A Big Reversal?

Indices made a 2% down day. There were no any major event or news. Gaza and Ukraine are not the first day. Europe markets started the overnight gap down but no buyers in RTH. ES  was down 40 points. This is a biggest down day in many months. My next Friday's 1910 bull puts is under water. This was a mistake I made on Tuesday. I sold it knowing the next day was FOMC. I cautioned myself not to enter a trade before FOMC. My habit of taking a chance took over my rules. I will need to take a stop loss tomorrow. Maybe it's time for a real correction?

Grains are mixed today. Corn and soybean are under pressure. Wheat had a 5 pts bounce. I sold couple of Nov and Dec calls and one Jan put for recovery. Corn looks like ready for another leg down and soybean's spot prices keeps falling.

Another FOMC 7-30-14

US 2nd quarter GDP came out 4% instead of estimated 3% this AM. Market popped up but stayed in yesterday's range. It started to sell off after open with concern of early rate hike. As Alissa noticed: they seam to have concerns weather it's a good news or bad news. After FOMC's announcement market went up and down to look for clues as usual. ES closed below yesterday's low. It could be a HS forming. However July 19's break out could be a IHS as well.

Wheat and corn retested yesterday's low and met buyers. But neither of them broke yesterday's high. The down trend is still in place. I will sell calls or buy puts on any pops with seasonality consideration. Soybeans met more sellers today. It is the 2nd day loss after a 3 day gains.

I went to a doctor's appointment for follow up of my annual physical and took Alissa to a concert in Midtown. I didn't have any trade today.

Weak Grains Again 7-29-14

Grains went down again this morning with all favorable conditions (bearish). Soybean and corn held up fairly well with over 1% down. Wheat had a new low intro-day.  News of Ukraine would have a bigger harvest of wheat and corn contributed to the 2% drop. I had one SB and a wheat march strangle filled for options roll over. I am still short many fill from last two months' losses. It's going to be a long way of recovery. It looks like some of my August wheat roll over need to get roll over again.

ES had a wild ride to day. It was up and down after open, then up to yesterday's high, closed at a new daily low. It looks like it was a clean deck for tomorrow's FOMC. I sold two ES puts in S-5 account and 1 in IB acct after closing. We may have a pull back after GDP and FOMC as the previous pattern of sell after a new high. MACD is showing a sign in weekly and daily. Hypotheses two is a weekly bull flag formation break out and we may finish summer rally above 2000 in SPX and ES. NQ is holding up much better after hour with some good earning news.

Seasonality At Work 7-28-14

Is Grains' seasonality start working? SB and corn gaped up on Sunday night. Wheat is hanging around recent lows. Is it bottom building or setting up another leg down. If 5, 10 and 20 years' seasonality is any reference and relevant then this should be a bottom building. But the weekly charts is showing a lot of down side room as well. I have to be mindful about it. I sold couple of calls to fade the pop in soybean and corn but no call or puts were filled. Corn looks like at seasonal low. I may want to scale some of my directional puts out to protect my profit although not much were made yet. Soybean is getting some export support but there is a November low in seasonal charts.

Indices had a morning sell off then met with strong buyers. I was so focused on grains didn't catch the V shape bounce. This Wednesday is going to be a big day with GDP and FED meeting announcement. I kind of forced a ES trade of bull put 1910, Aug 8. I could be in trouble if there is a sell of after FOMC. I am only 60 points away from current level. Remember to have patience waiting for the market come to me, not chasing it.  

My Weekly Review 7-26-14

Equities and indices maintained a strong up trend into earning season. ES is only a throw stone away to the big number of 2000. Grains popped in the last three days of the week as they reached major monthly support area and sellers covered their shorts to the expiration.

My draw down of July came to the end as the monthly options expired on Friday. My rightness and mistakes shown in the result. Made some money on buying corn puts to offset losses. I held the urge of selling corns because the trend is clear down. I probably avoid some future losses.

