are on the right side!!

Trade Update

Crude oil was reversed to long @ 4181 on 20th and it made high of 4262 yesterday..It had ran up a lot mainly due to heavy weakness witnessed in INR. Due to FOMC statement, there was sell off late night in NYMEX. When we opened today, Oil was down by 3$ but fortunately INR helped the slide in MCX prices. We opened down by 80rs instead of 120-130rs.

Had a sell signal at open itself and reversed to shorts at 4135. If INR was a hero yesterday, he is a villain today who spoiled the entire show. Oil in $ tumbled about 3 $ again in intraday which should have reduced the MCX value at least by 120rs but INR is in heavy losing streak as it reached to 49.53 at close against open price of 48.70. This resulted only about 70rs loss in MCX oil prices till am doing this post. Rest of the move is based on how US mkts are going to open and trade tonight. Europe is bleeding about 4-5%. SAR is placed at 4270 for the day.

Copper continuing its mini dream run on downside. Currently its trading at 390. I have missed the entry. You know how much it pains!! Yes! The good trade which you missed will give you more pain than the one which caused heavy loss to you :)

Silver – Let me list down my trades here. Crazy start with this mother of swings counter !!

Short @ 63700 – Made low of 63165 but not booked.

Long @ 64510 – Made high of 65550 but not booked

Short @ 64510 – Today again reversed to shorts and it’s now trading at 63000 and yet not booked :)

In sum, three good swing trades of silver showed me good profits but yet to pocket them. Not booking the profits but just riding the swings with the system which so far gifted me just 700 points profit as of now. If I book the profits and exit, I will surely struggle to enter again and I may miss the huge move as like what is going on with copper. As I just started trading silver, am not ready to exit from position and want to be with the system to test where it takes me.. It’s the best way rather than doing the paper trades.

There will be some clue tonight whether global markets are bottoming out or another “2008-lehman” kind of history is in making!!

Trade Update

Crude oil was sold at 4235 and made low yesterday 4058. Due to expiry, covered the shorts at 4164 in Sep series and shorted Oct series at 4182. SAR is placed at 4180 today.

Copper had made a mini dream run on downside. Should have shorted it around 416 but stayed away from the trade due to preceding whipsawed trades. It made low 403.25 yesterday and SAR is placed at 410.50 today.

Silver - Started trading from yesterday. Sold it at 63700. SAR is placed at 64510 today.

Either crude or silver is making a wrong move and either one of it will hit SL today.

Crude oil

Crude was testing patience for couple of days and finally paid for the waiting.. It was kissing 4215 levels on the downside from wednesday and not breaking the same yesterday till evening. And finally the much awaited break was done which accelerated the downfall to another 100 points i.e, till 4118. It has closed at 4150.

4250 at MCX or 89.50 on dollar will offer some good resistance next week and more price action in store next week. It is trending in these days and am trying to capture the most of its move..

Recent trades read as below for oil.

Short @ 4050
Long@ 3920
Short@ 4085
Long@ 4138
Short@ 4235

Aggregated 340 points in 2 weeks. Should stay focussed and disciplined otherwise all of it will be swayed away :)

Trade Update

Crude oil :

Shorted it at 4050. It made low of 3843 and 3847 on the consecutive days. Didn't book the shorts as system was still in short. Reversed to long @3920 and it made high of 4153 today.Still holding the long in hand with SAR at 4024.

Copper :

Not trading for the last one month. It should have been sold at 423 and reversed to long at 419. Long from 419 should be in hand with SAR at 418.50 as of today.

Bill Lipschutz - Sultan of Currencies

"The New Market Wizards" by Jack Schwager is an awesome book. This book is with full of practical approaches. Traders who survived the markets with great success, expose their mind over markets in simple conversations. Will try to post the important Q&A from each trader's interview here.

Let's start with Bill Lipschutz, a veteran forex legend trader. Author describes him as "sultan of currencies". It's true as he made billions at his age of 35. He reveals his success as below.

-------------------------------x---------------------------x----------------------------------

For argument's sake, let's say that the fundamentals ostensibly don't change but the dollar starts going down. How would you decide that you're wrong? What would prevent you from taking an open ended loss?

