Not all conventional commodity trading folklore is correct. Some is and some isn’t. Much is anecdotal. Most of it is designed to make you feel comfortable in a trade. Feeling “comfortable” is the fastest way to the poorhouse in commodity trading. We are paid to provide liquidity and take on risk. Read on to see if you adhere to this basic and important market law.

More S&P 500 and E-Mini Futures Contract Observations: PART4

“The following e-mini futures action turned into a big chop, then a big rally the next day: After a clean out decline, wait for a series of bottoms with big volume buying activity. Wait for the sell-off to a bottom and sharp rally and then the volume dies. This is the safest place to buy. This was the forth bottom and the previous three bottoms had bearish volume patterns. The forth bottom changed – it had bullish volume patterns and then price rallied to the close.”

It pays to step back and view the e-mini futures market in context. My notes keep repeating it’s a mistake to buy the first panic spike. I’d gotten good at buying spikes and wondered why I always broke even or even lost doing it. Most of the time a huge e-mini futures climax is followed by several tries to test the bottom. It’s easy to get chewed up in these bottom tests since they can last for several hours before a big turn.

The single spike low that holds and supports a big move was popular in the 90’s, but it seems to have been replaced by a series of double, triple and quadruple bottoms. Throughout the bottoming area, you will see a bearish volume pattern until near the end where it turns bullish within the formation. It’s often profitable to stay bearish and continue to sell rallies and cover at the bottom area. In fact, EXPECT big bottoms to be tested.

If you are early buying a bottom, don’t let these tests fake you out. If you are positioning long, expect them and even average in some more as long as the bottom area reasonably holds. The e-mini market may even spike the original low by one-half to a full point, but any more usually means a major break down and you want to be gone.

Remember that “major” e-mini day-trading lows occur only every 3-5 days or longer, so be selective when positioning for them. Personally, I have found big turning point positioning to be a waste of time and money from a day-trading point of view. It often leads to overnight holds and a bad next-day gap surprise. It’s better to let the longer term futures traders beat themselves up and get the occasional rewards. Playing these large, range-bound formations from the short side until they finally end is the best advice.

When the e-mini futures market starts trending, use this larger frame of reference (the recent bottom) to pick up a bias in a certain direction. Then simply buy the dips and exit at the climaxes over and over. After identifying a big turnaround, don’t try to outsmart the market by shorting or reversing your position against the trend.

This is a difficult idea to adhere to, because the e-mini market will always be having minor corrections and try to fool you into believing it’s turned back down. But after the minor correction is done, the market will move to new highs in line with the accumulation that took place in the last couple days.

Part Five of Five Parts – Next!

There is substantial risk of loss trading futures and options and may not be suitable for all types of investors. Only risk capital should be used.

By: Thomas Cathey

About the Author:

punjabi4life asked:


My team is:

Derrick Rose, Chi PG
Caron Butler, Was SG, SF
Carmelo Anthony, Den SF
Rasheed Wallace, Det PF, C
Andrea Bargnani, Tor SF, PF, C
Tayshaun Prince, Det SF
Chris Paul, Nor PG
Richard Jefferson, Mil SF
Raymond Felton, Cha PG
Kendrick Perkins, Bos C
Dirk Nowitzki, Dal PF
Nate Robinson, NY PG, SG

I’m allowed to take two keepers into next year, I just missed the playoffs in my league this year. CP3 is a no-brainer but I’m struggling to decide between ‘Melo and Dirk. It’s a head to head league, and strong big men are the best commodities because we get 10 points for double doubles.

Dirk gets more double doubles, but ‘Melo scores more when he’s healthy and can get just as many double doubles. I dunno whether to go with Dirk or ‘Melo. ‘Melo gives more trade value because
of his name but in my league Dirk gives me 35.3 points a game and ‘Melo gives only 28.7 points a game.

I’ve been trying to make a decision ever since I missed the playoffs (about a month ago). HELP!

Randall E asked:


Let’s be perfectly clear on this. I see and hear a lot of people blaming “mortgage crooks” and “greedy lenders” and “greedy borrowers buying homes they couldn’t afford.” Well, there are some horror stories like low-doc and no-doc – - – but almost all the mortgages were on the up and up – subprime yes but they all cash flowed at the rates then in place. And at the cost of funds then in place the banks’ models showed that their portfolios could handle the risk. And since they knew that short term rates would creep up and long term rates would lag them, they needed to go further out the risk/return curve to make any money – which since banks trade publicly they needed to do. Securitizing these mortgages was supposed to REDUCE risk because you were buying a piece of tens of thousands of mortgages, not banking on a handful of them.