My little dip in to sell soybean and corn in June in hope of offset wheat loss turned into a bigger loss than wheat. lack of discipline cause me too much. Got to remember the thinking process lead me into a big draw down. The mistakes I made in trading grains in June and July wiped out my 2014 entire gains of nearly $50K. What have I learned from these mistakes? Remember: If you keep doing what you are doing you will keep getting what you are getting.

It's going to be a long road to a full recovery. So far I am looking at 5 month out, may be even longer.

A Closure of Grains 7-25-14

Grains are up on strong export data and possibly unwinding short on this expiration day. I exited my last position of SB 1250 at a worse than yesterday's price. The 2nd month draw down is put to a closure for now as the grains options expired. Am I numbed by the $20K loss? Why am I less motivated to the recover process and lack of will to take stops again. Remember: if you keep doing what you are doing and you will keep getting what you have been getting. 

Indices gaped down overnight. ES filled Monday's gap. The new high and sell off pattern may repeat again.
I should be on a look out early next week. Be prepared to exit the RUT bull put spread in both IB and Etrade accounts early.

A Retest Yesterday's Bounce 7-24-14

With a strong export data this morning grains popped again before open. I got my last piece of 1260 out for $10 less but my 1250 didn't get filled. Too bad my direct put was pushed in to negative territory and filled at -$460. I didn't follow my plan of scale out 1 before. I have only 1 of 1250 left and it must be exited by tomorrow. There is a possibility of losing more if the price fall much below today's range. It may be wild since it's the option expiration Friday. Grains were faded back to yesterday's range after open. Corn even made a new low but buyers stepped in. It looks like a decent bottom for now.

ES made entra-day new high of 1987. The much expected ES 2000 is only a through stone away.

I am looking at bond options now. Both 10 and 30 yrs have weekly and margins are reasonable. But volume looks like concentrated in near money area. Price movements and volatility are much smaller than grains.

A Follow Through Bounce 7-23-14

All three grains had a overnight low and bounce in RTH. They held at high of the day at closing and looked decent. I got out one more 1260, 50 and bought couple of puts for ZS and ZC. My biggest draw down continues. I didn't get any roll over fills. It's likely they will come down more.  

Indices continue inching up. I don't have any new trade to review.

I closed the last leg of strangle in CL.

A Failed Bounce 7-22-14

Soybean and wheat bounced overnight and after open on Europe buying and export data. The bounce failed before lunch. My exit orders of soybean of 1260, 50 filled before RTH. It looks like people are covering their short for the last 3 days of the week. I am the sucker to buy from them now. But I roll them over to Dec in 2:1 ratio as I planed yesterday.

ES made another new high to 1981 today. I tried to enter the 2nd leg of RUT iron condo but didn't get it.

CL fall back and I got out my bear call of 110. Will try to get out my bull put of 95 to release my margin.

Roll Over to Leap 7-21-14

I started to thinking to roll over my deep ITM soybean positions leap to end of the year or March, 2015 after woke up Sunday morning. Considering r/r and the length of time it will take it probably is the best recover plan I can think of. Another solution would be buying Leap calls. But I don't have a good forecast of target price while SB is in such a down trend. I may buy some puts to hedge my bull puts once the roll overs are down. May consider it as a insurance.

Equities are holding up well despite geo-political events. I am considering to sell treasury options once I get a free hand from the grains. I was way too aggressive rolling into grains without enough basic knowledge.

Weekly Review 7-18-14

Grains continued to trending down. All majors are below their 200MA. There was a bounce on Thursday in reaction to the news of M-plane down over Ukraine, but they were faded the day after. Next week will tell whether it's a retest of b/o point or resuming of the down trend. Soybean couldn't hold its gains even with good export numbers. However it had two strong rejections at 1160 and 1152 in last two weeks. One thing I have learned about grains is trending strongly on supply and demand. There are not many zip zaps. My trading strategies won't work in more than 10% persistent price movement. Corn and wheat have had more than 25% down move in less than 60 days.

Indices are still in up trend despite geo-political risks. Unfortunately I reduced my ES trade to one lot at time in order to trade more grains. I broke my allocation rules.