I believe in this scenario very strongly-but if the price action fails to confirm my expectations, will I be hugely long? No, I'm going to be flat and buying a little bit on the dips. You have to trade at a size such that if you're not exactly right in your timing, you won't be blown out of your position. My approach is to build to a larger size as the market is going my way. I don't put on a trade by saying, "My God, this is the level; the market is taking off right from here." I am definitely a scale-in type of trader. I do the same thing getting out of positions. I don't say, "Fine, I've made enough money. This is it. I'm out." Instead, I start to lighten up as I see the fundamentals or price action changing."

Do you believe your scaling type of approach in entering and exiting positions is an essential element in your overall trading success?

I think it has enabled me to stay with long-term winners much longer than I've seen most traders stay with their positions. I don't have a problem letting my profits run, which many traders do. You have to be able to let your profits run. I don't think you can consistently be a winning trader if you're banking on being right more than 50 percent of the time. You have to figure out how to make money being right only 20 to 30 percent of the time.

How do you gauge when a panic has run its course?

I think it's a combination of market experience and innate feel. Many currency traders operate under rules that if they lose a certain amount of money, they must liquidate the position. Those are not the type of decisions that are made rationally given the specific situation at a given moment; rather, they are general rules that have been established previously. How do you decide when that type of last-ditch selling is nearly exhausted? It's probably largely a matter of past experience that has suffused your subconscious. In this sense, what people describe as gut feel is probably better described as subconscious market experience.

What do you believe are the characteristics of the truly superior traders?

Let me start with an analogy. When I was in college, my impression was that people who were really smart could do very well, even if they didn't work that hard, and people who really worked hard could also do very well, even if they weren't outstandingly bright. In contrast, in trading, I think you need both elements.The best traders I know are really quite brilliant, and they all work very hard-much harder than anyone else. By the way, when I talk about working hard, I mean commitment and focus; it has nothing to do with how many hours you spend in the office. These traders have tremendous commitment to the markets-to their craft, so to speak. They develop scenarios, reevaluate scenarios, collect information, and reevaluate that information. They constantly ask themselves: What am I doing right? What am I doing wrong? How can I do what I am doing better? How can I get more information? It's obsessive.

Besides intelligence and extreme commitment, are there any other qualities that you believe are important to excel as a trader?

Courage. It's not enough to simply have the insight to see something apart from the rest of the crowd, you also need to have the courage to act on it and to stay with it. It's very difficult to be different from the rest of the crowd the majority of the time, which by definition is what you're doing if you're a successful
trader.

Many people think that trading can be reduced to a few rules. Always do this or always do that. To me, trading isn't about always at all; it is about each situation.So many people want the positive rewards of being a successful trader without being willing to go through the commitment and pain. And there's a lot of pain.

Why do you trade?

I like the game. I think it's a great challenge- It's also an easy game to keep score of.

With trading consuming most of your day, not to mention night, is it still fun?

It's tremendous fun! It's fascinating as hell because it's different every day.

Would you still trade if there were no monetary remuneration?

Absolutely. Without question, I would do this for free. I'm thirty-six years old, and I almost feel like I have never worked. I sometimes can't believe I'm making all this money to essentially play an elaborate game. On the other hand, when you look at all the money I've produced over the years, I've been vastly underpaid.

Inch by inch!

I love this man always ! - Al pacino. Let it be good or bad, he always make you think about him for few days. And this speech, no way!







Script:



I don’t know what to say, really. Three minutes till the biggest battle of our professional lives all comes down to today. Now either we heal as a team or we’re gonna crumble, inch by inch, play by play, ’til we’re finished.



We’re in hell right now, gentlemen, believe me. And, we can stay here — get the shit kicked out of us — or we can fight our way back into the light. We can climb outta hell one inch at a time.


Now, I can’t do it for you. I’m too old. I look around. I see these young faces, and I think — I mean — I made every wrong choice a middle-aged man can make. I, uh, I pissed away all my money, believe it or not. I chased off anyone who’s ever loved me. And lately, I can’t even stand the face I see in the mirror.


You know, when you get old in life things get taken from you. I mean that’s…part of life. But, you only learn that when you start losing stuff. You find out life’s this game of inches. So is football. Because in either game, life or football, the margin for error is so small — I mean one-half a step too late, or too early, and you don’t quite make it. One-half second too slow, too fast, you don’t quite catch it.

