Slapped On My Hand - Weekly Review 6-21-14

It was a week of taking punishment for my undisciplined actions in wheat and corn. I took a net loss of $16K. It was more than my entire May's profit. Although I will continue to roll over to future months but consider the time and opportunity I lost during the holding period, plus the added risk.

I realized the add on to average down is not the best strategy to cure an underwater position. Instead I think it is better to take a stop at 1.5 to 2X loss and roll up (down) at 1.5 to 2X size to recover the loss. This strategy may not fully recover the entire loss of the stop out but could recover majority of the loss and prevent a total disaster.  

Quadruple Witch 6-20-14

It's an unusual quadruple witch Friday. ES had a 5 point range. It usually would have a bigger than normal range but today was smaller. It feels that market is in a waiting mode. Bears and bulls are building energies. There is no sell off so far like most time this year. Next week will tell if the bulls are still in control.

Grains are moving independently today. Corn is up and soybean is down. Wheat went up earlier but dropped at noon. Is it retest b/o area or ready to make a new low. I will see if the IHS pattern would hold. I entered two more roll over positions for wheat on the way down. I lowered the strike prices to reduce risk. I sold calls to compensate lowered premiums. Hope it's a better way to recover the disaster of my mismanagement.

I am going to CA with family next week. I will use my limited time and access to manage my positions. I raised exit price target for my RUT bear spread. RUT is in the money of my 1180 now. It looks like a small blow out of my position.

Watch Out Risk 6-19-14

Indices holding up well but in a small range. The early attempt of sell off met by buyers. Let's see what will bring by tomorrow's quadruple witch day. I tried to buy couple of index ETFs to hedge my spread but didn't get enough of pull back.

Grains had a follow up to the upside due to the concern of rain and flood. I need to watch out unexpected turns in grain market due to weather changes. I made couple fitting trades of bear call in wheat yesterday. I lowered my level a bit to fit the price. I entered another one at 680 for Aug to day. I entered couple of bear calls for corn which has a seasonal down trend. Remember that wheat has a seasonal up trend for the next few months. My T/A for wheat is that a pull back will lead to another attempt of push down. Based on this hypotheses I am holding off my roll over for wheat and corn.

I am completely out of energies now. My last NG bear call was filled this AM before the NG inventory report. I will wait for anther opportunity. Pro traders are paid to wait or wait to get paid.

Stay Disciplined 6-18-14

I exited my ES bear calls of 1955, 1965 before lunch as planed. I might have left some money on the table. But I am glad I followed my plan and reduced my risk before FOMC. Stay disciplined and follow the rules are the ways to be consistent. It makes my job easier in the long run. Any profession has rules and procedures as standards. I also exited wheat and last corn positions. Although I lost money but I feel good about following my plan. No wishing washing, just get it done.

Grains bounced on nearing expiration today. I took the opportunity to add some bear calls on wheat and corn while waiting for them to drop again before adding my roll overs.

ES made a new high after FOMC. I am glad I exited my bear calls. I guess I have learned my lessons. RUT is up into my call spread in my first Etrade position. I will get out before the weekend and roll up to recover some loss if the indices don't drop after new highs like before.  

Disaster Can Happen Anytime 6-17-14

It's the pay back day for not controlling risk. I roll over majority of my wheat and corn puts today. The total loss is near $14K. There are still 4 wheat contracts left with approximately $6K underwater. I am waiting for it to go down further to enter my further OTM positions. But the future of the roll overs are still unknown plus the lost time. Roll over should be my last result as I have learned from last April. Add on and roll up (down) are the early steps to deal with risk. I will pay for it again if I don't deal with the risk and take firm actions. I was over confidence and wasn't fearful after I realized the trend change. But I didn't deal with it affirmatively. I didn't believe there could be a 6 weeks of continuously drop. But anything can happen in the market place. As FT said, behavior won't change unless you are proactively changing it.

Trading is an endless game. One must constantly control the risk in order to stay in the game and make profit.

Indices just won't go down despite Iraq crises. It looks like bull want to see what's above there. Tomorrow's FMOC could be a trigger. I have couple of RUT bear puts and one ES 1955 endangers. I will be ready to exit out if tomorrow's Fed meeting pushes the market up.      

A Week of Inaction 6-13-14

"Mistakes are the stepping stones to wisdom, we learn from trial & error, we become wise by understanding problems."

But how many times I have repeatedly made the same mistakes and how long it will take to correct the mental process and behavior?

