History

I like science and math, but I don't like history.

However, I truly believe that we're standing in the middle of history that hasn't happened for about 90-100 years.




Thanks for economy slow down. My lumber trading is going down to toilet. I might need 'p'lum(b)er. A bad joke?



Regardless of Lumber, I hate greedy wall st. companies, but unfortunately if they don't do well, our whole econ will struggle.

Other than holding the lumber, I'm trying to sell Nov Nat gas puts. By the way, the soybean spread trade, I indeed exit too early. That would have helped the lumber drawdowns. I'm still learning here, but tastes sour for sure.

9/26 -$400

Dagger. Friday afternoon. One hour till market close. I thought the setup was great but it just didn't work out. Because of the volatility I used 2 pt stop (normally 1.5 pt ES stop) and I took a full stop out on 4 lots. I looked the trade over and over again and I don't think there's anything wrong. Throughout my 4 months of simulation I have 83% of chance to hit target 1, but I still have 17% of chance I get full-stopped out and this was one of them I guess.

I'll take the same trade anytime any day. Besides, I need to be more aggressive on setups just like I did on sim.

9/24 +$600

After missing lots of good trades (came close or ticked at me), I finally was able to make two trades. The first trade was +475 (before commissions) and the second trade was +125. The second trade was very unfortunate because it ticked at target 3, but turned around and stopped me out (only 15 contracts were traded on ES). Furthermore, it went then thru target 3. The difference was +125 v.s. +325. Oh well, that's the trading. I have two more days of 'bootcamp' trading with my friend, Jack, in OH.

Sold 1 Nov 210 Put Lumber at 5.70 ($627)

Lumber kept on dropping, so I threw an order and got filled finally. This is for cost-averaging position. The expiration is 10/30 (or 10/31), so I'll hold until then. If I get assigned, great, my avg Lumber got lower. If I don't get assigned, I collected $627.

Why didn't feds lower the rate?

Yesterday, we saw a mega sell-off all over markets. The worst thing I've seen. The 9/11 move was more external problem, but yesterday we saw 150 year old hedge fund firm failed, a firm that survived through great depression was sold very cheap and the world's biggest insurance firm was desperately calling a distress signal. Thus, everybody was thinking the choice for the feds was clear! Oil is not at $150 any more, grains came 30% off of its top, so cut the rate!

What a surprise, the feds just announced to keep the rate steady. Remember early this year, when Bear Sterns failed, we saw emergency Sunday night cut, lots of billions of injection etc. Here's what I am thinking. Every 'normal' people I know we're in deep trouble. Yes, we still are and we will for a while, but I think the worst could be finally behind. (Remember, when everybody knows, markets will do the exact opposite? ) When the feds rescued bears and even rescued Fannie and Freddie, there clearly seemed to be more serious coming. And yesterday there it was. Normally, lowering rates mean more liquidity, so markets love them. But we're in a situation where lowering rates mean more trouble to come.

This morning, it looked like markets are going to die (ES at -25 pts-ish), but 45mins after the keeping the rate news, we're rallying +15 pts! I always think that someone somewhere knows about what's going on. Not necessary smart people but they somehow have information about what will happen and we're seeing exactly that.

In terms of technical perspective, ES has a long bottom-tail, which is one of powerful signs of exhaustion. When technical meets fundamental, we see a steady move to one side. In this case, to the upside.

Remember Goldman Sachs said oil will go to $200 by the end of summer? People got scared and putting lots of money onto oil funds or natural resources. Oil is currently around $90! GS said it's supply / demand. Emerging countries' demands are getting higher and higher. I said that was a complete BS. It was all speculations after all. You see all hedge funds are liquidating everything to get chase. I bet Lehman and Meryl sold a lot of grains and oils. (By the way, I still like GS after LEH and MER taken down badly. Goldman Empire from now on???)

Then again, thanks for bad housing markets. My lumbers are down a lot now. It consolidated for a while and took a few more dives in the last few days. I'm trying to sell 1 Nov 210P for $500 ish for cost averaging. Today the price came to 213, but my puts didn't get filled. If futures get so low, there's not much extrinsic value or no volume at all. Besides, Lumber is pit-traded contract, so god knows what pit traders do to screw people like me. I'll leave the order as it is for now.

I'm also trying to sell 70 CL puts. This extreme down move will end soon. If I get one more day of sell-off, I'll get filled, and when it bounces, I'll buy back. Now the problem is if I get one more day of selling or not.

As a 20/20 hindsight, I did exit the soybean-meal spread trade way early. The spread is now around $24K when I exited it was around $27K. An extra $6K (I was holding 2 spreads).... Ok, I'll go to corner and stay there for 10 mins as a punishment.

Sold all

I sold all of my Long (stocks) positions. Stocks (or indexes) were in a range for a long time and they broke down (ES' 1260) with a really big volume. I can tell a lot of big money flowing into the short side and this indeed seems to be a new leg down to test and break the 52-week low.

I have an order in Natural gas, but I don't think I'm gonna get filled unless it comes close to 6.7-ish. LB is doing nothing as usual. I might have to sell Nov puts since time decay is significant on Oct contract.

Lumber rollover

I sold 2 Sept Lumber at 255.50
I bought 2 Nov Lumber at 241.50