The inches we need are everywhere around us.


They’re in every break of the game, every minute, every second.


On this team, we fight for that inch. On this team, we tear ourselves and everyone else around us to pieces for that inch. We claw with our fingernails for that inch, because we know when we add up all those inches that’s gonna make the fuckin’ difference between winning and losing! Between livin’ and dyin’!


I’ll tell you this: In any fight, it’s the guy who’s willing to die who’s gonna win that inch. And I know if I’m gonna have any life anymore, it’s because I’m still willin’ to fight and die for that inch. Because that’s what livin’ is! The six inches in front of your face!!


Now I can’t make you do it. You got to look at the guy next to you. Look into his eyes! Now I think you’re gonna see a guy who will go that inch with you. You’re gonna see a guy who will sacrifice himself for this team because he knows, when it comes down to it, you’re gonna do the same for him!


That’s a team, gentleman!


And, either we heal, now, as a team, or we will die as individuals.


That’s football guys.


That’s all it is.


Now, what are you gonna do?

Trade Update - Intraday

Can't resist myself from doing this intraday update which I normally don't do.



Crude oil was sold at 3919 and it is trading at 3810 now (previously sold one lot at 3977 and booked it at 3930)..let the lady luck smiles at me till tomorrow morning :).




I badly need this success after all missing the good junk from previous carnage.

Trade Update - After the break!!

Excellent trade cycle, I would say once in couple of year opportunity has just passed by. Crude oil sold at 4199 reached 3543 and gave buy signal @3785. Buy has reached 4030 yesterday and about to give SELL today if 3919 is breached.

Copper was sold originally around 435 and reached 387 and gave buy at 400 and still in buy mode now. It is about to give sell today if 400 price level is broken. But copper is making typical which happens quite often now a days.

Also, did not have proper TA levels by tuesday due to long weekend at Indian markets. It may sound funny but that's how I have been slightly struggling with my system. If Indian markets or US markets are closed,I would be having the pinch next day. I will remain mostly neutral on those days.

Back to the trades from today onwards. Since Feb, I have never been with empty hands except by first two weeks of this month when I missed to eat the yummy and fatty stuffed bread fully. I could eat only a slice of it :)

Commodity Trading - Insight

Most of us hear lot about commodity trading as they are hot products in today's financial world. I believe that they are going to rule the future. But we have lot of "ifs" and "buts" about commodity trading. I tried to submit my view on commodity trading from my short span of experience.

Commodities to whom ?

- If you are a true follower of technical analysis.

- If you are a person who can obey to the mechanical system without any manual intervention.

- If you are a person who can trade only with 50% of the capital to manage MTM requirements.

- If you are person who believes that swing trading can make you rich than intraday trades.

- If you are a person who can simply ignore all noise about markets from media, forum etc..

- If you are a person who has a mental fortitude to just follow price despite of any good, bad and ugly events.

Why commodities?

- TA is precise when applied with commodities compared to equities. Of course, you must follow one system consistently.

- Almost traded 24 hrs in a day. It’s actually an advantage as you are in a position to manage trades when it reacts to any news/events across globe

- Traded globally with high volumes. Group of people cannot control prices.

- If you are trading in Nifty future, only alternate is bank nifty future and there is no other alternate apart from stock futures. But each major commodity is like one nifty future.

- Risk reward ratio is excellent in commodities.

- Great liquidity with low margin requirements.

What are all wrong myth about commodities?

- Rapid moves kill your trades. Of course, if you are not a disciplined trader. If you are well armed with right system and stop loss guard, these rapid movements are actually a gift to traders.

- It requires more time. Overtime pays extra J. But on serious note, we don’t need to spend all our time in terminal if we do positional trades. I personally feel that positional trades are good. So, we can simply place orders and forget it. But the extra effort whatever we are putting in commodities is real worth in terms of profit compared to equities.

- You may have to take the physical delivery if contract is not squared. Can you imagine, your nifty future contract will stand unsettled due to no buyer or seller?. In the same way, it will not happen in commodities too. Exchanges and brokers have systems in place to make sure that your contracts are rolled-over or squared well before market close on the expiry day.