My progress of last week:
1. Refrained myself from adding to losing positions. except added one to soybean 1250 expiring next week.
2. Added more directional puts to hedge and offset my losses. But I need to do some quantitative study to clear define risk/reward and ratio of hedging.
3. Tighten my add on rules of engagement. I will not use add on in commodities. Instead I will take stops at 1.5-2X and leg up (down) to limit my loss. Add on gives me a false sense of security and temporary relief. But when it comes to take stops at 1.5-2X after add on it increases the $ amount of loss drastically.

My errors and undisciplined activities.

1. Kept moving my stops loss targets on short term price movement. It costed my missed SB exit by $5 last Thursday when there was a good bounce. I didn't keep a cool head during short time volatility surge. Remember to step aside and wait for things to settle with a clear directional pictures.
2. Added one lot to SB 1250 without considering maximum risk factors.

I may be knock down but I will get up again. I will learn from my mistakes and press on. I must obey my rules and take the pain in order to correct my bad habit and be successful in this business.

Quote of the Day: "If you keep doing what you are doing you will keep getting what you are getting."
In my case I will keep getting wiped out if I don't change my bad habit.

Grains Lost Steam 7-18-14

The plane down and Ukraine crisis faded so quick in the market. Grains fall back to yesterday's open. Corn looks like ready to break a new low, hanging on a thread. Wheat is also closed at yesterday's low. Soybean had no loss at least. I have only next week to exit my August contract and take losses around $16K. It may cause my cash to -36-40K. What a disaster. I need to stick to my rules and discipline to make in this business.

Indices pushed back to the levels before yesterday's event. People disregard bad news and event in bull market same as good news in bear market.

I will write this week's activity in the weekly review.  

Anything Can Happen At Any Time 7-17-14

A Malaysia Airline's airplane was shot down over Ukraine and Russia board for no apparent reason. No one admitted responsible for such a tragedy. As it happened on top of Israel attacking Abase's bases the market went wild. equities were dropping, commodities were popping. My CL bear call of 110 were filled. I am in a strangle position now. I am thinking about to get out both side early instead of holding to expiration.

I added one more position to my ES bull puts of 1840, Aug 1st. I also took advantages of the volatility and entered a quick scalp of 1890 for tomorrow's expiration at 3x70. I didn't want to do more since I wanted to reserve some funds in case of something drastically happens.

Grains popped on news of the plane down. My exit orders of corn and wheat were filled finally. I also exited half of my corn direct puts to lock in some profit. On the other hand I lowered my soybean price too far out and none of them were filled. I was influenced by report of good soybean export numbers and other people's upbeat twitts. I didn't do a good measurement of soybean's price target during the frenzy time. I also made a mistake of adding a position to my 1250 at 3535 on a p/b which was deep ITM already. I was pretty confident the pull back was temporary and buyers would step in. I am often wrong whenever I am confident of a price movement. The news pop ended short lived.

It was a mixed bag day in terms of my performance. I need to be aware of my emotions and step aside when market is in a news driven state. Ask myself: can I survive it and wait till tomorrow?    

A Quiet Day 7-16-14

Equities continue to push up after yesterday's gap fill.

Grains tested upward on third day in small steps. I tried to use the pull back to sell calls and exit my ITM positions but no fill today. I must take stop losses, especially for soybean this month. They may push down again tomorrow as the pattern lately. Today's closing was week. There is a weekly export report tomorrow morning. Hope there will be some good news to support the market.

No fill in energy front either.

Draw Down Continues 7-15-14

Grains had some signs of life. Wheat was up to test Monday's gap. I exited out two July bull puts at 4X and 5X of average cost. Corn was down and tried to get back to yesterday's range. Two of my stop loss of July bull puts were filled at 4-5X losses too. I bought 2 each of Oct, Dec 340 puts. I still have 5 deep in the money soybean but no fill today. I bought Sept 1000 put and sold Nov 1280 put. They are not enough to recover soybean's losses. I need to develop a formula for my hedging instead of base on feelings. I am in negative $14K cash now. This summer may be turning out to be a worst performing season. I need to be patience and perseverance to rebuild my business.    

Energies continued going down. I will try to sell CL bear call to balance my bull put position after inventory report tomorrow.