The flow of credit into mortgages, like the flow of credit into the commodities markets, fueled a housing bubble similar to the commodities bubble (oil prices rose and then fell more than real estate prices).

This is your classic example of the interest-rate cycle as the Austrian School explains it.

The banks have complex models, they’re highly regulated, the regulations require them to follow the models, and the models showed that the risk was acceptable.

The reason the risk turned out to be unacceptable is that the Fed’s unsustainable monetary policy masked the inherent risk.

So the question – the $700BN question – becomes, is it the banks’ responsibility to sensitize their models for bad Fed policy?

If that’s their responsibility, rather than the central bank’s responsibility to maintain a stable monetary policy – then why have a central bank? Why not just let the market set interest rates?

Should we be reforming the banks? Or the central bank?

LeAnne yes CRA was a problem but don’t confuse the side show for the main act.

Risks were put on the back burner because the models masked how significant the risks were – because the models assume stable interest rates.

=) asked:


Currently working on an investment research paper as a part of of our requirements in a course. I am choosing between working the paper on a mining company and a universal bank.

The mining company is well-known, and I believe its securities are known and being traded world-wide. Its securities are included in the Active Stocks of the stock exchange of our country. Seems that I would be able to gather a lot of information from the internet, news, and other resources. My only problem doing research for it is that I do not know how to add some things related to the pricing of its commodities. I believe that the prices move together with the world markets.

The universal bank, on the other hand, is well known to the country. Its shares are not included in the Active Stocks. It seems to me that I have lesser resources of information than that of the mining company. I am a little bit familiar with the operations of a bank.

Please help me which of them to choose to work on the paper. Thank you. =)

Berry X asked:


Euro dollar is based on a combination of gold and the good will of the EU. In 2006 it was $3.50 US to 1 Euro, in 2007 it was $2.50 to 1 Euro, and now $1.28 to 1 Euro even under the rise of gold prices. The fact is that in 2006 and 2007 the Euro lost 30% of its trade being power and 20% of it domestic buying power. In 2008 it lost 60% of its trade being power and 40% of it domestic buying power. This is a sign of a long term decline in Euro economics that has lead Italy to threaten pulling out of the EU.

China has already indicated it will combat its decline in exports by selling its stock piles of commodities and if this happens it may lead the EU in to hyper inflation like seen in Africa.

Before you start trading in forex or commodities, you need to first learn about the basics of money management. First and foremost you need to have a clear understanding about the system. Before investing in this high risk business, you should take a well calculated decision about how much money you can afford to lose while learning this system.

Forex and commodity trading is a high risk business. You should never attempt to invest your full savings in this business from the beginning. Instead first learn the system with practice account. Most of the providers offer practice accounts for the new traders. You can do mock trading in such accounts without investing any real money.

You can learn secrets of trade by practically involving yourself in the business. Most of the new traders do the mistake of thinking forex business as gamble or jackpot. Please understand that though the profits in this can be huge sometimes but it is definitely not a gamble. It is business which is directly affected with demand and supply. There could be several factors influencing on price rise or price fall of currencies and commodities.

If you truly want to be successful with this business, you need to first plan your system. It is in your best interest to seek services of some mentor or expert who can guide you through while you master the system. It is very easy to lose money in commodity and forex business. You need to be extremely cautious while entering into any trade. Never try to guess the market movement through your gut feeling. You should have a technical reason for every trade you open and close.

By: Robinn Miller

About the Author:

But you must be asking yourself, “Why in Singapore?”

Among the industrialzied countries, many new and growing businesses nowadays chose Singapore primarily because of its reputation and stability in terms of economic and facility. Other needs to reposition their office in a competitive trading nation for added sales and reliability.” These are credible based on facts and figures. As per our own study, I was able to get some reasons and statistical reports:

• Singapore is strategically located near ASEAN manufacturing countries and are considered the center of commodity trading in the world
• Singapore bridge the gap in commodity trading
• Efficient Facility
• Better Air and Sea ports.
• SMRT complements workforce and business establishments
• Comfortable living
• Nice recreation for our guest is awesome
• And a lot more which is enough reason to get the respect of both partners and investors, in and out of Singapore

According to World Bank, “Singapore is the cheapest place to start a business in Asia.”