- I have never seen my book in green with nifty itself. How can I think about commodities?. This was the main concern holding me back when I thought about commodities. But, the fact is different. Due to the volatile nature and higher range of price movements, commodities make you more disciplined and organized. You will realize within 2-3 trades that how disciplined you should be to keep survive in this market. I always thank commodities as it keeps me standing on my toes always.

- Very sensitive to global events. Yes, but I see it as an opportunity rather than nuisance. I have observed that TA makes you to enter on the right side well before any event/news. There will be a huge volatility but your SL will save you for sure. Even if you have to reverse the trade with huge loss, don’t hesitate but do it and the reversed trade will give you huge profit after compensating the previous loss.

Where should start?

- Start checking charts from metatrader platforms, forexpros, stockcharts etc.. All the major commodity charts are available here and data too available.

- Apply your TA knowledge with these charts and observe them.

- Don’t do paper trade for long time. Start real trades in small quantities.

- You can start real trading with smaller contracts such as silver micro and lead/Zinc mini etc where margins are very low like mini nifty.

What are the commodities can be considered for trading?

I will prioritise the commodities as below to start the trading.

1. Crude oil

2. Copper

3. Silver

4. Gold

5. Nickel

6. Lead

7. Aluminium

8. Zinc

Which exchange is better ?

Above said energy, metals and precious metals contracts are traded with volume in MCX.


Agro commodities like Pepper,Guarseed etc are traded with volume in NCDEX.

What are the margin and lot size?

Which TA system is best?

Any system which helped to take profits in equities, nifty future can be used for commodities. But due to bigger range of prices and volatility, success ratio might differ between nifty and commodities for the same system. So, I will personally advice to back test systems with both nifty and commodities for relative performance and settle with the specific system accordingly.


Moving average cross over will lag the entry and exit in commodities due to higher range of the price movements. This is just my personal observation. We can still use MA with other appropriate tools attached to it. I always believe that approach is important with commodities rather than the TA system.

What are the Don’ts?

- Never over trade.

- Never average when the first trade is in loss.

- Never do blind trade. Always follow the entry and exit as per your study of TA.

- Never hesitate to exit at stop loss even for a single trade. Always remember that you are trading the contract which is being traded simultaneously across globe.

- Avoid small range counters like zinc, lead and aluminum when you are in initial phase of commodity trading.

- Don’t react to news or events. Just follow the signals from your system.

- Never ever predict or assume the price levels to make quick entry and exit. Just follow price action.

What are the Do’s?

- Always trade only with 50% capital.

- Always trade with fixed position for certain period.

- Try to do multiple lots per contract. Off-load part qty whenever you have profit.

- Have a eye on commodity prices on dollar value too i.e, listed in NYMEX,CME and COMEX.Prices from MCX are dependable to INR value. So, even if the commodity has run up in its original dollar value, MCX price may not proportionately move up but lag slightly. This may impact MCX based TA levels in a slight way which may lead to whipsaws.

- Whenever U.S markets are closed, trade less on those days as movement will be less with low volumes.

- Exit only at stop loss. Don’t try to exit due to volatile moves. Commodities always shake weak hands.

- Trades based on any SAR system should be traded with filters. Especially after the bigger trending moves, allow more % of filter than normal. This will keep you engaged in right trade.


All the above are from learner's perspective. I have not gone deep into subject. Please use as an preliminary source on your search about commodities trading.If you have any doubts, please feel free to post in comments and i will try to clear them as much as possible.


I have made this   presentation   based on my commodity trading experience only. So,if you are serious about commoditiy trading please check this presentaion also before start trading.

Good luck!!

Gotcha!!

"And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I’ve known many men who were right at exactly the right time, and began buying and selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine – that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance"

- Legendary Trader Jesse Livermore

When I read these lines first time, I skipped it as usual which I normally do after reading such famous quotes :).. When I started shaping up as a trader, I understood the pain which this man should have gone through before writing these lines.. And today is the day, I really feel the power of this quote..

What a trading week..It cannot be better than this ever in life!!.. Entire globe is bleeding.. every index and commodities are crashing like there is no tomorrow.

Ok, am i seeing this first time? nope, still had the nightmare of lehman brothers collapse days.. but this time, it's different. am staying on the right side.







YES. Had shorted both crude oil and copper well before the vote session on debt ceiling at U.S parliament..