I was pretty much inaction in dealing with wheat. Hoping for a turn around instead taking actions to reduce my risk. The biggest mistake was a single minded directional thinking. I had no 2nd and third hypotheses and plans in place while waiting for USDA report. My positions in wheat were crashed when the market went to opposite direction of my expectation after the report.

I guess it requires more discipline and patience to learn and correct mistakes. I wish there is a faster way to learn it. I often recognize a potential mistake when I thought about it but didn't stop my action. I need to have a rule as: When in doubt hold any action and think it again before doing it.

One progress: I am not panic when in loss. I start to think about solutions. I laid out a spread sheet to prepare rollovers rationally. I don't have a good solution for my long wheat positions yet.    

Let's Roll 6-16-14

I started to roll over my wheat positions today. Wheat was up 6 point overnight. I thought I would have had a good chance to exit some of my positions. It ended back to close Friday's gap and broken down to the next LVA. Wheat closed down 6 points. It's testing the last break out area of Feb. What a trip. I got caught up in both ways. I got in 3 sets of roll over but no exit orders filled. I will have to exit out first.

Corn went down 6 points too. My 450 puts is approaching stop out target. I will have to roll over or take stop tomorrow too. I tried to buy puts to hedge my wheat and corn positions but didn't get a decent pull back. Time is the essence now.

ES held an initial sell off after open. It looks like moving up again. Wednesday is the FOMC again. I will wait after it before establish any positions in indices. My first spread RUT trade in Etrade is endanger of ITM. I was too eager to get in. I sold a call spread of 1180/90 instead of 1190/1200. I am paying a price of anxiety and possible stop out. I placed an exit out at B/E. Let's see if the increased volatility will get me out of this positions.

Energy took a breath today. I exited my CL 108 position according to my plan. Even though it went lower later and only one day left. I am glad I followed my plan to reduce my risk. It could be just easily shoot up to 108 giving the situation in Iraq and I wouldn't have time to exit out. Following my rules and plan make me feel good.

Hurry Up & Wait 6-13-14

ES continued to fill in the LVA as expected for this Friday. I have only 1 bull put expired and out of all bear calls with a small profit.

Grains continued in bearish mood. Wheat was up 8 pts at one time but gave all back at closing. I laid out a spread sheet for roll overs in my wheat positions to next 3 months. The damage looks pretty bad. I have three days next week to unwind all my positions.

CL held its current range of 107ish. It's all depending on Iraq this weekend now. I am have to roll it over too.

The good sign is that I am not getting all emotional but calmly prepare to exit my positions. Of course the bad part is that I wasn't rational and disciplined enough to cut my loss earlier or held off the natural reaction of fighting the trend.

Breaking Out Everywhere 6-12-14

With Iraq fighting caught people's attention equities broken down and energies broken up. ES had a 16 point range day only pull back some at closing and Intel's better earning announcement after hour. I had 2 small bull puts for month end and before July 4th. I found it works better to sell from further date first on a pull back. I can get better premium in deep OTM and a chance to watch the depth of the pb before entering near term positions. ES is filling in the LVA of 1931-1915 of Sept contract.

CL had an over 2% pop on Iraq news. It reached $107 for July contract. My almost closed bear call are 3X underwater in a day. I may have to leg up and roll over. It was a counter-trend trade I shouldn't take in the first place. NG was up 3% too. My put target was hit and left a call which need to get out soon if NG break out 4.85.

Wheat went down again but didn't go too far. I am over 20K down in all of my wheat positions now. It make my stomach sick. Corn had a short covering since it reached January low. Soybean had a 30 point sell off which put my another undisciplined position of 1390 underwater.

It looks like I still have a long way to go in trading professionally and building a iron strong discipline. Quote of the Day: Discipline can make or break a trader.

Thinking Differently 6-11-14

This is the 2nd time I remember recently I had only one scenario to deal with a deeply underwater situation. The scenario is in favor of my direction. Last time was the expiration of wheat in May. I didn't get out of all of my expiring puts and got assigned. To make the matter even worse I didn't know I was assigned 2 new long positions and I didn't even check after the assignment. It was like running a business without checking bank balance. I planned to add one more contract to wheat 625 before USDA report and scale it out during the volatile report release swings. I expected it a two way swing like most time. I didn't have a plan for any other scenarios. I was so single minded. I could have bought a put to hedge it. But a different way of hedging didn't even crossed my mind before the report. Once the report came out it was a one way down the hill. My $25 entry became $35 in the water. I wonder why I didn't think it differently. I have learned the lesson before. I have about 5 days to unwind these positions. I will sell calls on a pop and buy puts to hedge. I will started to roll over these positions to August and further out. In the meantime control my risk and size.