“The 2nd most profitable place for investors,” according to Global 2003, BERI

As for start-up firms or aspiring foreign entrepreneurs, he/she must first formulate a viable business plan to pass the approval of concerned Singapore government agency for the licesence to operate and the required work permit/working Visa for himself and his immediate family. Funds are granted by a number of concerned government agencies but proponents have to qualify to their standards and criteria. Most of them has standard format on business plan, you just have to download their template through their websites. Nonetheless, I will be enumerating some of the basic information needed that has to be in the business:

I. Executive Summary

II. The Business

1. The Business Model and Value Proposition
• Definition
• Business Name
• Ojective
• Mission
• Vision
• Goal

2. The Products/Services

3. Market Structure and Analysis
• Target market and customer base
• Market size and potential
• Competitor analysis
• Competitive analysis

4. Marketing and Distribution
• Marketing and communication
• Distribution
• Sales

5. Production process and development
6. The supplier and raw materials
7. Company structure and management
8. Planning and strategy
9. S.W.O.T. Analysis
10. Price breakdown of products/services
11. Investment Plan
12. Source of Plan

III. The Financial Plan

IV. The Development Impact

Others: You may also need to include the expansion plan and Risk management plan.

This business can expand in the near future, depending on how effective management in administering the business. Having the right invesment/investors and partners means a lot in attaining success.

To avoid waste of time and money, I recommend two crucial partners:

1. Rikvin Consultancy Singapore (permits and documentation processing, including initial setting up related to office, business plan polishing, etc.)
2. SAP International/Singapore (setting up of effective and globally competitive systems and procedure)

(Most of the tips and outline can somehow be adopted if you also want to do business in globally competitive trading countries)

By: Denis Salvatierra

About the Author:

Alex D asked:


I’ve been given an assignment that requires me to get ten articles on the economy and then write a 100 word summary on each of them explaining the significance of the article, the context, and comments on it?. The articles have got to include at least one of the following topics:
* The US financial problems
* China’s situation regarding levels of imports and exports
* The effect of China’s economy on the Australian economy by way of prices for commodities
* The employment effect in Australia of the Global Financial Crisis (GFC)
* The forthcoming Federal Budget and the demands it faces
* The economic stimulus package put in place by the government
*The effect on trades such as retail sales, the hospitality industry or travel of the GFC.

I just don’t understand what is happening to the economy in relation to these questions.. and therefore don’t know whether the articles im getting are relevant? could anybody explain them a bit better for me please? And even help me get some good articles for them?

With the advent of the Internet, the way the world does business has been revolutionized. Online commodity trading is a multi-billion dollar sector that enables buyers and sellers to reach each other, literally at the click of a button. Most of the online commodity trading is done on futures, which are also known as forward contracts. A futures contract obliges the seller to provide a commodity at a mutually agreed upon date to the buyer. Future trading includes widely traded commodities like coffee, oil, gold, sugar or financial instruments like stock market indices, bonds, or currencies.

Commodities? trading is not a new phenomenon, though. It has been going on for centuries now. One can find mention about commodities trading in ancient Greek scriptures. By the 12th century, futures contracts were popular in Europe. Traders used to transact business during fairs. The fair vendors used to display samples and sold futures to be delivered at a later date. Similar references can also be found for many countries around the world, where futures started centuries ago. The early 1970s saw the boom in the futures market, with an explosion in the volume being traded. Major commodity exchanges were opened up in large cities to regularize the entire process of commodity trading.

The spread of PCs and the increased usage of Internet gave rise to the ultimate boom in the commodity market. People could visit almost any exchange online and find out the latest prices for commodities. The Internet with its great communication capabilities became more than a handy tool in the hands of the buyers and the sellers. Trading became easy and the entire process of transaction was made simpler and faster. One can literally go through thousands of online commodities web sites, which offer exhaustive listings of commodities and also current trends in the various commodities market. A little bit of search can equip even a lay person with at least the basic knowledge to trade online.

By: Eric Morris

About the Author:

Berry X asked:


Euro dollar is based on a combination of gold and the good will of the EU. In 2006 it was $3.50 US to 1 Euro, in 2007 it was $2.50 to 1 Euro, and now $1.28 to 1 Euro even under the rise of gold prices. The fact is that in 2006 and 2007 the Euro lost 30% of its trade being power and 20% of it domestic buying power. In 2008 it lost 60% of its trade being power and 40% of it domestic buying power. This is a sign of a long term decline in Euro economics that has lead Italy to threaten pulling out of the EU.

China has already indicated it will combat its decline in exports by selling its stock piles of commodities and if this happens it may lead the EU in to hyper inflation like seen in Africa.