Crude oil was originally shorted at 4299 and it is now trading at 3579 with 720 points profit.300% returns from capital.


Copper was originally shorted at 436 and it is now trading at 396 with 40 points profit (200% returns from capital)

No stop loss hit in between for both the above trades.

In the same week, Nifty had lost 500 points which translates into 100% returns.This is what I love about commodities. If you are on right side, you can make smart money.

Ok.. how much I have pocketed!! Not bad this time.. Had taken enough cut from the fall.. but should have sat tight.. Had to square of the positions due to heavy work load at office and having doubts of bottoming out. System still stays in short and I must have also stayed. But, very happy to realise that having a system in place which can really take you to the path of glory if you are disciplined!!.Yes, i remind myself to be more disciplined which is nothing but sitting tight!!

Trade Update

hmm.. what was going on last week? simple.. profits were seen on papers but not landed in my pockets.. whipsaws taken back the profits.. but can't help it..that's how the system was signalling after a good run up..what happened? let's look at it..

Trade details of 19th - 23rd July :

Crudeoil:

Had long@4367 on 18th and it made high of 4420 on 19th. On the 20th, it moved up till 4438 but later made low of 4333 and me reversed to shorts @ 4350. It beautifully bounced from lows to show 4400 again and closed at 4372.For the 21st July, my SAR was at 4430 but i was waiting it to clear previous day high of 4438 and it did clear that. So, obviously entered into longs at 4440. On the 22nd, it was a inside day and SAR was saved by mere 6 points and carried the longs for the weekend.

Today my SAR was at 4400 and it got hit at open itself and now carrying shorts with SAR at 4490.

Copper:

Reversed to shorts on 21st at 434.90 and again gone long@435.20 on 22nd July with SAR at 431.But it made high of 435.35 just 15 paisa above my buy. SAR hit at open today and holding shorts now with SAR at 436.00

Trade Update

Trade details of 19th July:

Crudeoil : Bought@4367. It made high of 4420 and closed at 4412. Carrying longs with SAR@4349.

Copper : Holding buy. Made high of 442.75 but closed at 440.40. Cleared 21Day high yesterday.SAR is placed at 436.20

Trade Update

Trade details of 18th July:

Crude oil:

Covered shorts@4245 as it was taking support there. No position in hand now. Will short it below 4200 or will go long above 4330.

Copper :

Still carrying long with SAR at 432.50

Trade Update

Trade details of 15th July :

Crudeoil:

Shorts were in hand from 4319. It bounced later in the evening due to no negative outcome of stress bank results and made high of 4347. SAR was placed at 4350 hence shorts were saved by mere 3 points. It later closed at 4309 on friday and closed at 4329 on saturday. SAR is at 4370 now and still carrying shorts.

Copper:

Still in consolidation with small range. Holding the longs with SAR at 431.50

Trade Update

Trade details of 14th July:

Crude oil :

Booked long@4285 as it was having stiff resistance around 4390. Even after mute retail sales and unemployment data, price was not able to take out 4400. Later in the evening, it crashed. Sold @4319 and holding the shorts now. It made low of 4215 i.e, 100 points from the entry but didn't want to book the shorts as 4400 had given a good resistance and prices just started coming down. Wanted to see if i am getting consecutive sell signal today otherwise will close the short today. SAR is placed at 4350 now.

Copper :

Making consolidation for last 3-4 days. Holding the long with SAR at 429.50.

Trade Update

Trade details of 13th July:


Crude oil - Long from 4265 was in hand. After inventories data and US fed chief speech, oil had a good run-up. It made high of 4412 and closed at 4380. Holding long with SAR at 4215.

Copper - Long from 434.25 was in hand. It made high of 438.70 but later slid to 431.25 and closed at 433.Holding long now with SAR at 428.75

Trade Update

Trade details of 12th July:


Crude oil - Shorts from 4300 was in hand. price broken previous day low and went till 4190. But it bounced from 4190 and had to reverse shorts to long yesterday at 4265. It made high of 4330 later and closed at 4320. So, carrying long now with SAR at 4240.

Copper - Shorts from 431 was in hand. It made low of 427.50 yesterday but later had a bounce. Had to reverse the shorts to long at 434.25. It didn't move high but closed at 434.So, carrying long now with SAR at 429.75

Trade Update

Trade details of 11th July:

Crude oil - Short@4300 still in hand. It made low of 4196 yesterday and closed at 4220. Still carrying the shorts with SAR at 4265 now.