ES challenged new high but was sold off until it filled Monday's gap. I was able to get a fill and sold six August VIX 19. I also got RUT 1080 credit spread in both IB and Etrade. Hope I start to recover my losses in those bear calls.

Late is better than nothing 7-14-14

I decided to take stop losses for grains on the weekend review. Luckily grains had a pull back on this Monday after last Friday's big sell off. It didn't hurt that much at 2X after all although the losses are steep in term of dollars. I exited each July position in wheat and corn but no fill in soybean. I will continued to scale out to reduce my risk and add more hedges in directional puts and bear calls. The entire grain market is still very bearish as the weather continues cooperate.

Indices gaped up and holding well. I tried to sell RUT credit spread on a pull back of gap fill but it didn't happen. It looks like the up trend will continue despite all geo-political concerns.

CL and NG had pull back and I would try to sell calls to balance my CL bull puts and get in a NG bear call.

Progress & Shortcoming - Weekly Review 7-12-14

Last week I was able to hold so many urges of entering grains bull puts as prices continuing coming down. I also started to buy puts to hedge my underwater bull puts positions. Although it' bit later and lack of specific risk/reward calculation but they are helping off set the losses and release some margins. I need to refine the ratio of hedging with my directional options. Should it be 1:1, 1:2 or 1:3, what are the dollar amount ration?

My shortcoming is still lack of alternative plans. I tend to plan my actions on my certain expectations. Do have 2-3 hypotheses and related solutions. A good example is preparing for the USDA report. I had add on and exit price range with a pop expectation. But I didn't have a plan for any other scenario, such as reduce positions at a loss before report in case of straight against me. Because of it I am sitting on an additional 22% loss. It's a hefty penalty for fear of loss. I have to overcome the unwilling and fear of loss, otherwise I won't be able to make it in this business. I will add more conditions for add on in my underwater rescue strategy or even completely remove Add On as part of the strategy. It would be better to take stop at 1.5-2X loss and leg up (down) to recover partial losses.

Deeper In The Water 7-11-14

Grains didn't have a chance to pop before or after USDA WASDE report. It was under pressure all morning and went straight down after the report like last month. My plan was partially fulfilled today. I was able to enter directional puts in all three grains to hedge the expected drop. But none of my bull puts was exited since there was no pop at all. I thought about getting out some positions at whatever price I could get before the report. But I didn't implement it since I had an expectation of a possible small pop if USDA gave a curve ball. My shortcoming is lack of alternative plan. A better plan would have been to exit some at small loss after puts buying filled. Now I may have to take 5-7X losses. From the price actions of today's closing it appears wheat and corn has further to go and soybean had a decent rejection. I will need to exit some on Monday or Tuesday if we get a small pull back.

Indices had a decent push up in the later part of the day. I only get a ES in S-5 account. I am saving IB margins for commodities. I tried for two day to sell some VIX but no fills. The pull back in equities appear short lived baring from further European shocks or Geo-political event, such as current Israel-Palestinian conflict. Market has largely brushing it off so far.    

Risk On From Europe Again 7-10-14

Indices had a nose dive overnight on Portugal's banking trouble. ES surprisingly had strong buyers and closed a 16 point gap. I got in couple of August 1 bull puts at 1850 and 1860.

Grains are still controlled by bears even in the day before USDA report. There is no sign of short covering.  I didn't get any exit but had 2 add on for August soybeans. No directional put filled either. My plan is to exit some add on before or during the report volatility. If the market goes down without any two way exploring like last month's report I will be further underwater. What is my plan for the worst case scenario? Buy more directional puts?

Buy Puts to Hedge Grains 7-9-14

Grains continued to fall most of today. I purchased puts in all of three to hedge my positions. Most of them got filled before the closing on a small pop. My plan is to exit part of my bull puts before Friday's USDA report and let the directional puts run further. I need to cut some loses first otherwise I don't have enough directional puts to offset my bull puts. The general consensus are bearish as weather and crap conditions are supporting a large production.

I added couple of ES this morning when it came down to close a small gap. It looks like a three day pull back is over if ES would close above 1970 in next couple of days.