One thing worked today is that I was able to exit out my ES bear calls of this week unscratched. It was luck and the nature of ES saved me.

From now on I must have at least two hypotheses for every rescue plan. I need to clear define each scenario and my action when and if it happens.

Frustration 6-10-14

ES initiated a selling in the morning but didn't go down very far. Buyers stepped in at the low of HVA around 1944. The LVA below is between 1944 to 1938. Obviously my put sells didn't get fill. I had two add on of 1845 and 1935 at 3X this week. I have to get out in two days one way or another. It's a riskier play. Get to remember not to leave any futures position for assignment.  ES has not had a red week since April 18 bottomed at 1800. It's frustrating to trade one way market. I tend to make boredom trades in such market conditions.

Grains continued to against my positions. Wheat tested 600, down another 11 points. I am glad I didn't release the long order set at 604. My goal is to wait for confirmation of market turn, not to pick a bottom. I had wheat 620 and 610 add on in attempt of rescue these positions. I set scale out orders already and hope tomorrow's USDA report will generate a large price movement to fill some of my orders. I will plan to roll over my underwater positions once the market directions are clear. It's very bearish right now with the improved weather condition and China's ban on GMS products.

CL continued it move up and NG had a 2% down day. My goal in energy front is to lock in my profits and wait for next opportunity.  

Boring 6-9-14

ES made a new high of 1955 and closed unchanged. Would tomorrow be the day to end the 14 days up streak? It's possible but the up trend is still intact. I tried to add to my bear calls but no fill.

Corn and wheat came back to retest last Friday's low and closed firm. The bottoms held for now. I stayed with my plan to add to my wheat 660 long. I wanted to see a confirmation of the retest hold. I may have to wait after USDA's planting progress report on Wednesday.

CL had a big up day today. It's above $104 now. Too bad I missed the bull put last Thursday. NG is still range bounded and I am OK on both sides.

I tried to add the puts legs of Iron Condo for RUT and SPY but no fills. My 1180 bear calls in Etrade are in danger now. I was too eager to get in last week and facing the danger of ITM now. I still have the bad habit of wanting a trade the same day, not waiting for it come to me.

Ignorance with a Big Price Tag - Weekly Review 6-8-14

ES broke out this week with ECB's new stimulus package which I wasn't aware of before. US unemployment figures added fuels into the rally. ES closed at new high of 1949. My main mistakes were shorted it too early, also left a bear call order overnight without knowing it.

Wheat and corn finally had a relief rally at end of the week. Looking back I didn't recognize wheat's trend change on week two of down turn. The biggest mistake I made was that I didn't check May 23 assignment transaction. I thought it was like equity assignment with charge of the difference in options price. It appears that commodity futures options are assigned to new contracts. I only noticed my account had two more wheat futures 660 positions which is two week later and $4K below cost. What a ignorance. I remember I thought about to check the options assignment transaction but didn't see it on the following day's statement. I felt unpleasant to look into the loss further and assumed the assignment was same as ES's assignment procedure. I am not only have to deal with my bull puts losses and also a long position of 660 which I didn't even know it existed for two weeks. It's not a business practice to ignore business transactions.  

Raging Bulls 6-6-14

The employment report was 217K vs expected 214K. It gave the bull another shot in the arm. Although ES price didn't jump after the release and even 10 min after open. But it grind up all day. It closed 1 tick to 1950. Today was the thirteenth consecutive green days for ES and  15 out of 16 up days in a roll. I tried to add on my bear call of 1935 but no fill. I will have next week to see how much up ES will go.

Grains finally had a bounce day. It's a short covering before next week's USDA report. Wheat and corn are in deep oversold territory on daily chart. I sold bear calls of 725 and 535 for wheat and corn respectively. No fill on bull puts side.

No trade in energy today.

This week is a light week. There are only 3 single ES positions expired. ES have had no pull back for the last 13 days. I spent a lot of time on commodities. I need to pay attention to ES and refer to my asset allocation table to keep my trades in balance.

Break Out 6-5-14

ECB surprised many people, including me with a deep interest rate cut and other stimulus programs today. Equity market went wild after the announcement. It started with pop, sell off and push to new high. However, Euro recovered all losses and closed at its season high. ES reached 1941 and closed with a bull flag. My bear calls are under water now. I will start to add on to my positions if we have a gap up or push up tomorrow. I entered two more RUT bear spread and waiting for a pull back to make them iron condo if I get the chance.