Copper - Short@431 still in hand. It made low of 428 yesterday and closed at 430. Still carrying the shorts with SAR at 434.20 now.

After the break - Trade Update

Had a busy schedule at office for the last two weeks and could not update here. Ok, what is going on with my trades?

Crude oil : After that unhappy hedging, managed to came out without a damage :).. Oil has bounced nicely from the 4060 lows and raised till 4400 last week. Glad that captured 70% of this move.. Had a thought of booking the profits around 4400 but some how held back thinking of some more highs. But it has reversed from the peak last evening after poor data from U.S and given a sell around 4300. Now holding SELL with SAR at 4360.

Copper: Dr.Copper was a darling for the couple of weeks :). Was expecting the big move for some time but didn't know which direction it would be.. Had some typical whipsaws which alerted me for the big move..and it finally came. long entered at 407 was moving all the way above to 437 without taking my stop till the U.S poor data news last evening.. didn't book the long at high but reversed them to shorts when i got the sell signal at 431.. one of the good trade from copper after somany whipsaws and still some losses to be recovered.not bothering about the loss and just following the price action.. Holding the SELL now with SAR at 438.

Trade Update

Trade details of 24th June:

Crude oil :

Yesterday after the short@4230, it crashed down to 4065 and bounced sharply to close at 4140. It maintained the down trend today also. It just kissed yesterday's low i.e, 4067 and again bounced to close at 4120. I made mistake of adding another short when it reached day's low.. it was a pure gamble trade as i was predicting that it will crash heavily if it breaks yesterday's low. I didn't follow the price action and just gambled it!! And it gave me the prompt slap as it bounced from the low i.e, after my short.. Had to hedge the shorts with Aug contracts and am not at all comfortable with this hedging business.. but had gone for hedging coz got panic as the bounce happened just few minutes before the closing!! poor boy, read your slideshow again and again !!

Copper :

Dr.copper really testing the patience. Everyone - at least me, biting the dust as its consecutive 5th whipsaw today.. Copper was reversed to longs @407. It made high of 410.40 and closed at 407.30.

Holding the longs with SAR@403.75

Trade Update

Trade details of 23rd June:

Crude oil :

After the fed meet, it has cooled off and opened low today.Reversed to shorts at 4230. SAR@4340 now.

Copper :

Traded with more than my normal position and end up with neat loss!!. Reversed to shorts @ 402.50.SAR@407 now

Trade Update

Trade details of 22nd June:

Crude oil :

Had a zigzag movement due to fed meet.. it had a rapid bounce while closing by showing the last tick at 4300 but average close was at 4283. Carried the longs.

Copper :

Nerve breaking day with two longs which is more than my usual position. Traded in a quite narrow range i.e, 401-405. But movement between these two prices were very quick. Had carried the longs.

Tight grip with Dr.Copper's tail !!

Copper is clearly getting ready for the big move.. taking stop losses on both sides and typical whipsaws!!

Clearing 412 will take to 424 or break of 398 will show us 386!!

Catching Dr.copper's tail tightly..already swallowed two stop losses :)

Trade Update

Trade details of 21st June:

Crude oil :

Have given a break out and revered to longs@4263. Neat loss!!

Copper :

Have reversed to longs @407 and @408.. yes 2 lots!!

Trade Update

Trade details of 20th June:

Crude Oil :

Entered into shorts @4128 again. But it bounced sharply and had to cover it @4186. Had a thought that let me rollover it later with some cushion but it fell again after covering the current contract.. Finally re-entered shorts with JULY series@4190.

Copper :

Holding the shorts

Crude - on the fence or breaking up ?

Crude oil has broken the important support of $93 and made low of $91.50.. currently it is trading above $93 and it has given a mild break-out today..

Below chart shows the importance of the $93 level..



Below is the close-up chart of the current trading level of above $93




If it closes above $93 today, it will remain in short-term uptrend!!

Trade Update

Trade details of 17th June:

Crude : Short from 4360 was booked at 4138. Low was 4122 and when it bounced from low, booked the shorts. Will have to re-enter today since the system is still in shorts.