CL is in its 3rd week downward. Today's inventory report is less than expected but price still dropped more than 1%.  I entered a bull put 95 for August near Fib 50% RT. It looks like I was too early. I should watch 101 level at Fib 62%. May add a further out position at 93 or hedge it with a bear call when and if it pops.

Grains 7-8-14

Grains look hopelessly in bear territory. Wheat and corn took a breather today but soybean continued its down thrust for another 10 points. My August positions are ITM now. It's decision time before Friday's USDA report. I will review and reaffirm my risk control procedures tomorrow. I may have to take a hit in wheat again this month.

ES had a 17 points down day only pulled back some in the afternoon. It's the 2nd down day. Would we see a third one? We have had most 2 down days since May. I sold couple of bull puts for 2 & 3 weeks out. I want to reserve enough margin for my grain positions. I tried VIX and indices bear calls but no fill.

My Goals of July 7-7-14

My ultimate goal is risk assessment and management. It's a never ending journey. Every trade is a step of my journey. I need to have a clear defined level for each trade. I will wait for the price come to my level before enter a position or no trade. I have a tendency to alter my entry or move my level to get a fill. It often happens when I don't have a fill for the day. I still have the day trading mindset. Making one rule into a habit at time. It takes repetitive practices to build a habit.  Be sure to make every step of the journey to be a progress, not repeated circle.

My Biggest Draw-down By Far, Monthly Review, June 14

June ended with my biggest draw down ($22K) since I started trading futures options. It was right after my best returns of April and May. I got into fighting the down trend of the wheat after the big up trend caused by Ukraine crisis and US winter drought. I was too slow to recognize the trend change even after the strong first weekly down bar. I relied on my view and hope of the wheat market instead of objectively analyzing the market. I was also facing a lack of production information which I don't have many timely sources other than GrainTV and Arlan101.

I remember I was feeling bored and didn't have a sense of direction for the grain market in later May. I thought I wasn't going to get much done for the summer and I was over confidence in my ability of handling the grain market. Whenever I am not humble and alert to market risk the market will teach me a hard lesson.
My strategy for position adjustment and rollover have flows too. I was heavily rely on rollover instead using it as a last resort. I was trying to avoid the pain of taking losses.  I drafted a new position adjustment procedure to correct it. I need to review and update the procedure to make it into my thinking habit.    

Change Habit Flow Chart

Equities Shoot Up Again 7-3-14

A positive June job report made this half trading day a gap up trending day. My worst case scenario became a realized case. SPX  gaped up above 1980 and stayed above it. I implemented my exit plan and had to raise my price. I was lucky to get out at $3.5 ten min before 1PM closing. SPX pushed up to a new high of 1985.59. Glad I followed my plan and avoided a bigger loss. It was right action I took yesterday to exit RUT at 1202-03. It also gaped up today and closed at 1207.72. More importantly I feel much easy to implement my plan on risk control. I accept the loss as part of business and move on. I am less worried about what if ans wish wash.

Grains continued its courses. Wheat was up 5 points but corn and soybean were down again. Too bad my bear calls didn't get fill.

Energies are currently in a consolidation mode. I don't have any positions in either CL nor NG.

Back in the Game 7-2-14

Back to my work station after nine day CA trip, a college tour plus vacation. I will review my activities of the vacation week in this weekend's report.

I had to exit all of RUT 1200 bear calls in Etrade and IB with an average $140 loss per contract because RUT was flirting above 1200. I didn't want to let it floating around without any risk control. I didn't get the best price to fill but I followed my plan. My loss is smaller than I expected. I live for another day to trade.

Grains continue to fall after USDA's 6-30 bearish report.  It looks a good harvesting year for all major grain producing regions. My August wheat and corn are underwater again. I will re-access my positions and plan to take stop out instead of rollover. I will sell more bear calls on any pull backs to recover my losses.

Equities are still in bullish mood. I didn't get a chance to sell any puts or calls. I will see what the job report will bring tomorrow morning for a half trading day. Also be prepared to exit my SPY 1280 bear call if a new high push it ITM.