On the other hand, grains continued to drop. I didn't get any read on today's export report due to a doctor's appointment. My July wheat and corn are deeply underwater now. I may start rollover two month out next week. Both wheat and corn are near their Fib 78 now. I forgot my last lesson of the bigger, longer trend of grains.

NG's inventory report was higher than expected but price went up. I still don't have a good understanding of the NG market yet.

Same Pattern 6-4-14

ES performed the same pattern as the last three days but reached a new high of 1927. I still don't have any fill today. Waiting for that break out one way or another.

Grains are still weak hopelessly. Wheat and corn were inside for most of the season only got pushed to the day's lows at closing. I had a bear calls but only got 1 car filled. I may start rollover wheat on Fib 78.

CL's inventory report was lower than expected but price took a dive to 102.3. No fill here either. I won't watch NG's report tomorrow since I have to see a doctor for my annual check up.

It's a none event day.

Strong Bulls 6-3-14

Bulls are firmly in control so far. Buying on dip in the morning is current theme. Although it hasn't set a new high for the last 2 days but it's building energy. I didn't have any fill for ES today since it was in a smaller range.

Grains are down again today. Wheat and corn are in deeply oversold territory on daily but weekly RSI and MACD  appear to have more room. My impatience entry of wheat 625 put yesterday slapped on my face today. It reached $20 of my target price today. Wheat's next target is Fib 78 at 595. Corn is right at Fib 62 of $458. I am fine with my positions of SB but deeply underwater in wheat. I tried to sell calls on wheat and corn but didn't get even a small bounce. USDA'S planting progress report was in favor of bigger production yesterday.

No trade in energy market. I am waiting for inventory report for CL tomorrow and NG on Thursday.

Marching On 6-2-14

It's a new month. ES had a gap below from overnight. It initially closed the gap after open and continued to push lower to last Friday's low. I was hoping it to move lower so that I could sell some puts. But buyers stepped in to defend last Friday's low at 1914 and kept price in the higher part of overnight range. I didn't add any bear calls today. I want to wait to see if there is another thrust up to 1930-35 area on daily BB/H and weekly Fib 23 target. I will sell puts if it fail from here.

Wheat and corn dropped further overnight. They tried to push up after export report. Corn moved back to last Friday's range but wheat failed again before closing. Wheat is in the low of LVA. It may fill in this LVA of 618-645 for awhile if the low holds. I made a mistake by moving my 625 add on price lower before closing. The fear of missing made me change the entry from 20-18 range to $15, although it's a 3x add on. I should have waited for another day to see where the price will go. Soybean has the high demand of soy meal and export figures support. But future months' price are much lower than current price. Something needs to watch for.

CL retreated 0.5%. I am waiting for it to test Fib 38-50 PB to sell bull put. Also wait for Wednesday's inventory report. NG is still in the 4.35 - 4.75 range but tilting to the upside.

Review of May 5-31-14

Over all, it was a good and profitable month. I have made progress in discipline and patience. I started to pay more attentions to bigger trends and S/R levels. I realized corn's seasonal and current weather, production related down trend and formed my strategy of mainly selling bear calls. It has worked out well for July's calls. As a matter of fact all of my July bear calls are closed. I have only one bull put left for July. The opposite direction for soybean is working well too. I need to remember to use this process. It was a totally different story for wheat. Wheat was in a bull market with Ukraine situation and drought condition of winter wheat. When wheat started dropping sharply I was too eager to establish bull puts positions. It has been down for three weeks now and all of my bull puts are under water. I also made boredom trades on wheat 625.

A major mistake I made this month was no plan for worst scenario on expiring contract. I had only one plan to deal with the monthly expiration on wheat last Friday. I expected it to pop since it was the Friday before a long weekend and wheat was down two week. I kept moving my last exit deadline hour by hour but refused to plan a worst scenario. It cost two of wheat 625 got assigned with a loss of $650.

I spent more time and resource on commodities than ES this month. The ratio behind it is that commodities, especially grains have better percentage returns than ES and lower margin requirement. The better results are shown in April and May. One factor need to be noted is that part of the higher returns are from options rollovers which means I had ITM positions and took on some unnecessary risks or had bad entries. Such high risk positions may not be able to recovered one day when a trend doesn't change for a long time. The key is to follow my plan and be disciplined. Wait for the market comes to me, not to chase it.