SAR for shorts 4210

Copper : Shorts are still in hand with SAR at 410.

Trade Update

Trade details of 16th June:

Crude : Shorts from 4360 carried all through the day. Narrow range day and closed flat. SAR for the shorts are now moved to 4300.

Copper : Shorts taken 404.50. SAR was at 411.

Trade Update

Trade details of 15th June:

Crude : Covered long@4425 at open. Reentered at 4400 and booked at 4425. Shorted at 4470 which was day high incidentally. Covered short at 4450 and took long against the system as there was no signal for buy. Market fell like pack of cards and had to reverse the longs at 4360. But shorted two lots and it drifted down rapidly then. Covered one short@4285 and holding one short still. SAR is placed at 4392 now. If the long at 4450 was not taken, then profits must have doubled. Stil, not a bad day!!

Copper : No trade.

Trade Update

Trade details of 15th June :

Copper - Reversed to long from short @ 403.60. Had quite a good up move but mind was set for the down move and not comfortable with the short. Had booked partly twice and re-entered at slightly higher prices and finally quit the long@409.30. It made high of 411 and closed there. Now no position in hand.

Crude oil - Made low@4326 and had a good bounce. Reversed to long@4426. Still holding the long with SAR at 4360.

Even an elephant can slip !!

It's a famous proverb in our tamilnadu. Even an elephant can slip!

Just look at this image!



This image reminds me lot of consequences caused by bad decision in my trading life. Of course, every trader can correlate this image to his trading life. Yes, you cannot shoot your own leg which always take you forward.

To read the story behind this image, just go here slopeofhope

Veteran trader Tim knight talks about one of his bad decision.Thanks to him for this excellent write up.

Crude Oil and Copper Trades

No change in position from previous post.

Both Crude Oil and Copper shorts in hand.

Crude and Copper trades

Update of 08th June trades :

Crude - previous short was supposed to be reversed to long at 4450.. When price was approaching 4450, tried to add one more short with SL 4451 ( Gamble!!). Placed order for short at 4442 and once it was sold, immediately tried to place order for reversing.. but life is not so easy!! price jumped to 4464 due to some positive data after my sell at 4442..and the worst part is terminal stuck and couldn't place the order.. by the time it was rebooted, price jumped to 4490.. I was then having two shorts and i was sitting against my trading system.. without even thinking, i covered one short at 4502 for 6k loss.. and wanted to reverse the remaining one short if i get some lower level.. by the time, high was at 4522.. I placed a stop buy to reverse at 4523 just above the high..

But it cooled off only till 4490 and pierced the high to reach 4554.. i was waiting for some higher levels, but it retraced fast from peak of 4454 and i closed my long at 4432.. and left the day with no position in crude oil.

Copper - Carrying the shorts from 408.75

Update of 09th June trades :

Crude - Sold at 4522 against my trading system again..

Copper - Carrying the shorts from 408.75


Update of 10th June trades :

Crude - Added another short at 4512 and covered it @4460.. carrying one short from 4522.. Made low of 4433 and closed at 4442. SAR for longs now at 4520.

Copper - Carrying the shorts from 408.75.. It made low of 400.30 and closed at 401.95. SAR for longs stay at 406.00.

Crude Oil and Copper trades

Crude has given a sell at 4565 on 01st June. Since then it was trading weak.Trend remains weak.

Copper has given a sell at 413 on 01st June. It went down up to 401.80 on 02nd June and 402.85 again on 03rd June.But not booked the profits. Greedy!! Partly yes and partly no.. Reason to no is, first of all no BUY signal from system.. And , it was consolidating quite well in the range of 413-418 and again now at 407-411.. Actually, i swallowed a whipsaw last week with some loss..So, obvious trending movement is around the corner and want to hold the position with whatever signals am getting from the system..

Crude SL is placed at 4450. Will switch to buy there.
Copper SL is placed at 414. Will switch to buy there.

Copper and Crudeoil trades

Copper :

Long taken@405.60 on 18th went up to 413.50 on 19th. But in late session it retraced down and got the SELL signal.

SOLD@407 yesterday with 2 lots and booked one at 405 and it made low of 404.50. EOD carrying 1 short.

Today had a flat open and it was moving up and reversed into longs@410.

Now holding longs and SL is way below at 400..

Crude oil :

After a long time, entered into shorts yesterday at 4475. It made low of 4467. Today it was trading in tight range and let me wait.

Copper trade

Copper which was sold at 399.60 was reversed at 405.60 on 18th May

Copper trade

Copper bought@406.00 on 09th May.

Booked loss and SOLD@399.60 on 11th May 1.00PM

Will add more at 395 and then at 392.

SL 406

xxxxxxxxxx

Update : 16th May

Copper is testing patience as it swings both sides. short@399.60 still in hand and it is trading in the range of 398-400 today.

Crude oil trade

Crude oil bought @4632 on 10th May.

Made high @4640 yesterday and closed at 4610.

Opened higher @4651 and trading in the range of 4650-4670 today on 11th May.

SL 4520 and let me wait..

xxxxxxxx

Update :

Since it was trading weak, i decided to book the long at 4650 to re-enter at low and booked the same on 11th itself. It fell in the evening up to 4422 and i didn't reenter into long. Now no position in crude.

Holy grail!!

Do you have a wonderful trading system, one that consistently makes you money? You probably believe that you have found your holy grail but this couldn’t be further from the truth. Your system has very little to do with consistent profitability in the markets.

I often here amateur investors talk about that the “best way” or “only way” to invest and argue why their way is better than everyone else’s. The passion and energy exuded by these novice investors is wonderful but they are missing the point completely. No one can say that options are better than stocks, commodities are better than options or forex is better than everything, etc… Each investor develops a system that is suited to their own personal character traits and they use a vehicle (stocks, options, forex, commodities, real estate, etc…) that can help them reach their goals.

Investors also debate systems within a market such as: trend trading, swing trading, scalping, shorting, day trading, buy and hold, fundamental trading, technical trading, Elliot wave theory, moving average crossovers, etc… They all work if the “person” understands the holy grail of trading. And that is being able to understand YOU and how your mind works.

However, it is not the system that makes one successful. It is YOU that makes the system work properly. What do I mean? Each individual must master their own personal psychological impacts on their trading results. You must work on YOU to become consistently successful! I recommend reading The Disciplined Trader by Mark Douglas if you would like to understand the psychological trader in you.

To say that one system or vehicle is the “way to go” is ignorant.

Pick up any Market Wizard book and read how these men and women made hundreds of millions in the markets using different systems. The only thing they all had in common was money management and risk management. That’s ALL! Every one of them traded in different ways and used different vehicles but they all watched their risk, calculated proper position sizing techniques and understood their system’s expectancy.

Money management, also termed as risk management is a major part of the holy grail of investing, NOT THE SYSTEM! Novice investors will eventually understand this after many years of trading (some quicker than others).

So, if someone ever tells you that their “system” is better than yours, turn away and run and run fast because they don’t know what the hell they are talking about.

Here are some examples supporting this idea from the Market Wizard books:

* Michael Marcus turned $30,000 into $80 million trading futures
* Michael Steinhardt ran a fund that averaged 30% annual return over 21 years trading stocks
* Tom Baldwin started with $25,000 and eventually traded $2 billion a day in T-bond futures on the floor or in the pit.
* Paul Tudor Jones ran funds that averaged triple digit returns for five consecutive years trading multiple markets
* Ed Seykota realized an astounding 250,000% return over 16 years (yes that says 250,000%) managing accounts trading in the futures markets – possibly the best trader of our time
* Bill Lipschutz traded currencies with a staring account of $12,000 (started out as an architect – very motivating for me since I started the same way).

The list can go on forever but the point remains the same; they all traded different markets with unique systems from different locations (the floor, an office or their home in the mountains) but they all had one major factor in common: money management and risk management.

Just about every market wizard refers to position sizing as a major part of the “holy grail” of trading. Van Tharp (also featured in Market Wizards) coined the phase in the first edition of his book but he only realized that money management was the holy grail after studying and speaking with hundreds, if not thousands of very successful traders. Tharp’s Book, Trade Your Way to Financial Freedom, is a must read if you would like to understand position sizing and expectancy and learn more about understanding “you”.

The Holy Grail of Trading:
Understanding you and combining that with sound money management rules. Conquer these two entities and you will be successful beyond your wildest dreams!

Courtesy : www.chrisperruna.com